KL to proceed with $2.7b bridge to Thailand

KL to proceed with $2.7b bridge to Thailand

KUALA LUMPUR (AFP): Construction of a 10 billion ringgit (US$2.7 billion) land bridge to southern Thailand will go ahead despite a weakening ringgit, Malaysian Prime Minister Mahathir Mohamad said yesterday.

Mahathir described the bridge as "very viable" and a way to reduce congestion in the Malacca Straits, one of the world's busiest waterways passing between Malaysia, Indonesia and Singapore.

The proposed bridge would link northern peninsular Malaysia, the northeast Langkawi resort island and southern Thailand with roads, railways and gas pipelines.

"We plan to build a land bridge so that we don't have to go down and up the Straits of Malacca," he was reported as saying by Bernama news agency at Langkawi.

The proposed bridge would also help avoid oil spills in the strait and save the hassle and the money needed to clean up the mess, he added.

The project will be carried out jointly with Indonesia and Thailand.

"The fact that our ringgit has depreciated does not mean that we cannot build this land bridge," Mahathir said.

The Malaysian ringgit sank to a new low of 3.7300 to the US dollar late Thursday before recovering to close Asian trading at 3.7050. The local unit had tumbled more than 40 percent since regional turmoil erupted in July.

Analysts said the bridge project was badly timed given the region's currency crisis which has forced Indonesia, Thailand and South Korea to seek multi-billion-dollar bailouts led by the International Monetary Fund (IMF).

"The project may make some sense but the timing is way off. Where is the money going to come from? I doubt if Thailand will agree to it," said the head of research at a local brokerage who declined to be named.

A senior analyst with a foreign brokerage described Mahathir's comments as "political talk" and said he doubted if the project would be implemented.

"Funding is going to be a major problem. The region is facing a liquidity crunch and both Indonesia and Thailand have received bailout packages led by the IMF," he said.

"The project may also not be economically viable considering the cost of loading and unloading and the amount of manual workers needed to operate the railways and port efficiency may not be adequate," he added.

One local research chief dismissed rumors that news of the bridge project contributed to continued falls in the ringgit.

"The market has got wind of it already. It is widely known and would not have any impact on the ringgit," he said.

The research chief declined to comment on the viability of the project as no information was given.

"We really don't know the details of it like the companies involved, the returns on investment ... No one can make any sensible comments except to say that it is bad timing," he said.

"The issue here now is not in the projects but in the credibility of the government," the frustrated research chief added.