By P PREM KUMAR / Pic By BERNAMA
The Kuala Lumpur-Singapore highspeed rail (HSR) project, worth up to RM110 billion in overall cost, has been suspended until May 31, 2020.
Both the Malaysian and Singaporean governments agreed to the suspension via an agreement inked in Putrajaya yesterday, at the request of the new Pakatan Harapan administration.
The much-anticipated bullet train is now expected to be operational by January 2031, instead of the original commencement date of Dec 31, 2026.
Economic Affairs Minister Datuk Seri Mohamed Azmin Ali told reporters after signing the postponement documents that the deferment will incur the Malaysian government approximately RM45 million in abortive costs.
He said the Malaysian government has agreed to pay the penalty by the end of January 2019.
Malaysia will also bear the agreed costs incurred by Singapore, as agreed upon in the previously signed bilateral agreement, if Malaysia does not proceed with the project by May 31, 2020, as declared in a joint statement by Azmin and Singapore’s Coordinating Minister for Infrastructure and Minister for Transport Khaw Boon Wan.
“During the suspension period, Malaysia and Singapore will continue to discuss the best way forward for the HSR project with the aim of reducing costs,” the statement read.
Given the length of the suspension, Singapore and Malaysia’s infrastructure companies, SG HSR Pte Ltd and MyHSR Corp Sdn Bhd, will be calling off the ongoing international joint tender for the HSR Assets Co.
“The ministers reaffirmed the mutual benefits of the HSR project as it will bring both countries closer together by improving connectivity, deepening people- to-people ties and catalysing further economic co-operation,” the statement revealed.
The signing ceremony was held in the Prime Minister’s Office in Putrajaya’s Perdana Putra, witnessed by Tun Dr Mahathir Mohamad, Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail and her Singaporean counterpart Teo Chee Hean, who is on a week-long working trip to Malaysia.
Dr Mahathir, upon his historic return to office in May, initially suggested that the HSR project be scrapped entirely as it will not be beneficial to Malaysians and as a mechanism to reduce the country’s RM1 trillion debt. However, he said in July that the project would be deferred instead.
The first bilateral agreement on the HSR between Malaysia and Singapore was inked in December 2016.
The project’s rail track length was expected to be approximately 350km, which will cut travel time between the cities to a mere 90 minutes from four hours (by road).
A flight takes around 50 minutes, but airport formalities add to the time taken, besides an average one-hour transportation from the Kuala Lumpur International Airport to the city centre.
Since its announcement in 2015, the project had attracted the attention of rail-related companies from Japan, China, Korea and the US.
A field study by the now-defunct Land Public Transport Commission (SPAD) had estimated that the HSR will carry up to 49,000 passengers daily by its 10th year of operation, giving rise to an annual ridership of 17.9 million. Annual ridership could hit 251 million by 2060.
The project was also expected to generate an economic impact of RM100 billion to the country’s GDP once operational. About RM70 billion was expected from construction, operations and multiplier impacts, while the remaining RM30 billion was targeted from a wider economic benefit via an increase in other economic sectors such as property, tourism and services.
During the initial bilateral agreement signing, the HSR was initially slated for operation by 2020, but was pushed back by the governments of Malaysia and Singapore, citing the complexity of the project.