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Jakarta Post
The Jakarta Post
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China's EXIM bank to fund most of Malacca-Indonesia bridge project

  • Yong Yen Nie and Wahyudi Soeriaatmadja

    The Jakarta Post

Kuala Lumpur/Jakarta | Fri, October 18, 2013 | 11:07 am

A controversial proposal for an almost 50km-long bridge from Malacca in Malaysia to Dumai in Indonesia is back on the table, with funding lined up from China's Export-Import Bank.

Feasibility studies are starting again for the bridge over one of the world's busiest shipping routes, the Strait of Malacca. The project was previously thwarted by the regional economic crisis and then by environmental concerns.

Now the Malacca state government has re-appointed Strait of Malacca Partners to be the master planner and builder of the bridge, estimated to cost 44.3 billion ringgit (US$14 billion).

"The project is definitely on, but it will take time as we are still at the feasibility stage," Lim Sue Beng, the private firm's managing director, told The Straits Times on Wedneday. He said approval from the federal government is still needed.

The bridge is to span 48.7 km, with an additional 71.2 km-long expressway from Pulau Rupat, where the bridge ends, to Dumai in Riau province, which is known for its oil palm plantations, including some owned by Malaysian companies.

The bridge will make it easier to transport raw materials from Indonesia's Sumatra island to Malaysia while opening new markets for businesses in both countries.

Lim said the Exim Bank, an equity partner in the project, has agreed to loan 85 per cent of the bridge's cost. The rest will come from regional sovereign funds and private investors.

The partners, he said, plan to charge motorists $80 each way.

China's Exim Bank could not be reached for comment. Officials at Malaysia's Economic Planning Unit, which oversees national projects, did not respond to The Straits Times' queries.

However, Dr Mohd Hazmi Mohd Rusli, a researcher from Universiti Sains Islam Malaysia who has done studies on the bridge proposal, said planners will have to figure out the impact on the environment and on shipping.

Also, he said, economic benefits beyond palm oil are limited. "Unlike Malacca's proximity to Kuala Lumpur or even Singapore, Dumai is not near any of Indonesia's major cities... The bridge is still not viable enough yet."

The idea of a bridge between the two countries was first mooted in 1996 by then Malaysian Prime Minister Mahathir Mohamad when he met Indonesia's President Suharto in Kuala Lumpur. Then came the 1997 Asian financial crisis. Over the years, the Malacca government has tried but failed to revive it.

Malacca Chief Minister Idris Haron said the project was discussed at a chief ministers and governors' forum for Indonesia, Malaysia and Thailand recently.

Some Indonesian counterparts fear this bridge might rival another29-km bridge linking Java and Sumatra, called the Sunda Strait Bridge. Currently, most goods are manufactured in Java and shipped to Sumatra by sea via the Sunda Strait.

Dumai's mayor Khairul Anwar said a bridge across the Malacca Strait will benefit Malaysia at the expense of Indonesia. He has urged the Indonesian government to hasten the construction of the Sunda Strait bridge.

"We must have that bridge first or at least the same time as the Malacca bridge," he told The Straits Times in a phone interview.

"Otherwise Malaysian products will have an advantage in this region and their products will flow in and beat ours."

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