By Sharen Kaur/Business Times - February 12, 2025
KUALA LUMPUR: Malaysia's proposed high-speed rail (HSR) project could play a crucial role in the success of the Johor-Singapore Special Economic Zone (JS-SEZ), according to a market insider.
The insider said that improved connectivity between Kuala Lumpur and Johor would offer significant advantages, including enhanced labour mobility, which could drive social benefits through increased job opportunities for Malaysians.
Although the JS-SEZ is hailed as a "gamechanger," he expressed concerns that without the HSR, the zone could disproportionately benefit Singapore, creating an unbalanced economic ecosystem.
"Without the HSR, the JS-SEZ risks shifting the regional economic focus towards Johor and Singapore, limiting Kuala Lumpur's potential to emerge as a truly global city," he told Business Times.
He cautioned that while Kuala Lumpur would remain a key domestic hub, its regional and international competitiveness could be compromised.
Covering 3,505 square kilometres in Johor, the JS-SEZ encompasses strategic areas such as the Iskandar Development Region, Forest City Special Financial Zone, and the Pengerang Integrated Petroleum Complex (PIPC). It features business-friendly initiatives, including simplified procedures for Singaporean firms to establish operations in Johor, passport-free checkpoint clearances, and digitised cargo management systems.
The JS-SEZ is expected to create over 20,000 skilled jobs and attract high-value investments in sectors like manufacturing, logistics, digital industries, healthcare, and education.
"This will lead to an increase in road users over time, eventually resulting in congestion. In the absence of the HSR, Malaysia will need to invest heavily in alternative infrastructure and strategic initiatives to strengthen Kuala Lumpur's global standing and offset these challenges," he added.
Wan Agyl Wan Hassan, founder and chief executive officer of MY Mobility Vision Sdn Bhd, said that reducing travel time between key economic hubs—Kuala Lumpur, Johor, and Singapore—would significantly boost productivity and stimulate the development of regional economic clusters.
Without the implementation of the HSR, travel times along the North South Expressway are expected to rise due to increased economic activity and population growth driven by the JS-SEZ.
To address this, alternative measures such as upgrading public transport, enhancing road infrastructure, and introducing traffic management strategies may be required. However, these solutions are unlikely to fully match the efficiency and benefits offered by a HSR system.
"We're talking about the potential to attract FDIs, create dynamic business districts, and enhance our tourism appeal. However, the real challenge is ensuring that we adapt best practices. Just think of Japan's Shinkansen or China's HSR in our unique local context, not just replicating a foreign model," he told Business Times.
Wan Agyl cautioned that failing to invest in HSR infrastructure could put Malaysia at a competitive disadvantage in the region.
"In my view, if we don't invest in HSR, we risk falling behind our neighbours on several fronts. Modern HSR systems not only speed up travel but also create economic hotspots around station hubs, attracting investment and driving trade efficiencies.
"Without such infrastructure, Malaysia might be seen as less competitive, making it harder to attract both domestic and foreign investors. For tourism, reliable and fast connectivity is increasingly a deciding factor for travellers. The lack of HSR could therefore mean missing out on substantial economic spillover benefits and a diminished role in a rapidly modernising region," he said.
HSR 'revival'
Hailed as a "marquee project," the Kuala Lumpur-Singapore HSR is envisioned as a strategic development aimed at reducing travel time between the two countries to just 90 minutes.
The HSR, which was initially proposed 23 years ago by YTL Group, is planned as a 350 km double-track route with eight stations. Johor will feature the longest stretch of the alignment, covering 182 km out of Malaysia's total 328 km, with stations expected in Muar, Batu Pahat, Iskandar Puteri, and potentially Forest City.
Johor will also host two key maintenance facilities: a main depot north of the Iskandar Puteri station for general HSR train upkeep and a heavy maintenance base near Muar station responsible for maintaining the track, power supply, and signalling systems.
The project 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.
The Malaysian and Singaporean governments last year agreed to revive the mega rail project.
The project is nearing fruition, with three consortiums reportedly shortlisted: YTL Construction Sdn Bhd-SIPP Rail Sdn Bhd, Berjaya Rail Sdn Bhd-Keretapi Tanah Melayu Bhd-IJM Construction Sdn Bhd, and a Chinese consortium led by state-owned China Railway Construction.
Doris Liew, economist and assistant research manager at the Institute for Democracy and Economic Affairs (IDEAS), suggested that a well-structured public-private partnership (PPP) would be the best approach to ensure the project's long-term viability and sustainability.
Relying solely on private initiatives for such a large-scale project is risky due to the significant investments involved.
A robust PPP model can balance financial sustainability with public value, Liew told Bernama.
She noted that the success of the HSR project would also depend on the financial resilience of private sector partners involved.
Emphasis on balanced planning
The revived Kuala Lumpur-Singapore High-Speed Rail (HSR) project is projected to cost around RM70 billion, marking a significant reduction of 30 to 35 percent from the previously estimated RM110 billion, according to market insiders.
This revised figure factors in the updated railway alignment within Malaysia, along with adjustments in the number of stations and trains required for the project.
Wan Agyl noted that while project delays often lead to cost escalations due to inflation, rising land prices, and technological advancements, the notion of a "do now or never" approach oversimplifies the complexity involved.
"Rushing into a project without solid feasibility studies since we need a new study due to the many years of delay, clear political consensus, and secured financing can lead to even more serious cost overruns and execution failures. Instead, we need to fast-track essential preparatory work. In other words, we must strike a balance between urgency and due diligence so that when we move forward, we do so on rock-solid ground," he said.
Despite both Malaysia and Singapore signalling readiness to move forward with the project this year, construction may not begin for at least another two years.
"The fact that we haven't yet secured a formal commitment from Singapore and haven't even kicked off discussions on our side should be seen as a sign of prudence rather than reluctance. Both nations need to ensure that all technical, financial, and political details are ironed out before making any binding commitments via bilateral agreement.
"For cross-border projects of this scale, aligning differing regulatory and operational standards is a lengthy process. This cautious approach allows us to conduct deeper feasibility studies and stakeholder consultations. It's not a rejection of the project but a necessary phase to build a robust, mutually beneficial framework. We have done it before and I believe it's not a big issue for us to go through the process again," he said.
Wan Agyl explained that this projected timeline reflects deeper structural challenges beyond bureaucratic delays.
"Firstly, comprehensive feasibility studies are needed to tailor the project to our local realities, ensuring that environmental, economic, and social impacts are fully understood. Then there's the issue of political and bureaucratic inertia. Malaysia has seen large projects stall due to shifting priorities and slow decision-making," he said.
He further emphasised the complexity of cross-border collaboration with Singapore, highlighting the need to align technical standards, regulatory frameworks, and financial structures.
"These delays, while frustrating, are critical to laying a sustainable and accountable foundation," he said.
Wan Agyl said that an operational HSR could be a catalyst for growth across multiple sectors.
Shorter travel times would streamline business interactions and foster the creation of new economic corridors, making Malaysia a magnet for both domestic and international investors, he said.
"For tourism, HSR would offer an attractive, efficient way for visitors to experience our rich culture and landscapes, spurring growth in hospitality, retail, and services. Moreover, HSR stations can serve as nuclei for urban renewal and transit oriented development, spurring smart city initiatives and sustainable development.
"In short, HSR isn't just a transport project; it's an economic corridor development and an integrated strategy for national economic development," he said.
