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M'sian central bank urges Dhaka to be cautious about KL's proposal
Publication Date : 28-02-2013
The Malaysian central bank has advised Bangladesh to be cautious about the Malaysian proposal for constructing the Padma bridge, saying there are doubts about the proposal's financial viability.
Finance Minister AMA Muhith has taken a strong stance against the Malaysian proposal after getting the letter from the bank, said officials at the finance ministry and the Bridges Division.
However, the communications ministry has been trying to persuade government high-ups to accept the Malaysian proposal.
A unit of the Malaysian central bank recently wrote to the Bangladesh Bank (BB) about the proposal made by S Samy Vellu, special envoy of the Malaysian prime minister.
In the letter, the Malaysian central bank suggested that Bangladesh should engage intelligence agencies to enquire about the proposal, if necessary, said sources.
The whole content of the letter could not be known.
The BB forwarded the letter to the finance minister last week. The contents of the letter were discussed in several meetings between the finance minister and government high-ups, said the sources.
Talking to reporters prior to his departure for Washington on February 24, the finance minister expressed his reservations about the Malaysian proposal.
He said there have been differences of opinion between Malaysia and Bangladesh over the project's financing. Initially, Malaysia said US$2.9 billion would be required to complete the project but now it says US$3.8 billion will be needed to build the bridge, Muhith told reporters on the day.
“Apart from that, there are even bigger differences which I will disclose after the government makes its decision on the proposal,” he said.
The finance ministry sent a proposal to the Prime Minister's Office this week, making recommendations to reject the Malaysian proposal and construct the Padma bridge with the government's own resources.
In the meantime, the communications ministry also sent a proposal to the PMO, suggesting that the government should accept the Malaysian proposal.
The differences of opinion between the finance and the communications ministries over the proposal have put the government in a dilemma, said a finance ministry official.
On February 20, Samy Vellu presented the Malaysian proposal to Muhith in a meeting. Later, the communications ministry held several meetings with the Malaysian side led by Vellu.
According to the proposal, Malaysia will implement two components of the project - river training and construction of the main bridge - at a cost of US$2.3 billion. Earlier, the government estimated the cost for the two components below US$1.8 billion.
The proposal said Malaysia will recoup the cost in 26 years, and will take 70 per cent of the total toll collection, leaving the rest for Bangladesh.
A Chinese company will construct the bridge, as there will be no open bidding, it said.
Bridges Division officials said Malaysia will be able to collect more than US$6 billion in tolls against their investment of US$2.3 billion if the bridge is built according to the proposal.
Other terms and conditions in the Malaysian proposal have many loopholes that prompted local experts to give negative opinions about the proposal, said sources.