|1. Good morning.
2. We have called today's briefing to provide an update on the Changi Motorsports Hub project.
3. When the Changi Motorsports Hub project was first conceptualised, it was envisioned as a land sale which was to be fully funded by the private sector for the purpose of promoting motorsports as a viable economic activity. These conditions provided the justification for allocating state land for this purpose against other possible competing uses.
4. Following the contract termination with SG Changi, SSC decided that it would seek inputs from the market to more accurately assess market appetite and interest before deciding on whether we should re-tender the land out again.
5. In July 2012, SSC conducted a seven-month long international and local market sounding and RFI exercise. A four-month market sounding exercise assessed the level of continued interest by potential investors and possible motorsports and sports and lifestyle concepts for the 41-hectare site in Changi. This was then followed by the RFI, which took place from November 2012 till Jan 2013, and whole-of-government deliberations that took slightly more than four months.
6. At the onset of the RFI, SSC had laid down several key principles stating that the proposed concepts had to be private sector self-funded and commercially viable. We also indicated that the site does not have special tax exemption status. Should potential bidders suggest any deviations from these principles, they would be required to make their case as part of their RFI submission, with the SSC reserving the right to accept or reject the proposals.
7. During the RFI, the SSC had received seven proposals from six consortia, the majority of which were motorsports-related. The proposed motorsports ideas included a FIA grade 2 or 3 circuit, CIK graded karting circuit, racing academy, drag strip and bonded warehousing, while non motorsports-related ideas included a theme park and watersports marina. Common ideas cutting across the majority of the proposals include retail and F&B.
8. Potential bidders who participated in the RFI told us that unless significant combined conditions were met, the project would not be commercially viable. The key requirements from potential investors include requests for flexibility of lease terms, land use and tax concessions. For example, with regard to flexibility of lease terms, there were requests for extensions of duration and pricing below valuation.
9. Some bidders had also proposed significant concessions in the project for it to be financially viable. For example, some proposals suggested a PPP model whereby the SSC funds part or the entire project for it to be commercially viable.
10. After careful consideration and in consultation with our sister government agencies, we have decided not to proceed with the tender as these significant conditions for the project to be commercially viable are things that the SSC cannot accede to.
11. The majority of the feedback we received from the industry indicates that the project is not sustainable if undertaken solely by the private sector, without SSC's involvement. The amount of concessions, for example, through direct equity stakes, land pricing concessions or tax concessions is not insignificant and not surprising due to the high barriers of entry for the motorsports industry.
12. Taking into consideration these requests and potential outcomes, we need to balance the costs and benefits. The land take and proposed use under this project do not justify an operating model that involves significant government subsidies or concessions. After careful consideration and in consultation with other government agencies, we have decided not to proceed with the re-tender.
13. Following the decision not to re-tender, SSC will proceed to reinstate the land and work with the authorities on the feasibility of early hand over of the land back to the authorities for alternative uses.
14. While we work towards handing the site back to the authorities, SSC is also actively working with the relevant agencies on possible interim uses for the site for motorsports related activities such as karting for the community.