RM70bil for high-speed bullet train project?

 By Sharen Kaur/Business Times - April 19, 2024 

The Kuala Lumpur-Singapore high-speed rail (KL-SG HSR) project might tally up to about RM70 billion, a notable decrease of around 30 to 35 percent from the previously reported RM110 billion, according to market insiders.

KUALA LUMPUR: The Kuala Lumpur-Singapore high-speed rail (KL-SG HSR) project might tally up to about RM70 billion, a notable decrease of around 30 to 35 percent from the previously reported RM110 billion, according to market insiders.

"No definitive cost estimate has ever been provided for the HSR project. The RM70 billion figure is a projection based on factors such as the length and alignment of the railway line, as well as the number of trains and stations required," said an insider.

MyHSR Corporation, the government-owned entity overseeing the HSR's development, received concept proposals from seven local and international consortia by the January 15, 2024, deadline. The RFI was held in order for the Malaysian government to assess the private sector's ability to fully finance the project without state funds or guarantees. 

Despite efforts to assess the private sector's capability to finance the project independently, there seem to be three shortlisted consortiums, and they are seeking some form of government financial support. 

The three shortlisted consortiums are YTL Construction Sdn Bhd-SIPP Rail Sdn Bhd, Malaysian Resources Corp Bhd-IJM Construction Sdn Bhd-Berjaya Rail Sdn Bhd-Keretapi Tanah Melayu Bhd (MRCB-IJM-BRail-KTMB), and a Chinese consortium led by state-owned China Railway Construction.

The MRCB-IJM-BRail-KTMB consortium has reportedly requested in its proposal that the government compensate it if the number of passengers falls below a minimum number.

The YTL-led group has also requested some form of government financial support in its bid to manage the mounting costs of building the line.

"This contradicts the government's stance that it will not fund the 350-km-long line. Of the shortlisted consortia, only the China Railway-led consortium possesses robust finances to undertake the project via private funding," said the insider.

Dr. Yeah Kim Leng, a Professor of Economics at Sunway University Business School, indicated that the mega rail project has edged closer to fruition with MyHSR shortlisting three consortiums. 

However, he cautioned that numerous obstacles must be overcome before the project commences, including clarifying funding sources, assessing the project's feasibility, and determining the extent of government support.

Private financing hinges on commercial viability, particularly concerning financing, given the maturity of high-speed rail technology in China, Japan, and Europe, Yeah said. 

Yeah emphasised that if economic viability and financing feasibility challenges are resolved, the mega project could significantly benefit the Malaysian economy by the end of the decade. 

Transport Minister Anthony Loke Siew Fook said early this month that the concession method used for private companies to build highways could be emulated for the HSR.

He said the HSR remained an integral project that could be an economic changer for the country.

"I don't see why we must say no, but it should not be a government-led project. Instead, the private sector can contribute capital and carry on the project," he said during the Keluar Sekejap podcast with Khairy Jamaluddin and Shahril Hamdan on April 5.

The 330-350 km-long project, first mooted over 20 years ago by YTL Group, resulted in a legally binding agreement signed in December 2016, with the aim of having the line operational by 2026.

However, it was put on the back burner following several delays at Malaysia's request and the eventual lapsing of an agreement in December 2020.

Malaysia paid more than S$102 million in compensation to Singapore for the project's termination.

Talk of reviving the project intensified following the general elections in 2022 and Prime Minister Datuk Seri Anwar Ibrahim's visit to Singapore early in the new year, where he met with Singaporean leaders.

KGV International Property Consultants executive director Sr. Samuel Tan said that from the surface, it appears that only the Chinese consortium possesses the financial capacity to undertake such a massive project, estimated at RM70 billion or more.

"Whatever the case, this KL-SG HSR project, when operational, will transform the entire transportation landscape in Malaysia. The country will be part of the big jigsaw within the Pan Asian Railway Network, possibly starting from Singapore, Malaysia, to Indo-China, then to China, and finally to Europe.

"With that in place, more investors will be keen to invest here, as travelling by rail is seamless and yet an experience to be enjoyed," he said.

Source: https://www.nst.com.my/business/corporate/2024/04/1039838/rm70bil-high-speed-bullet-train-project