Gerbang Perdana Case Study
The Mahathir government’s decision to build the ‘scenic’ half bridge was an attempt to use sunk costs as an economic strategy. By building the first half of the bridge and turning the expenses involved into a sunk cost it would encourage the Singaporean government to support the construction of the second half making the bridge a success.
The relationship between Malaysia and Singapore in the past has been rocky to say the least. This is because of a separation in 1965 that was due to political differences, racial tensions, settlement agreements regarding areas in and around the Straights of Johor, and many more minor disputes such as maritime boundaries, delivery of fresh water to Singapore, etc. By constructing the half bridge the Malaysian government was leaving national pride on the line through having a large architectural monument in their name remaining incomplete. Because of the previous international agreements involved, disputes between politicians, and the economic strategy Malaysia attempted to use, the two countries never came to an agreement on the bridge and the bridge was left incomplete.
In my personal opinion, this was a reckless and desperate attempt to accomplish something that was not necessary. Alternative actions could have been taken initially to prevent Malaysia’s unnecessary expenditure of government finances. One strategy that could have been utilized instead, which should have been attempted before the high risk strategy of sinking the cost of the first half, might have included international trade talks regarding a balance of benefits and prior agreements with Singapore. This could have saved Malaysia the cost of the first half of the bridge and potentially improved the long standing rocky relations between the two countries. By attempting to use this economic strategy Malaysia harmed themselves and accomplished almost nothing but losing face. I do not suggest that any government follow this example under almost any circumstance. This may be an acceptable strategy in a desperate scenario after all other strategies have been exhausted.
The relationship between Malaysia and Singapore in the past has been rocky to say the least. This is because of a separation in 1965 that was due to political differences, racial tensions, settlement agreements regarding areas in and around the Straights of Johor, and many more minor disputes such as maritime boundaries, delivery of fresh water to Singapore, etc. By constructing the half bridge the Malaysian government was leaving national pride on the line through having a large architectural monument in their name remaining incomplete. Because of the previous international agreements involved, disputes between politicians, and the economic strategy Malaysia attempted to use, the two countries never came to an agreement on the bridge and the bridge was left incomplete.
In my personal opinion, this was a reckless and desperate attempt to accomplish something that was not necessary. Alternative actions could have been taken initially to prevent Malaysia’s unnecessary expenditure of government finances. One strategy that could have been utilized instead, which should have been attempted before the high risk strategy of sinking the cost of the first half, might have included international trade talks regarding a balance of benefits and prior agreements with Singapore. This could have saved Malaysia the cost of the first half of the bridge and potentially improved the long standing rocky relations between the two countries. By attempting to use this economic strategy Malaysia harmed themselves and accomplished almost nothing but losing face. I do not suggest that any government follow this example under almost any circumstance. This may be an acceptable strategy in a desperate scenario after all other strategies have been exhausted.