THE East-Coast Rail Link (ECRL) is the game changer that the Kelantanese business community has long waited for despite all the controversy surrounding the RM60 billion project.

For the small and medium industries struggling to stay afloat in this backwater state, the ECRL could plug the logistics gap that has hobbled the state’s ability to bring in much-needed investment.

Kelantan’s Chinese and Malay commerce guilds told The Malaysian Insight that the state’s economic potential is untapped because of the lack of highways and rail links between the state and Terengganu.

When there are no good infrastructure links between Kelantan and Terengganu, it is risky to invest in the state because of the time needed to transport goods, said Chinese Chamber of Commerce and Industry president Yap Heng Orr.

“With the ECRL, there definitely will be more outside investment at it is more profitable to open factories here due to the low cost of land and labour,” said Yap.

Kelantan’s shared border with Thailand and the lower cost to open and run a factory compared with neighbouring states would make it attractive to investors if only it had better land links, said Yap.

The boost in the state’s economy will create more jobs and lead to higher income for locals, said Yap.

“When their incomes go up, their purchasing power goes up. Retailers will come and open up more shops here, creating more income opportunities.”

His counterpart in the Malay Chamber of Commerce and Industry Wan Zulkifli Wan Abdullah is guardedly optimistic about the ECRL.

“The ECRL will bring change and attract more investment. But we can’t really imagine how big of an impact it will have because we hear that its transport rates will be high.”

Wan Zulkifli’s worries reflect an ongoing criticism of the ECRL.

The ECRL is a joint China-Malaysia mega-project that is part of the former’s “One Belt, One Road” infrastructure initiative aimed at extending its economic and trade influence in the region.

It is being financed by a loan Malaysia is taking from the Export-Import Bank of China (Exim Bank) and most of it will be used to pay China Communications Construction Company (CCCC), the ECRL’s main contractor.

Observers have argued that its high construction cost will mean that ticket prices will have to be high for it to be viable and profitable.

Opposition MPs, such as Tony Pua, have criticised the project’s bloated cost, arguing that at its current price, it would cost 120% and 143% more than the northern and southern double-tracking projects.

The ECRL’s route runs from Gombak, Selangor, through to 23 stations in Pahang, Terengganu and Kelantan and is expected to be ready by 2024.

It is touted as being able to cut travel time from Kuala Lumpur to Kelantan by four hours. The current rail travel time from KL to Kelantan is between eight and 12 hours.

Work on the Kelantan phase has already begun where 445ha of land have been acquired.

The first phase of the Kelantan section will involve building a 46km stretch from the Terengganu-Kelantan border with three stations in Tok Bali, Jelawat and Tunjong.

The second phase will see a 24km stretch from Kota Baru to Tumpat.

The lack of external investments in Kelantan’s economy is reflected in its financial reports.

The state’s financial statements between 2014 and 2015 showed a decrease in external investment from RM18.52 million (2014) to RM15.56 million (2015).

In tabling the state’s 2017 budget, Menteri Besar Ahmad Yakob said Kelantan was dependent on revenue generated from forest products, which totalled RM172.96 million in 2016.

This revenue comprises royalties from forestry premiums (RM70 million), timber production at RM30 million, payments to the Forestry Department (RM22 million), forestry licences (RM1.5 million).

In April, the Statistics Department showed that the state’s residents have among the lowest per capita incomes.

Despite having almost doubled its gross domestic product (GDP) during the period between 2005 and 2015, Kelantan’s GDP per capita is just one-third of the national average.

According to Wan Zulkifli, the businesses that are sustainable in Kelantan are cosmetics and beauty products, and food.

“These two sectors are more stable and there is high demand for them compared with other sectors that have been affected by a weak economy.” – October 11, 2017.