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Monday, November 14, 2016

Labuan-Sabah bridge will interest China, Japan, says economist

Economists say construction of such a bridge will only be feasible with external financing.

Long time rivals China and Japan would be interested in constructing the proposed Labuan-Sabah bridge for geopolitical purposes rather than mere economic gain, says economist Hoo Ke Ping.

“China is aggressive in wanting to expand its influence in the region, but so is Japan, which is flushed with cash,” he told FMT when commenting on the feasibility of such a bridge.

Last week, Minister in the Prime Minister’s Department Abdul Rahman Dahlan revealed that a comprehensive discussion on a possible bridge had been set for January next year, noting that such a project would be possible via a public-private partnership.

Hoo said given the current economic climate, this was only possible if private companies from either China or Japan financed the bridge’s construction at the cost of granting land around the area for development and a lengthy toll concession.

On the other side of the South China Sea, Chinese and Japanese railway companies are also eyeing the RM50 billion 350km Kuala Lumpur-Singapore High Speed Rail project.

Beyond the construction of the bridge, Hoo said Putrajaya must also do its part to ensure the sustainability of the project.

“The government must fully restore Labuan’s duty-free status to attract international tourists landing in Kota Kinabalu, Miri in Sarawak and Bandar Sri Bengawan in Brunei.”

On Nov 1, the Customs Department enforced new rulings for Labuan, effectively restricting the sale and purchase of duty-free items, such as alcohol and cigarettes, a move which has been criticised by several Labuan chambers of commerce.

Hoo said the proposed bridge would complement the direct flights from China to Kota Kinabalu and the Pan Borneo Highway which was currently under construction.

“If there is enough pull and accessibility to Labuan, then the proposed bridge would definitely be feasible,” he said, adding that the cost of the Labuan-Sabah bridge should not be borne by the government.

Universiti Tun Abdul Razak’s Barjoyai Bardai said the bridge was a long-term investment as Labuan was not mushrooming at the moment and that the project would require external financing.

He told FMT that it was most likely a Chinese company would be interested in constructing the bridge as it would also want to develop the island.

“If the project is going to be funded by a foreign company then it is okay, but if the government wants to fund it, then it is a cause for concern as Putrajaya should focus on other catalysts for growth.”

Barjoyai told FMT that the government should focus on developing the tourism sector, especially in the health and education sectors which had strong potential for growth and were more widespread throughout the country.

Earlier this year, Health Minister Dr S Subramaniam revealed that Malaysia’s health tourism sector drew 850,000 medical tourists last year, generating revenues of more than RM900 million, while the Higher Education Ministry had set a target of having 200,000 foreign students studying in Malaysia by 2020.

Last week, while speaking on the proposed bridge, Rahman said prior to this, the Economic Planning Unit, which he heads, had received a number of project proposals from various parties, but many of them were either not feasible or depended too heavily on government funding.
“I will initiate talks between the Sabah and federal governments and Labuan local authority leaders on the project,” he was quoted as saying.

- By Robin Augustin

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