Gov't approve higher cost for SECOND PENANG BRIDGE

Malaysia is one place which will absorb any price increase in building materials. If you can get a contract such as this, there is little to worry about. The profit is definite for the contractor. It is a different scenario for the taxpayers.
Take your sweet time to build. There's no need to worry about inflation. You still get the bridge users to pay you when they cross it years later.

Gov't approve higher cost for SECOND PENANG BRIDGE
10 June, 2008

Asia Pulse - The government has approved an increase in construction cost for the Second Penang Bridge but the mechanism and quantum are still to be discussed, according to UEM Builders Bhd's managing director Ridza Abdoh Salleh.

The increase above the original cost of RM4.3 billion (US$1.3 billion) was to reflect the escalation of costs due to rising prices of oil and building materials, he said at a press conference after the company's annual general meeting here Monday.

Ridza said preliminary work on the construction of the bridge had started and the project was on track to be completed as originally planned by 2011.

"The RM4.3 billion is what we estimated for the project. The government will allow for any price increase should there be any increase in the prices of materials," he said.

According to him, RM200 million has been committed for the construction cost.

UEM Group, the holding company of UEM Builders, was awarded by the government the contract for the construction of the 24-kilometre bridge connecting Penang to the mainland.

The project is being undertaken by UEM Builders in a joint venture with China Harbour Engineering Company Ltd.

"We are working closely with China Harbour on this project," Ridza said.

He said it has been the company's strategy to forge alliances with partners, especially between developers and contractors.

In a volatile business environment, this strategy will help to address issues on risk management and guarantee on projects, Ridza said.

"This concept will help the company to win more projects and gain revenue," he said.

UEM Builders' chairman Datuk Abdul Rahim Abu Bakar said the company was just eyeing tenders but also going for alliances, especially in overseas projects.

Its relationships included joint ventures with major property developer in India, he said during the press conference.

Under an aggressive five-year business plan, UEM Builders is targeting more overseas projects to achieve a balance between local and overseas projects, he added.

UEM Builders had succeeded in securing an order book of more than RM2.3 billion in its financial year 2007, with about 80 per cent from local projects and the balance from international projects.

Currently, its order book of current and potential projects stood at RM4.8 billion with 35 per cent from overseas, Abdul Rahim said.

UEM Builders, he said, expects to strengthen its position in India and the Middle East and was currently pursuing new construction and infrastructure projects in India, Singapore and Indonesia.

According to Ridza, there is potential, especially for projects in Singapore.

After having managed to secure projects worth RM25 million, there was potential to win bigger projects, he said.

Abdul Rahim said the company had been given a contract in Singapore for work on Sentosa Island.

He said the company was also in discussions for projects in Papua New Guinea.

UEM Builders completed its financial year ended Dec 31, 2007, on a strong note with a pre-tax profit of RM182.9 million compared to RM9 million in the previous year.