After telling six weeks ago to indefinitely suspend the High Speed Rail project between Kuala Lumpur and Singapore, Malaysian Prime Minister Mahathir Mohamad suddenly looks again at the possibility to build the rail link… An unexpected u-turn which probably has been made under financial pressure from Singapore.
The Kuala Lumpur-Singapore high speed rail project, when announced and launched back to 2014 between the former Malaysian government of Najib Razak and his Singaporean counterpart was a rather rational step. Both cities, which have strong economic and social linkage, are only 350 km away from each other, being linked together by highways, trains and flights.
Just looking at the border crossing between Singapore and Johor Bahru in Malaysia gives an idea of the flows of travellers. According to data, they are some 250,000 people who pass daily through the border with over 120,000 vehicles passing every day on the Singapore-JB Causeway Link. In total, Singapore recorded 203.78 million of travellers cleared on departure and arrival at all checkpoints in 2016 (Source: data.gov.sg).
Kl-Singapore, one of the most travelled journeys in the world
How does air transport fare between Malaysia and Singapore and particularly between Kuala Lumpur and Singapore? According to Singapore official statistics, 6.2 million of air passengers flew between Singapore and half a dozen destinations in Malaysia in 2016 (latest available data) For KL/Singapore, aviation consultancy OAG recently released that 4.04 million air passengers flew between both cities on 30,537 flights between March 2017 and February 2018. This makes the KL-Singapore air route the busiest in Asia.
The high speed rail would then definitely makes sense. First by cutting travel time from five hours to 90 minutes, a timing that even air transport cannot match if it includes check-in procedure and waiting time spent at the airport before the flight. Generally it takes on average two hours and a half for the journey between both cities.
According to official data released over the project, the total number of users of the future HSR would be around 22 million a year by 2036, ten years after the planned opening. Even by cutting by half this forecast, over 10 million HSR users per year would be a comfortable number. It would be equivalent to total passengers currently using Eurostar between Paris and London.
The HSR would also benefit indirectly to Kuala Lumpur air hub. Although passengers would certainly be reduced between both cities, it would help however freeing air slots for aircraft. According to OAG data, Kuala Lumpur is currently among the worst in Southeast Asia in terms of punctuality with 67.4% of all flights departing on time, behind Bangkok Suvarnabhumi and Singapore.
In May, following Malaysia’s election which saw the defeat of the Barisan Nasional coalition, which had run the country since the independence, Prime Minister Dr. Mahathir indicated to review all mega projects launched by the previous government, citing the worrying stand of the country’s debt. The Government recently revealed that the public debt of the country stands now at Ringgit (RM) one trillion (US$244 billion).
According to Mahathir government’s estimations, the price tag for the HSR is not at RM72 billion (US$17.5 billion) but rather around RM110 billion (US$27 billion). Malaysia claims that the difference in the project evaluation is due to additional costs deliberately hidden by the Najib government.
But the unilateral decision of Malaysia to cancel the high speed rail did not go unnoticed from Singapore, which has just be placed in from of Mahathir government decision. A situation that Malaysia PM now acknowledges. “The problem is that if we just unilaterally discard the agreement, we have to pay a high compensation,” Dr Mahathir told reporters in Parliament. “We cannot say that we will never build this HSR but at this moment, we don’t have the funds,” he explained. “We then need to delay”.
Malaysia will now negotiate a deferment with Singapore on the HSR project, negotiations being carried out by the end of the month in Singapore between Malaysian and Singaporean Minister of Economic Affairs.
Looking for a compromise?
Malaysia Minister of Economic Affairs Mohamed Azmin Ali already indicated that “everything” in the agreement needs to be relooked. “The entire project needs to be reviewed,” he told reporters, adding that the government would consider if a supplementary agreement is needed.
“The priority is quite clear. We want to reduce the debt that we are facing now,” explained the Minister to local media. “ We can reduce the project’s scope. If it becomes viable at a later stage, then we can discuss. But our priority now is to cut cost and reduce government debt.”
Singapore is likely to look for a compromise with Malaysia. Singapore Transport Minister Khaw Boon Wan indicated recently that the City-State already spent S$250 million (US$183 million) on the HSR project with another S$40 million (US$29 million) to be disbursed before year end.
Singapore has been actually going on with the development on its side as it had not been officially noticed by the Malaysian government over the HSR suspension.
“This is actual money that has already been spent,” said Singapore Transport Minister. “We can recover value for some of the expenditure… But a significant amount which has been spent will be completely wasted expenditure if the project does not proceed,” he told Singapore newspaper The Straits Times. Singapore has shown for example its goodwill to cooperate with Malaysia new government for the recovery of funds from the 1Malaysia Development Bhd financial scandal, which precipitated Najib disgrace.