I REFER to two articles, “Large-scale infrastructure projects can further spur Malaysia’s economic development” and “HSR will give economy boost” in the NST.

The justification is for the projects is that they generate spillover effects and employment opportunities and in turn, enhance productivity and ensure that Malaysia maintains its global competitiveness. 

It is said the Kuala Lumpur-Singapore high-speed rail (HSR) project will provide Malaysian firms and talents access to a vast and untapped market (the China-Asean Economic Trade Zone, the Eastern Economic Corridor in Thailand, and sub-regional economic zones). It can encourage the economy to develop deeper integration with its neighbours and place Malaysia among the world’s 30 largest economies. 

It will transform how people travel (reduced journey time, safe and seamless) and conduct business. The southern corridor’s demand is projected to exceed 250 million annual journeys by 2060. Studies indicate that the HSR will be able to accommodate 140 million additional trips per year.

Stop for a moment to think. The numbers are mostly subjective and the line is only between Kuala Lumpur and Singapore.

Look at the KVMRT project, an Economic Transformation Programme (ETP) fully funded by the government, envisaged to radically improve and transform Kuala Lumpur’s sorely inadequate public transport coverage. It was projected to see a fivefold increase in rail ridership. And most agreed that the project would generate immense economic contribution and investment returns.

Now, after seven years of operation of Line 1, and one year for Line 2, how do we rate it?

Last year, the Transport Ministry instructed Prasarana Malaysia Bhd (Prasarana) to look into the frequent technical issues and the poor state of facilities for its Light Rail Transit (LRT) and MRT services. What about ridership? Traffic jams are still a permanent feature. The LRT has been in operation for more than 24 years and is still struggling with technical issues.

And then there are the funding issues for the RM39 billion MRT3 Circle Line.

And where are the economic contribution and investment returns? MRT Corp’s financial position as of December 31, 2022 showed an accumulated loss of RM57.5 billion.

Prasana is the parent company of RapidRail, which operates LRT and MRT services and RapidBus. As of end-2019, Prasarana had accumulated losses of a whopping RM42.41 billion. 

The company continues to operate outside the ambit of parliamentary budget allocations and is not subjected to the usual audits.

Back to the HSR. 

More than 30,000 flights take place a year in the KL-Singapore air corridor, which among the busiest international routes in the world. The sector’s carbon emissions accounted for 28.8% of Malaysia’s total fossil fuel combustion.

Let’s take a look at the status of the HSR, also an ETP project.

The Singaporean transport minister said the main reason for the project’s termination in 2021 was Malaysia’s suggestion to remove the assets company AssetsCo, a “best-in-class industry player” appointed through an open tender, as the means to run and operate the network. Both the partner countries are inexperienced in the business.

In July 2023, MyHSR Corp put in a request for information and to officially submit concept proposals for a public-private partnership. In January, seven proposals were submitted. Japanese companies were not interested as there will be no governmental financial support

In December 2023, the prime minister said the government will proceed with HSR if it could substantially lower the cost.

In March, the transport minister said  the project will not involve government funding and that it with be financed through private fund investment. But he also said the proposals must focus on minimising the government’s financial input. What a contradiction.

In a written parliamentary reply, the Transport Ministry stated that the evaluation of the proposals is expected to take two months to complete. We are now in April.

Industry sources said a consortium had in its proposal asked for government compensation it if the number of passengers falls below a minimum number. It is separately eyeing opportunities to acquire and develop land around the railway stations as another source of income. Another one asked for some form of government financial support.

Thus far, we hear only about the pros, but what about the cons?

Analysts believe that private financing alone cannot revive the project. They say that for the HSR to be commercially viable, private companies would need state support for land acquisition, subsidies for train tickets, and maintenance of the infrastructure.

I trust the government takes into account the Public Finance and Fiscal Responsibility Act that limits the country’s debt level to 60% of gross domestic product (GDP), and financial guarantees to 25% of GDP. In September 2023 it was at 63.8% of GDP.

A research fellow at the Institute of Malaysian and International Studies at Universiti Kebangsaan Malaysia said, “Malaysia simply can’t afford an HSR. It would be fiscally irresponsible for the government to fund it, and we will be passing the debt on to future generations to bear”.

Implementation of large-scale projects entail risks of aggravating socio-spatial exclusion through land acquisition and displacement of population and as a result of the created infrastructure, environmental destabilisation including urban fragmentation. It displaces minorities, reduce neighbourhood employment opportunities and economic policies that promote skilled employment, thereby penalising relatively less educated groups.

Studies show the claim that growth creates employment is a “key ideological prop” for the growth machine and is not sustainable.

What would be the implications for Malaysian airline companies and would savings in carbon emission help when the HSR project cries for help from the government? In 2018, the then prime minister scrapped the project, saying in an interview that the decision was to “avoid being declared bankrupt”.

We still have not sorted out the first and last-mile connectivity issues in our present rail system and the feeder bus service is sub-par at best.

We may want to do a catch-up with Indonesia but do we consider the issues and that the consortium had requested the government to extend its operating rights to 80 years from the initial 50. 

And our ERL concession agreement was extended by another 30 years. The Auditor-General’s Report 2015 revealed weaknesses and the formula of compensation does not benefit and protect the interest of the government as it was based on very high projected earnings.

The environmental benefits claim by HSR should be compared especially when cars and planes are becoming more fuel-efficient.

There is already an ETS from Padang Besar to JB, and the trip from KL to JB is only a couple hours longer. Why do we need the RM110 billion project?

Contractors and powerful actors who makes money upfront during construction stage will acquire and develop land around the railway stations and makes more money leaving the government to worry about the viability of operations throughout the concession agreement.

Nowadays, we are fond of setting up royal commissions of inquiry. I hope we do not need one for HSR many years from now.

I suggest that the government, in the spirit of good governance, to set up a truly independent committee to review the findings of MyHSR Corp and the Transport Ministry and to table the report in parliament before a final decision is made.

This should apply to all large-scale infrastructure projects. 

What say you… – April 9, 2024.

* Saleh Mohammed reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.