Cancelling the HSR project is a short-sighted mistake


THE high-speed railway (HSR) is a strategic project between the governments of Malaysia and Singapore that aims to improve their economies and elevate the quality of life of both countries through seamless travel between the two capital cities. It aims to enhance business linkages, and connect the peoples of both countries closer together.

With terminus stations in Kuala Lumpur’s Bandar Malaysia and Singapore’s Jurong East, the HSR line is expected to cut the travel time between the two cities to 90 minutes.

The Singapore-Kuala Lumpur air-route is the busiest international route in the world. There were 30,537 flights between both cities last year, putting Hong Kong-Taipei firmly into second place at 28,887 flights.

With such large yearly passenger numbers, there would have been a strong case for the financial viability for the project.

Beyond just passenger traffic numbers, the real benefits of a major infrastructure project such as this lie beyond providing the convenience of getting from A to B. This project has the potential to stimulate economic development along the rail corridors and urban development around the stations/rail terminus, better known as transit-oriented development.

The many stations in between, namely Putrajaya, Seremban, Melaka, Muar, Batu Pahat, and Iskandar Puteri, which are relatively less developed than Kuala Lumpur or Singapore, would stand to gain from development.

It is forecast that the result of HSR would be no less than the economic multipliers that happened to the Taiwan HSR between Taipei and Kaohsiung and the Tokaido Shinkansen between Tokyo & Osaka.

As such, it is too simplistic for Prime Minister Dr Mahathir Mohamad to say that the project won’t be beneficial because it will cost our country a huge sum of money and make no money at all from operations, as any potential returns from land value capture would pay for the railway project in the long run.

From the macro point of view, it is estimated that Malaysia will lose an estimated RM209 billion in gross national income contribution and lose the potential to create 70,000 jobs if the HSR is called off.

A study by the research body Institute of Developing Economies, Japan External Trade Organisation found that the HSR would have delivered a US$1 billion (RM4 billion) economic gain to Malaysia every year.

The abandonment of HSR would also mean that the value of 1MDB’s Bandar Malaysia project, which was to be a terminus station of the HSR, would be substantially decreased – diminishing the ability of 1MDB to repay its debt.

The current Pakatan Harapan government says the RM110 billion cost of the HSR is the main reason why this project must be cancelled. How did the figure of RM110 billion cost of the HSR come about?

This differs greatly from the range of RM50 billion to RM70 billion cost that the governments of Singapore and Malaysia had budgeted earlier this year.

Did the PH government take in the net economic benefits and spillover effects beyond the cost of the HSR project when arriving at this hasty decision to cancel?

The cancellation of this mega-project would have far-reaching consequences for Malaysia beyond just the lowering of our GDP growth potential. It will also disappoint foreign investors who see the project as a catalyst for more rapid pace of growth.

The government should not be short-sighted in making an important decision such as this. It is obviously clear that the spillover benefits are so huge that it will be a wasted opportunity if we don’t proceed with the project now.

Should this project be restarted in future years, the cost would only increase and the debt burden will increase manifold, which is totally against the PH government’s plan to reduce the national debt.

* Abdul Rahman Dahlan is a member of the Umno communications unit and the former minister of urban wellbeing, housing, and local government.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight.


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Comments


  • TQVM for reminding us of HSR benefits to Malaysia. If there is a chance of re-financing this expensive project it might still take off. Otherwise it could only be in the future, when we might have developed wing technology & learnt to self-propel to fly by ourselves..

    Posted 1 year ago by MELVILLE JAYATHISSA · Reply

  • I have downloaded and studied the paper cited above here - https://ir.ide.go.jp/?action=pages_view_main&active_action=repository_view_main_item_detail&item_id=50322&item_no=1&page_id=26&block_id=95

    This paper by IDE-JETO is very weak. It simply built castles in the air, with zero clarity on how exactly the benefits will be achieved. Anyone can hide behind complex models and claim benefits. The reverse could also be shown to cost Malaysia tremendous monies at no benefit.

    When the investment is huge and runs into a hundred billion, the justification needs to be much, much stronger than this weak paper. The paper is simply rubbish - download the above link, read it, and see for yourself!

    Posted 1 year ago by Seng Hong Teoh · Reply

  • This statement by Umno is utter rubbish to justify spending such a huge amount! "it is estimated that Malaysia will lose an estimated RM209 billion in gross national income contribution and lose the potential to create 70,000 jobs if the HSR is called off." - Why stop at RM209 billion? Why not RM209 trillion? Could it even be RM209 only? What are the top 5-10 groups that will benefit from the GNI contribution and what are the splits? Justify in more details because spending RM50-110 billion is not a small amount.

    Posted 1 year ago by Seng Hong Teoh · Reply

  • Apply some common sense too. First, the KL-Singapore flights are doing a great job, it won't be easy to create additional benefits - be suspicious when someone claims quantum leaps in benefits. Second, the time savings is only a mere 90 minutes. Third, author mentioned 30,587 flights last year, with the HSR, this number should reduce due to substitution effects - how much? Fourth, let's be generous and provide 10,000 net gain in flights - this is extreme assumption. 100 billion divided by 10,000 equals RM10 million per flight gain in economics. Let's stop and think for a while - does a single flight from Singapore to KL generates RM10 million gain for Malaysia? in other words, the numbers don't really add up - the claim of a benefit is Bullshit.

    Posted 1 year ago by Seng Hong Teoh · Reply