Archived press release

Bakun dam: foreign investment unlikely

8 April 1997

Ekran Berhad, the leading developer of the controversial Bakun Hydroelectric Project in Sarawak, Malaysia [1], is considering not offering 10% of shares to foreign investment due to rising concern about the financial returns of the project.

As well as the potential environmental and social impacts of the project, the Bakun HEP has been branded as a "high risk" investment by financial analysts [2] due to problems such as overrun costs, an uncertain long term performance and a risk of dam failure.

According to the Asian Wall Street Journal [3], Ekran Berhad accepts that a lot of time and money would need to be spent on encouraging foreign investment in this project.

As part of an international lobbying effort, Friends of the Earth along with other groups [4],sent letters to hundreds institutional investors and fund managers in February 1997 warning them of the financial, environmental and social risks involved in the Bakun project.
J L Parrott of the Commercial Union in response to the letter said:

"We continue to consider that the project has too many high risk features to make BHC (Bakun Hydroelectric Corporation) or Ekran Berhad attractive investments at the present time"

Sarah Tyack of Friends of the Earth said:

"It is clear that major institutional investors and financial analysts are beginning to realise that an investment in this Bakun Hydroelectric project is not only unethical but carries a high financial risk due to expected long-term technical problems and overly optimistic performance forecasts. Ekran must take this luke warm response from potential foreign investors as a reflection of the lack of confidence in this project as a viable enterprise."

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[1] The Bakun HEP, which is due for completion in 2002, will be constructed across the Balui River in Sarawak. It will supply electricity to the Malaysian Peninsular 650 km away via under water transmission cables. 70,000 hectares of tropical rainforest are being cleared and nearly 10,000 indigenous people forcibly resettled to make way for the reservoir The Bakun HEP is a highly controversial project which has been criticised for its potential environmental and social impacts by human rights, indigenous and environmental groups in Malaysia and worldwide since it was first proposed in 1962. The project was revived in the 1980s, but was shelved in 1990, a decision which the Malaysian Prime Minister, Dr Mahathir, said was "proof that Malaysia cares about the environment". The Prime Minister then supported the move to take it forward again in 1992.

On March 26th 1997, villagers and long house folk who will be resettled to make way for the RM13.6 billion Bakun hydro-electric dam project in Belaga district declined the resettlement compensation package offered by the authorities.

Committee chairman Bato Bagi said the committee adopted a resolution to reject the land acreage and other benefits offered by the authorities as they were not sufficient to compensate the natives, who will have to be resettled.

"We have to make a stand to reject the resettlement offer as the size of the land and housing scheme to be allocated to us are not enough to sustain our livelihood and daily needs.

[2] "Bakun High Dam: High Risk?" Published by Delphi International Ltd, 36 Great Queen Street,London WC2B, Tel: 020 7404 2963.


[3] "Ekran May Pull the Plug on Bakun's Foreigner IPO" - Asian Wall Street Journal, April 7th 1997.

[4] Groups that are working on the international investor campaign as well as Friends of the Earth are: Berne Declaration (Switzerland), The Ecologist, The European Committee for Human Rights in Malaysia and Singapore, FERN (Belgium), Forests Monitor, and the International Rivers Network (USA).

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