From Saleh Mohammed
I have touched on this subject before. The then government spent a lot of time in research and analysis to determine the benefits and risks and cost of the high-speed rail (HSR) link, estimated at RM60 billion to RM65 billion.
Strangely, Singapore did not publicly make any estimates.
Now, let’s look at Indonesia. We lost this race. Indonesia unveiled the first operating HSR in southeast Asia in October 2023, four years behind schedule and considerably over budget.
The 142km Jakarta-Bandung journey takes 40 minutes on the HSR but more than three hours by conventional train. However, the price tag might exceed benefits.
The final US$52 million/km price is significantly higher than the global average of US$17 million/km to US$30 million/km, including a US$1.2 billion cost overrun.
It is financed by a loan from the China Development Bank and a fund for the Indonesia-China’s state enterprises consortium (KCIC).
A KCIC official told parliament that the consortium had requested the government to extend its operating rights to 80 years from the initial 50.
A study found that potential demand for HSR comes from existing high-income passengers, but expensive tickets make HSR travel less attractive.
China can make the cost competitive because, domestically, more than 1.7 billion passengers a year use it.
Now back to Malaysia. In January 2019, we remitted USS$15 million in abortive costs to Singapore.
In 2021, it was revealed that the main concern leading to the termination of the project was Malaysia’s suggestion to remove the assets company AssetsCo, which would have been a “best-in-class industry player” appointed through an open tender to provide the means to run and operate the network.
From Singapore’s viewpoint, it was a significant departure from the original agreement, because AssetsCo would have helped to ensure that both countries’ interests were protected.
Malaysia then compensated Singapore S$102.8 million.
In July 2023, MyHSR Corp called for proposals for the development of the HSR project.
“The KL-SG HSR project will bring tremendous benefits to the people, particularly in enhancing and expanding economic dynamism from the Klang Valley to the southern corridor of the peninsula, and eventually to the rest of Malaysia.
“In addition to providing a new travel option that is safer, faster, more efficient and sustainable, the project will help us generate long-term growth and sustainability for the people and the nation,” newly appointed MyHSR chairman Fauzi Abdul Rahman had said.
Potential benefits of the HSR include an economic boost (creating jobs, promoting tourism, and enhancing business opportunities) and real estate development along its corridors. It would also contribute to higher land values, time-efficiency, reduced road congestion and access to Chinese technology.
However, potential drawbacks include high initial outlay, cost expended could be better used for more pressing social needs, land acquisition (will involve displacements), unbalanced development between cities connected and those that are not connected, sustainability risks or effectiveness and affordability. Also, it is likely to carry a very small percentage of the nation’s passengers who travel with no freight.
Not to forget, some dedicated infrastructure will be wasted and some communities will miss out.
Motorised transport and aviation require incremental expansions, but HSR requires high initial cost.
Its environmental benefits are questionable, especially when cars and planes are becoming more fuel-efficient.
Creating higher land value will work against the aim of building affordable houses.
Note that speed is not the most important aspect of travel between two cities, as passengers prefer more leisurely journeys to enjoy the view.
A 350km point-to-point service will take 90 minutes. The domestic service, stopping at intermediate stations and running every half-hour, will take 120 minutes. Then a shuttle train service from Iskandar Puteri will take another 15 minutes to reach Jurong East.
Initially, construction cost was estimated at RM8 billion in 2006 (for a 250km/h train and travel time of 99 minutes) by a public-listed company but the government halted it because the cost was too high.
Later it ballooned to RM72 billion. Now it is RM110 billion due to hidden costs and back on our plate when we have so many things that we need to swallow.
Due to fiscal constraints, the government wants to explore HSR through the public-private partnership (PPP) route over 30 years but can the contractor recoup the investment within that period, not least a realignment to the troubled Forest City?
Even Maybank Investment Bank stated it would be challenging without government involvement. HSRs in China and Japan were either fully or substantially funded by the government.
Remember, the consortium in Indonesia requested to extend its operating rights to 80 years from the initial 50.
Before a final decision is made, there must be checks and balances by public groups and experts. Be aware of total costs, including soft costs.
Detailed economic, social and environmental impact assessment must be carried out in view of higher costs and realignment.
The KVMRT project was “sold” based on construction cost and left MRT Corp saddled with huge losses, while the social impact study was not comprehensive.
Be cautiously optimistic when consultants play around with the “multiplier effect”. Our maintenance culture is also high on the list.
At the end of the day, it should not lead to a bailout at the expense of taxpayers. Have we not learned from the highway toll experience?
Critically, we must look at the risk appetite and spare a thought for our future generation.
“We don’t inherit the Earth from our ancestors, we borrow it from our children,” according to a Native American proverb.
Completing the transport ecosystem in Johor is not enough without considering the exorbitant costs. And what is the income level of Malaysians as a whole?
According to industry insiders, a route connecting KL and Bangkok will make more sense and possibilities to link to other regional HSR lines to form larger networks and more business opportunities but, again, is it the most urgent and important thing on our plate?
Be mindful of the proposed Thai land bridge and the Isthmus of Kra and whether we are too dependent on our southern neighbour. Consider future geo-political developments too.
It may be a milestone for the country but it can also become a millstone and later, a tombstone.
Saleh Mohammed is an FMT reader
The views expressed are those of the writer and do not necessarily reflect those of FMT.