'Catalytic' development planned for Indian city

Farmers from Andhra Pradesh tasting the costus plant at Tampines Hub Eco Community Garden.
Farmers from Andhra Pradesh tasting the costus plant at Tampines Hub Eco Community Garden. PHOTO: TAMIL MURASU

S'porean consortium to help spur investment interest in Andhra Pradesh start-up area

The Singaporean consortium picked as master developer for a start-up area in the Indian state of Andhra Pradesh's upcoming capital aims to spark interest in it by building a "catalytic development" that will draw investment.

The plan will likely involve erecting a multi-storey building in the area that is likely to become Amaravati's financial district.

The "kick-start" strategy was outlined yesterday by the Ascendas-Singbridge and Sembcorp Development consortium, which won the 20-year contract in May to oversee the 6.84 sq km start-up area in Amaravati.

But the consortium is not likely to be erecting any more structures.

"Singapore is not building the whole of Amaravati; the government of Andhra Pradesh is building their own capital city," said Mr Eric Tan from Singapore's Ministry of Trade and Industry, which is supporting the entire project. The financial district will be next to the state government secretariat.

Mr Tan said the consortium was aiming to attract a "Queen Bee" investor, such as a bank, to establish a presence, which would spur others into doing the same. He added that the consortium's motive for being involved in the development of Amaravati was "business, pure and simple".

  • PROFIT AGREEMENT

    58:42

    The profit-sharing agreement between the Singaporean consortium and the Andhra Pradesh government.

The project is being implemented under a 58:42 profit-sharing agreement between the Singaporean consortium and the Andhra Pradesh government.

Singapore has also entered a government-to-government Memorandum of Understanding with the newly created state to back the development.

"This is a very valuable partnership because if it was any other percentage, it may not work well... Once we have an Andhra entity inside, they have a vested interest, so the project will go faster than normal," said Mr Tan.

"For us, this is a winning combination, that's how we see it."

The entire project will take place over three phases, with five years earmarked for each phase. The first is likely to be completed by 2022, though Mr Tan said that these were only guidelines. If the consortium sees swift progress, it has the option to embark upon the next phase whenever it sees fit.

In addition, under the master developer contract, another five years have been kept in reserve for the project. This was done with a view to obviate the need for the consortium to use up or quickly sell land.

Mr Tan said the state government has acquired most of the land required for the greenfield capital city - one of the biggest potential hurdles to development of a city from the ground up - through a process dubbed "land pooling". Under this initiative, farmers and other landowners were asked to contribute land to a pool of 217 sq km required for the capital city.

They would get back a quarter of that land after it has been developed with roads, sewerage, fibre optic cables and electricity, besides other infrastructure.

The landowners would then be free to utilise whatever land that was returned however they saw fit, subject to zoning patterns.

Mr Tan said about 26,000 farmers had contributed land.

When the project is completed, Amaravati will be 10 times the size of Singapore. According to some estimates, the cost of construction for the whole new city will be more than one trillion rupees (S$20.9 billion).

A version of this article appeared in the print edition of The Straits Times on December 01, 2017, with the headline ''Catalytic' development planned for Indian city'. Print Edition | Subscribe