Will the SG-KL High-Speed-Rail Project be Derailed?

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The newly minted Pakatan Harapan coalition government of Malaysia has slammed the brakes on the project for high-speed-rail line between Singapore and Kuala Lumpur. The announcement comes soon after Prime Minister Lee Hsien Loong visited his Malaysian counterpart Tun Dr Mahathir Mohamad in Putrajaya for 30 minutes yesterday.

The move is underpinned by two factors in Malaysia – the need to cut down government expenditures and to review all projects signed by the previous administration. However, the larger question is, why didn’t PAP ascertain the risks associated with the HSR project at the onset? What are our risks given that there’ll be delays or if it is eventually canned?

HSR Project Reviewed

Azmin Ali, the newly appointed Economics Affairs Minister said that he’ll review all projects signed by the previous administration. “Certainly, we need to renegotiate certain terms. And we want to see whether the whole process was transparent or otherwise,” he said.

Dr Mahathir Mohamad in the run-up to the elections said that he’ll review the HSR project due to financial constraints as the country is already mired in RM 1 Trillion of national debt. “We need to do a study whether it is feasible or not, because we don’t have the money and we have to borrow money, and that is not something the Government can bear at this moment. “We have to know whether we really need this HSR or not,” he said.

The HSR project was mooted by embattled former prime minister of Malaysia Mr Najib Razak and was signed in December 2016 and was slated to be completed by 2026. The project is said to cost up to RM 70 Billion.

Pakatan Harapan has also promised to zero rate the Goods and Services Tax, which previously accounted for 16% of their GDP. The GST regime will be replaced by the new Sales and Services Tax which will boost revenues by RM 30 Billion. And any shortfall can be offset from the sale of crude oil.

Malaysia is the fourth largest oil and natural energy producer in the Asia-Pacific region. Since the crude prices are trading at a new high of $79 a barrel, the Malaysian economy is set to benefit from the move. Zeti Akhthar Aziz, a senior adviser to the Malaysian government, said on Tuesday that Malaysia would be able to reduce the fiscal deficit by controlling expenditure in the absence of GST, reported Reuters.

Even though it appears that Malaysia will have to compensate Singapore if the project is eventually cancelled, many analysts say that the project may only be delayed, but nobody knows for how long. The current bidders have requested to postpone construction works till the end of this year.

On this side of the straits, the Singapore Government had to acquire the land occupied by Raffles Country Club for the construction of the HSR Terminus in Jurong, which comes at a significant cost to Singapore. Any further delay may quickly run up the costs of the project.

New Terms to favour Malaysian companies

At this juncture it seems that the new terms will be skewed in favour of Malaysia.

In an email interview with Malaysian newspaper The Star, HSS executive vice-chairman Tan Sri Ir Kuna Sittampalam said, “Currently, the Government is reviewing all major infrastructure projects and we are awaiting their directive. Further to this, we are looking at possible upside in terms of increased local participation.”

Though there seems to be a lot to benefit from this project in the long run, but it is still uncertain given the new dynamics with Malaysia, about what’s in it for us in this project.

One thing for sure, it’ll take more than a short thirty minutes discussion with Dr Mahathir Mohamad and pretty- printed-shirts that PM Lee and Dr Vivian Balakrishnan wore for photo opportunity for the new government of Malaysia to treat this project on an even keel.

58 COMMENTS

  1. I still don’t see the attractiveness of the HSR. It’s not Singapore has much lower cost of living then Malaysia, then the HSR will be beneficial for Singapore. The problem now is that expat working in Singapore will be working here and flock out to stay in KL and Johore. How does it benefit Singapore? They don’t stay here, they don’t spend here to spur the economy.

  2. I think the HSR is a waste of money. HSR is good for internal transfers for countries with huge land masses. For cross border travelling, we should spend more on our air network instead & we are already building T5. HSR only can serve SG-KL, whereas air network can serve the entire ASEAN & also globally.

  3. Typical of Dr. M. When he was PM decades ago, Just to glorify himself he built useless grandiose expensive projects which only benefited a small portion of Msians. Many forget that due to his exuberance Msia suffered much during the Asian financial crisis due to the borrowings.
    His only main idea of scrapping HSR is he doesnt want Najib to be complimented for the project n also he hates SG… to the extend that he prefers the railway system remain at 40-50 yrs old while others pull away n ahead with technology.

    • Malaysia did not say do away HSR but wants review the project and terms therein.

      Malaysia knows the HSR will bring about connectivity in our region and Asia and even right up to Europe vide Silk Road belt. Needless to say there will be attendant economic benefits for all involved.

  4. “why didn’t PAP ascertain the risks associated with the HSR project at the onset?”

    Simple – when you choose to bet on a horse who is known to be corrupt you think u can expect a full proof no risk race to the finishing post. Unfortunately, a 92-year-old mare came in as a spoiler and screwed you big time! How asinine can you get?

    Which goes to show – our multi-million dollar leadership have NOT even a freaking penny of smarts!

  5. Why do people assume hsr benefits the country? Do they know so much they agree with Govt or are they always in the habit of accepting whatever Govt says whether it is a fact or not? This take for granted Govt info is preventing probe and truth to be exposed.

  6. Spore Government so rich. lose a little bit of money also nothing la. Even spore Government Hospital Patient no suffered for any spine problem. Doctor insisted advised patient to do surgery on the spine to prevent patient condition getting worse and worsen. After surgery performed by the doctor cause the patient permanently lose of earnings capacity. Patient pay full surgery fees and full hospital bill. Hospital and doctor don’t bear for any responsibility. Government is earning easy money from our citizens.

  7. HSR is good. But more gains if it is extended till Penang. Instead of draining money in 1 MDB and flop projects of Temasek in China, rather invest in this. Tourism is beneficial to both sides. We have to focus on service business. Instead of wasting money building white elephants in China and buying loss making Kindergarten in Australia, invest in our neighborhood and win friendship. Our neighbors are more important than distant cousins.