The Export-Import Bank of China has given Malaysia a US$800 million loan for the construction of a second bridge linking northern Penang island to the peninsular.

The loan is the largest amount of financing given by China for a single project in a foreign country, reflecting the close bilateral ties between the two nations, Bernama news agency reported.

The loan will be repaid over 20 years with a favourable three percent interest rate, it said.

The signing between the Exim Bank, one of China's three major policy lenders, and Bank Pembangunan Malaysia, a development bank, was witnessed by Second Finance Minister Nor Mohamed Yakcop and China Commerce Minister Bo Xi Lai in the administrative capital of Putrajaya.

Linked to Umno

The 826 million-dollar bridge project was launched last year by Prime Minister Abdullah Ahmad Badawi to boost Malaysia's economy in the northern region.

Penang is considered Southeast Asia's "Silicon Valley" as it houses hundreds of IT-related companies including Dell, Intel and Motorola.

Construction of the planned 24-kilometer bridge linking the town of Batu Maung on the island and Batu Kawan on the mainland is expected to be completed by January 2011.

Construction of the bridge will be undertaken by United Engineers (Malaysia) Bhd (UEM) - a major infrastructure player linked to the ruling Umno - in a joint venture with China Harbour Engineering Company.