THE proposed 350km Kuala Lumpur-Singapore High Speed Rail (HSR) had been criticised as financially and economically not feasible. Latest news reports have it that our country will proceed with the project without Singapore. If so, the project is as good as scrapped.  

There has been no official announcement and the little information available comes from media reports. Without Singapore, the proposed route will end at Johor Baru instead of Jurong East.  

In 2016 the MOU for the HSR project was signed with Singapore. The estimated cost of RM72 billion was way too expensive. Only the hopes for improved connectivity between KL and Singapore and for synergy with other railway projects to maximise economic spillover had kept the HSR project alive despite the financial non-feasibility. 

It was expected to cut travel time to 90 minutes between the two cities. Travel by car takes four hours while air travel takes as long after factoring in the time waiting at the airports.

At RM72 billion, it works out to RM206 million (US$51 million) per km. According to the 2014 World Bank report,  he cost of a HSR per km in China is US$17-21 million; Europe, US$ 25-39 million; and California, US$56 million. This puts ours among the most expensive in the world. 

Moreover, the price does not include the trains and land acquisition.

Getting enough passenger loads to make the project viable is a problem. The European Commission postulated that for a viable HSR project, the necessary minimum passenger load per year is nine million. Whereas the KL-Singapore flight route has four million passengers per year. 

Cost of the HSR ticket will have to compete with the current low-cost air ticket of around RM150 per trip. Even if all four million flight passengers opt for the HSR, it will take a few hundred years to recover the cost. A Malaysian-only affair is impossible to provide even half the necessary passenger load to make the project viable.

For synergy with other railway projects to maximise economic spillover, the HSR has to be integrated with other existing or planned railways – East Coast Rail Link (ECRL), Express Rail Link, MRT, LRT, and the North-South rail line. Better still, link it to KLIA.  Such integration was not on the original plan when the idea of the HSR was conceived. 

The ECRL south-bound passing Nilai before going north-east would have allowed for integration with the HSR, besides the RM20 billion cost-saving shorter route and not having to tunnel through the Main Range. Now that the planned route of the ECRL has reverted to the original, i.e, from Port Klang through Gombak and towards Bentong, it is incredible that foresight was absent in such important infrastructure planning.  

There is also the problem of financing the HSR project. The Pakatan Harapan government had estimated the project cost at RM110 billion, including interest. How the project will be funded is unknown. So is the apportionment of cost between the two countries. 

Bonds issuance seems the only logical means, but consideration has to be given to the recent downgrading of our sovereign credit rating that has made higher borrowing costs inevitable.

Financing the project through debt is troublesome as our debt to GDP ratio is the second highest among Asean members.  Our government debt in 2019 was 65.2% of GDP, and estimated to increase to 76% in 2020 due to economic stimulus spending. 

Other Asean countries have a debt to GDP ratio below 60% except for Singapore (114%). In Singapore’s case, although the government’s debt is high, when taken into account the credit holdings in terms of cash, debentures and bonds, the net debt to GDP ratio is 0%.

In our case, our government has issued bonds (and sukuk) to pay off debts and to bail out failed government-linked corporations. While debt spending for capital goods and infrastructural projects is usually good because of its economic multiplier effects, in the case for the HSR, there is a risk of a further rating downgrade. 

Our reputation for leakages and wastage due to poor management of mega projects does not help.  

In the final analysis, the HSR project is redundant without Singapore’s participation. – December 17, 2020.

* Captain Dr Wong Ang Peng is a researcher with an interest in economics, politics, and health issues. He has a burning desire to do anything within his means to promote national harmony. Captain Wong is also a member of the National Patriots Association.