It is suppose to reduce build cost and build rate by 20% and 30% respectively. I checked between that planet and another planet with no bonuses and the build rate was more BUT the cost was reduced so that part was fine, so there is only a build rate problem.
Now, it might be a bit confusing but both of the rates are in red which could assumed to be bad so they would have to go up but I just saw it as red reduce and green increase which works here so maybe thats why the mistake care along.
EDIT: I just thought about it and the 30% shoudl be green, for build rate to increase build rate. When I think about penal colony, I think about free labor so it may say it reduces cost and reduces build rate but I think it should actually increase build rate.