Thursday, August 20, 2009

Analysts: Proposed RM44bil Malacca Bridge will be tough to see through

The proposed RM44bil bridge connecting Indonesia and Malaysia has received lukewarm response from the analyst fraternity.

“It will be tough to see a project of this magnitude through,” Jeremy Goh, construction analyst at OSK Research, said.

At RM44bil, the proposed 48.69km bridge, poised to be one of the longest in the world, will cost much more than the Government’s current “pump-priming highlight project” – the Klang Valley light rail transit extension/upgrade, which together with new lines is worth RM30bil to RM35bil.

“I doubt the rate of returns can cover the huge cost,” Goh said, questioning also the urgency to link human traffic between the two countries.

According to reports yesterday, private firm Straits of Malacca Partners Sdn Bhd (SOMP) had proposed to build the bridge connecting both countries.

The project idea was mooted during former prime minister Tun Dr Mahathir Mohamad’s reign in 1995 but was shelved because of the Asian financial crisis in 1997/98.

Proposals to both governments are said to have been submitted, with SOMP saying that it hopes to secure approvals “by the end of this year or early 2010.”

China’s Exim Bank had said it planned to support the project and, according to its policy, could provide funding of up to 85%.

CIMB analyst Sharizan Rosely said “it will take some time” for feasibility studies on the proposed mega project to be completed.

“If it does go through, it will be a bonus for the construction sector,” he said, noting that “if you wanted to build the longest bridge in the world, you needed extremely professional contractors and consultants.”

Another analyst who tracks the regional construction sector believes that the project “will have difficulties kicking off.”

“It’s too complex. Here you have a bridge which will cross the Straits of Malacca, one of the busiest maritime shipping lanes in the world, at the narrowest point; the construction may pose navigational safety issues.

“And the project involves two governments, making it more complicated,” he said.

“If you want to build an infrastructure of this stature, you need to question the real need for it – this is a huge project which needs a lot of deliberation.”

Malacca Chief Minister Datuk Seri Mohd Ali Rustam was quoted yesterday as saying that the proposed bridge was a “viable and profitable” project and expected to boost the economies of both countries.

“Malacca has a population of 800,000 and has 40,000 vehicles, including buses and lorries, entering the state daily.

“In Sumatra, where the bridge is linked through Dumai, there are 70 million people and 10% are rich. They have money and come to Malacca for health tourism. They are also eager to come to Malaysia for their holidays,” he was quoted as saying.

Based on a viability study on the proposed Straits of Malacca crossing to Dumai by SOMP, it was found that traffic per day would stand at 15,000 vehicles.

Toll charges, meanwhile, were expected to be either US$75 (RM266) or US$85 (RM301) per vehicle based on the current fare of RM100 per person (one way) charged by ferry operators.

Source : STAR
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