Bridge of no economical returns


  • Business
  • Saturday, 19 Oct 2013

It will likely benefit Dumai more than Malacca

NEWS of a bridge connecting Indonesia and Malaysia across the Straits of Malacca seems to be like a horror story with multiple sequels.

You might have thought once the villain had perished in one movie, it will be the end of it. But he will be spawned back to life in the next instalment.

But the reason the villain gets resurrected gets weaker with each subsequent sequel.

That analogy is, to me, fitting when describing the proposal to build a bridge connecting Malacca and Dumai in Indonesia.

The audacious proposal is, however, not new. The original idea, according to reports, was first mooted in 1995. The Asian Financial Crisis killed any hopes of that bridge being built.

It was then in 2006 that the idea spawned again. This time, proponents of the project said the bridge was technically feasible. Attached with the proposal to the Economic Planning Unit was a study on how economic activity between Malaysia and Sumatra will be stimulated once the bridge is built.

The cost of building that bridge then was estimated at RM44.3bil.

Reports say that the Export-Import Bank of China had agreed to finance 85% of the total cost of building the bridge. Nothing materialised.

And just this past week, the Malacca government announced it is planning on reviving the 48.7 km bridge.

Honestly, building the bridge will be the biggest waste of money in the history of Malaysia.

There will be environmentalists who will argue their case against the project for the damaging impact it will have but the economics of it all really doesn’t make sense.

First of all, the project cost will be much higher than the RM44.3bil mooted in 2006. Then there is the rationale that it will be connected to Sumatra and that will spur economic activity.

The thing is that it will be connected to Dumai in Sumatra. It’s been described to be like Kuah in Kedah, which is one of the points linking the ferries to Langkawi.

I have been to Kuah. It’s a nice seaside town. Great seafood but is that a reason why tens of billions of ringgit should be spent on a bridge to connect to such a town?

If the money is spent and the bridge is built, it will really benefit Dumai more than Malacca or Malaysia. I don’t think the people from Dumai or the surrounding areas have the big enough tourism money to spend in Malacca to justify a bridge. Plus what is the economic advantage Dumai has or can contribute to Malacca and Malaysia that a bridge is needed?

Although there will be people willing to fund the bridge doesn’t mean it deserves to be built. If a state guarantee on the project is given, it then can be construed as an implicit government backing. The Government already has enough economic problems and why even back a project that is going to burn a hole in the current account and cause rating agencies to really question the financials of the Government?

Once such a guarantee is made, then people will be willing to fund any project. But I question the return on investment on Malaysia’s behalf and I doubt any reasonable rationale can justify taking such a risk.

Then there will be complaints from shipping companies. The Straits of Malacca is the busiest waterway in the world and given the traffic and a wall of concrete in the way of supertankers and aircraft carriers, I shudder to think of the consequences.

On the surface, the entire proposal is an excise in futility. It’s a monumental waste of money. It will literally be a bridge to nowhere.

I do hope that the reaction from Works Minister Datuk Fadillah Yusof remains the status quo when it comes to the project. It was reported that when contacted, he said he was yet to be briefed on plans to revive the project.

Business editor (features) JAGDEV SINGH SIDHU thinks it’s better to spend the money on a third link to Singapore or a MRT network in another city in Malaysia.

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Business , bridge , indonesia , sumatra

   

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