THE article by our former prime minister (Najib Razak) on the high speed railway project, dated May 30, appears to be taken directly from the MyHSR Corporation report. Most likely, the article was drafted by a senior staff of MyHSR for the former prime minister.

The key rationales put forth to support this project were:

1. Major economic benefits through the creation of new growth centres and industries, high income jobs – especially at intermediate towns like Batu Pahat, Muar, Air Keroh, and Seremban – involving real estate value appreciation.  

2. Rejuvenated local economies, enhanced tax income and related economic activities, and technology transfers.

3. Projected economic benefits of up to RM650 billion until 2069 and 442,000 job opportunities by the same time – all based on the MyHSR report.

The main arguments for the project are deemed seriously flawed, based on the following facts.

The RM110 billion estimate (with finance cost) would most likely incur massive cost overruns, which was the case with our rail-infra projects like the Express Rail Link (Kuala Lumpur-KLIA) and the electrical double-track project.

All HSR projects worldwide are not financially viable by themselves, which means governments must continuously subsidise. Even if the critical mass of passengers needed to break even with operating costs is met, the project investment cost needs to be sunk.

Typically, the needed passenger volume ranges from seven million to 10 million annually, depending on ticket pricing and country cost structure.

The KL-Singapore air traffic volume is nothing to shout about, and this is on the basis that a very high traffic displacement can happen. This would then adversely impact our local airlines.  

The Taipei-Kaohsiung HSR (320km) has been in a severe financial crisis for the last few years. To date, the United States still does not have HSR services.

The Seoul-Busan HSR did spur economic and real estate development for intermediate cities/towns along the route. But this happened because economic activities at these cities/towns were already high enough to use the HSR project as leverage to the next level.

This is not the case at all for the towns in our beloved country. The KL-Ipoh-Padang Besar double-track project did not substantially enhance the real estate values and economic activities of places like Ipoh, Taiping, Bukit Mertajam, Alor Setar, and Padang Besar, for example.

It is expected that the HSR project will mainly bring major developments surrounding the Bandar Malaysia terminal. But the real beneficiaries will be the contractors, real estate owners, and business entrepreneurs, not the rakyat in general, who are paying for the project.

The realisation of an estimated impact up to RM650 billion over a 45 to 50-year period, is seriously in doubt. Firstly, is the operating cost (including maintenance) substracted from this estimate? It will drastically escalate over the years, including the need to replace rolling stock.

Also importantly, how much of these are economic activities and returns, that would have happened anyway even without the HSR project? This brings to mind the favourable reports given to the government by the Halal Development Corporation (HDC) over the success of its halal parks, wherein the reality was that most of the industries sited at these parks would have happened anyway even without the halal development push.

Over the projected 50 years, the total investment, operating, and obsolescence costs, could be more than RM1 trillion. Who knows? 50 years is too long a time spectrum for a meaningful project evaluation. The projected economic gains, it is reckoned, do not also factor in the negative impact to local airlines.

Job opportunities from the project must exclude those that will be involved at the construction phase and also positions filled by foreign experts (which are usually high for projects like this, as with the MRT) and also labour-intensive jobs by migrant workers – in short, what are the real job opportunities for locals?

Technology transfers will not happen, effectively, until the process and practice of localisation starts to really happen in Malaysia, not merely in lip-service as in the past.

This would also eventually involve the building and manufacturing of rolling stock and key components locally. This will boost job opportunities for locals at all levels.

More critical than all the aforementioned points is the fact that this is a very expensive “want”, not a “need” project – similar to other transport projects like the ECRL and even the MRT. More so with the country’s current economic scenario, this project entails a very, very high opportunity cost.

This project will, of course, bring about benefits, but the ensuing costs are simply tremendous.

At present, if implemented, it will be at the expense of other priority areas like education, health, agriculture, industrial development, and also basic amenities – which are still lacking, particularly in the rural areas of the east coast and east Malaysia. Malaysia’s bus services are still lacking, even in the Klang Valley – these are more needful for the low-income rakyat.

The same level of investment, if injected into priority areas, will also result in tremendous job opportunities, particularly involving the industry and services sectors, perhaps even more than 400,000 jobs created in the next 50 years.

The need (not want) of the HSR project can be reassessed in 3-5 years’ time, when our economic circumstances and resilience have tremendously improved. Extending electrified double-track trains to Johor Baru is much more feasible, despite the speed limitations of trains on metre-gauge tracks.

HSR (i.e. that run above 250kph) need to be on standard-gauge tangent (very straight) tracks.

It is reckoned that Prime Minister Mahathir Mohamad’s decision to stop the project must have been done after deliberations and discussing the project’s negative aspects and its impact on our present economic capability.

* Ramlan Kamal is a transport analyst.

* 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.