A Scenic Bridge Too Far ...

The recent scenic bridge saga reminds me of the 1977 movie "A Bridge Too Far" - doomed from the very beginning.

I believe the Malaysian Government’s decision to terminate the construction of the scenic bridge is a correct one. If the construction of the scenic bridge was to continue, it would have considerably weakened the Malaysian government's bargaining position further. This is because the progressive accumulation of sunk investment (i.e. the scenic bridge) would have made the Malaysian government even more desperate to secure the Singaporean government's agreement.

Such 'hold-up' problems in situations involving mutually beneficial but ‘relationship-specific’ investments are widely observed and analyzed in industrial economics. In the scenic bridge case, the 'hold-up' may have changed the modus operandi of the negotiations over time. Media reports suggest that negotiations during the Mahathir Administration proceeded with the assumption that negotiations pertaining to the scenic bridge were conducted on a stand-alone basis but subsequently involved bundling of the scenic bridge with other issues (e.g. air space). Such developments reflect the weakening of the Malaysian government's bargaining position over time.

If a rational approach to the problem is adopted, the scenic bridge saga should not be allowed to sour the bilateral ties between the two countries. The initial set-up of the negotiations over the scenic already contained seeds of self-defeat. Both governments should recognize this and seriously consider resuming talks and negotiations on related and other matters. The former includes the possibility of a new full bridge that is mutually beneficial to both countries. Only this time, the officials involved should carefully reflect on the incentive structures in such negotiations.