Chinese firm wins $3.2b road, tunnel job in Malaysia

KUALA LUMPUR (REUTERS) - Chinese firm Beijing Urban Construction Group (BUCG) has won the bidding for road and tunnel projects worth 8 billion ringgit (S$3.2 billion) in Malaysia's Penang state, officials said on Friday.

BUCG, one of China's largest construction firms and the builder of the iconic Bird's Nest stadium used for the 2008 Olympic Games, has partnered with Malaysia's Consortium Zenith to build three highways in Penang and an underground tunnel linking the island to the peninsula.

It is the second large Chinese-led development in Malaysia this month as Beijing deepens its economic ties with the Southeast Asian nation.

Chinese firms will invest more than US$1.6 billion (S$2 billion) to build steel, aluminium and palm oil processing plants and expand a port in a new industrial zone on the Malaysian east coast, Malaysia announced on Feb 5.

The Penang projects aim to ease traffic congestion on the island, a key issue for voters - along with rising property prices and cost of living - in national elections due to take place within weeks.

The northeastern state of Penang, one of four run by opposition parties in Malaysia, has drawn increasing foreign direct investments (FDI) in recent years.

Penang was the largest state contributor to Malaysia's FDI between 2010 and 2011, accounting for nearly a third or 17.7 billion ringgit during the period, the state says.

The joint venture, which won out of four parties that submitted proposals, will be paid with 110 acres (45 hectares) of reclaimed land as well as future revenues from tolls, state chief minister Lim Guan Eng said.

The underground tunnel will be the third link to Penang, following a second 24km bridge that will be completed in September. China Communication & Construction Co, a unit of China Communications Construction Co, is one of the contractors for the 4.5 billion ringgit bridge.