RM1.7bil loan from China for second Penang bridge

KUALA LUMPUR: Malaysia is set to secure a loan of more than RM1.7bil (US$500mil) from China for the construction of the much-awaited second Penang bridge – the largest for any single project given to a foreign country by China. 

Sources said that a signing ceremony between the Exim Bank of China and Bank Pembangunan would be held this week on the loan. 

It is expected to be witnessed by a minister from China and Second Finance Minister Tan Sri Nor Mohamed Yakcop. 

It is learnt that the Chinese Government was willing to give this loan and favourable interest rates because of the close ties between Malaysia and China. 

The Exim bank, or the Export-Import Bank of China, is a state-run bank that provides financing for export, overseas construction and investment projects and the only arm to issue low-interest loans. The bank is under the direct leadership of China’s State Council. 

It has been reported that Penang’s RM2.7bil second bridge, which will link Batu Maung and Batu Kawan on the mainland, is set to bring spin-offs for the state, especially in the property and transportation sectors. 

The 24km-long bridge, which will be the longest in South-East Asia, is likely to ease the congestion at the present 13.5km-long bridge, which is 21 years old. 

The planned bridge would have a four-lane dual carriageway with two observation platforms at the central span, designed to resemble a pearl. 

Construction of the bridge is expected to begin in early 2008, with the opening scheduled for 2011. It will have six expressways as part of the project. 

The second bridge is among the number of projects under the Northern Corridor Economic Project to turn the state into a regional transportation hub, which includes the setting up of a low-cost carrier terminal at the Penang International Airport and the expansion of the Penang Port. 

These projects, together with the network of roads through the Penang Outer Ring Road and the public transport upgrade, are essential elements that must precede the rollout of other projects in the region. 

Prime Minister Datuk Seri Abdullah Ahmad Badawi is expected to unveil the massive development projects, from modern agricultural plans for Kedah and Perlis to human skills training for northern Perak, on July 30 and July 31 respectively. 

Malaysia was the first Asean country to have formal ties with China. 

It is learnt that during a closed-door meeting between Abdullah and Chinese Premier Wen Jiabao in Naning, China, late last year, the Malaysian leader sounded out the possibility of securing a loan to build the Penang bridge. 

“The Chinese government supported the idea and worked hard to accommodate the request for a substantial loan and at a very attractive interest rate,” the sources said. 

United Engineering Malaysia (UEM) has been appointed to build, manage and operate the new crossing. Sources said that if they went into the market to raise the funds, they would have been charged interest rates of between 5% and 6% per annum. The interest rate for the loan from China is likely to be significantly lower. 

At this week’s press conference to announce the loan agreement, there is a possibility that UEM could also sign a joint venture agreement with China Harbour Engineering Company (CHEC) to build the second Penang bridge. 

CHEC is one of the foremost builders of bridges in the world and has constructed some of the longest bridges in the world.