THE current discourse in the media regarding the high-speed rail (HSR) project provides a spectacle of hard stand, threat, fear, anxiety and anticipation among the stakeholders and spectators alike.
On May 28, after days of discourse through the media, Prime Minister Dr Mahathir Mohamad announced the scrapping of the HSR project. Depending on whom, the various contradictory responses are understandable.
The Pakatan Harapan government now estimates the total cost for the HSR at RM110 billion with interest added, while the previous government’s figure is RM72 billion.
At 350km, it works out to RM314.29 million per kilometre, or US$79 million. Comparative cost of HSR projects elsewhere (China, US$17 million to US$21 million; Europe, US$25 million to US$39 million; and California, US$56 million), according to the World Bank report in 2014, puts ours the most expensive project in the world.
The European Commission postulated that for a viable HSR project, the necessary minimum passenger load per year is nine million. The KL-Singapore flight route has four million passengers per year. The HSR ticket will have to compete with the current low-cost air ticket of around RM150 per trip.
A major factor when planning a HSR project is to decongest existing cities along the route.
Between KL and Singapore, the cities and townships are rather sparsely developed. Its proponents would argue that the project is likely to help develop more areas and raise the value of properties.
However, there cannot be too many stops as to cause delay and discourage travellers. New township and development areas resulting from the HSR route also mean new ghost towns and disused old rail lines and stations.
Arguments for job creation, economic multiplier effect and increased gross national income are subjective and speculative at this early stage. Often, economic and national income projections are way off the mark.
It is not clear if the projected cost of the HSR has taken into consideration the cost of acquiring land. As the project is a favourite “baby” of the previous prime minister, it is interesting to ask how much of the land to be acquired belongs to the military allegedly privatised and if so, who owns those parcels of land now. Also, if the planned seven stops along the route sit on those military land parcels.
If Malaysia already has existing heavy industries in the form of train construction and engineering know-how to complement the HSR project, then that is a positive factor to consider.
Total dependence on Chinese contractor, workforce, and even every nail, bolt and nut from China, is a no deal. A transfer of technology is also not a certainty. Bonds have to be issued, therefore, adding to the national debt burden, which is a humongous sum more than RM1 trillion.
All factors considered, the cost per kilometre, hidden costs, operating cost, low passenger load, ghost towns, land acquisition, possible secret deals, and the current debt to GDP ratio of 80% – all these add to the enormous financial risk to our nation if the project is to be carried out. These are the perspectives from the side of Malaysia.
From the Singapore perspective, the HSR track covers only 15km and some initial and survey works have been done. The claim of RM500 million for compensation for rescinding the contract is probably not even worthy of it as a good neighbour existing in eternity. For now, suspense has to fill the waiting period for the official notice.
China’s response to Dr Mahathir’s unilateral announcement of scrapping the project is interesting to observe. Its official statement is diplomatic and measured, stating that the infrastructure projects are still ongoing.
It appears that China has an extended diplomatic arm in the media personnel as watchdog. A recent Global Times, the unofficial mouthpiece of its foreign policy, article on May 31 gave warning and even a veiled threat to Malaysia for the scrapping of the HSR project.
In the report, Ditching Chinese-built high-speed rail project will carry high costs for Malaysia, the reporter, Hu Weijia, asked: “Is this the way Malaysia keeps its promises and adheres to the spirit of the contract?”
Exactly what in the world is the reporter, or China’s Foreign Ministry, talking about? What contract? Are there any deals made with the previous government that we do not know about?
Common knowledge among Malaysians is that China and Japan are keen to bid for the HSR project. Also, Beijing-owned China Railway Group Limited has been eyeing the project. Unless certain knowledge is uncommon, why is China so jittery or fearful of the HSR project being scrapped? Of course, only if the contract (if there is one) is unfair and some secret deals made.
Looking at the saga of this HSR drama the past three weeks, it looks like Dr Mahathir has pulled a masterstroke to unearth any possible buried skeleton of hidden deals and an unfair contract. The process of renegotiation is apparent and on the way. One cannot help but proudly admire the Sun Tzu in the old man. – June 7, 2018.
* 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.
* 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.
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Comments
Further, to politicise on the amount of RM500 million in compensation is equally disgraceful. Although Singapore's part of the rail only constitutes 15km of the total length, the entirety of the track will be constructed underground except at the juncture that the high bridge connects to Singapore mainland. The cost of an underground rail is vastly higher for the same length compared to above ground, and thus justifying the high cost of compensation should Malaysia renegade, otherwise there would be no safeguard for Singapore to undergo such expensive endeavour. To highlight, Downtown Extention of Circle line for a 3.4km length of line already costs S$1.4 billion to build back in 2005. If we draw a simple calculation using the above figures, the 15km track would cost roughly RM16.8 billion to Singapore, in which the compensation amount of RM500 million would only amount to about 3% of the costs.
The scenario would have play out very differently if negotiations were to take place before the announcement; it would have provided the stakeholders with enough time and room to get better results for both, even if it means the cancellation of the project. The saga here then, is much less about the cancellation of the project than the manner in which the project was being cancelled. It shows a 'my way or highway' mindset that would definitely deter future long term projects from being implemented with other partners with the Malaysian government (the possibility of government changing every 5 years). And should this happen to Malaysia, i.e. some one renegades in the same way the Malaysian Government has done against Malaysia, the government would have no moral authority to impasse such action taken against them, as they have shown to condone such actions by behaving as such themselves.
Posted 5 years ago by Chee Chung Koong · Reply
Posted 5 years ago by Alwyn Song · Reply
Further, if Singapore renegades, Malaysia can still keep the track up to Iskandar Putri. It’s a totally different story for Singapore, as the entire track built (or the efforts leading up to the construction) will be entirely wasted. These factors have to be considered by Singapore when they negotiate for the contract, and it should be made as unattractive as possible for both parties to renegade on their deal. This does not mean no room for negotiation to back out. But if the partner chose to go ahead on a decision without consent or negotiation with another partner, that, is definitely a cause for uproar.
Posted 5 years ago by Chee Chung Koong · Reply