High-speed rail link proposal gets yet another airing

THE proposal for a high-speed rail (HSR) link between Singapore and Kuala Lumpur seems to be one of those ideas that refuse to die, despite all that has happened over the years. To go back a bit, a KL-Singapore HSR link was first mooted in the 1990s, with an estimated cost of about RM5 billion (S$1.5 billion today). 

It took more than 20 years for the project to be seriously considered, and by 2013 the estimated cost had ballooned to RM30 billion. A binding agreement with Singapore was finally reached in December 2016, involving a 350 km-long rail line with purported train speeds of up to 350 kmh. The aim was to have the line operational by 2026.

The outbreak of Covid-19 and the election of a different coalition government led to multiple postponements at Malaysia’s request. Eventually, the agreement was abrogated in December 2020. Malaysia paid about S$102 million in compensation to Singapore for breaking the deal.

Nevertheless, some important Malaysians want to revive the project and recent news reports say that three companies – YTL Corp, Berjaya Rail and China Railway Construction Corporation – have submitted detailed plans. Malaysia’s Transport Minister Anthony Loke has ruled out any chance of government finance several times in the past. 

Even so, he said last month that the Anwar Ibrahim administration would make a final decision on the submissions by the end of this year. The timing of that decision seems elastic. Previously, it was reported that the deadline was the end of 2024. 

It is easy to understand the hesitation. Every HSR project in the world has been done with government financial backing. More importantly, few are operationally profitable, never mind the initial capital outlay.

There is considerable Malaysian opposition to the prospect of a HSR for this very reason. Current estimates put the final figure of such an undertaking well north of RM80 billion. 

One Malaysian political wit sardonically suggested that it would be cheaper to give away free tickets for flights between the two cities than to borrow for the project. Democratic Action Party member Tony Pua based his calculations on information released by aviation data company OAG, which found that flights from Kuala Lumpur International Airport to Changi Airport were the busiest international route for 2023, at 4.9 million seats. 

Assuming each seat costs RM400, Pua said, it would add up to RM2 billion per year. At an interest rate of 5 per cent for an RM80 billion loan, the HSR project would cost the government RM4 billion in interest payments alone every year. 

“So, the simple conclusion is, at RM4 billion interest cost for (the) HSR, the government might as well just pay for all flights between KL and Singapore and still save RM2 billion,” Pua said. 

Another critic argued that it would take 70 years for the proposed HSR to become financially viable, and pointed to European Union studies that had found financial justifications for such projects to be consistently overrated. Even in China, with its 48,000 km HSR network, only a handful of routes show operating profits. The rest run at a loss.

It has also been argued that taxpayers from every other state in the Malaysian federation would have to foot the bill, while gains would be limited to those in the south of the peninsula. 

The Anwar government has good reason to fear being left holding the financial bag, if things go wrong. Clearly, then, it may serve its political interests to keep the idea of an HSR alive, but don’t expect anything more.