Japan seeks leaner management in HSR bid

The organisation structure, which Japan sees as ‘very complicated’, involves 5 companies created just to run the HSR project


JAPAN has proposed for a leaner management structure as part of its cost-cutting plan for the deferred Kuala Lumpur (KL)-Singapore high-speed rail (HSR) project.

Japanese Ambassador to Malaysia Dr Makio Miyagawa said Tokyo has engaged with representatives from Malaysia and Singapore on a simplified organisation structure that would eliminate overlaps, which in turn could reduce the cost to build the 350km rail line.

He also said the proposed system which was put forward before Tun Dr Mahathir Mohamad became the prime minister for the second time last year “was very complicated” and “complex”.

“Both the Malaysian and Singaporean governments have decided to create five companies just to run the HSR from KL to Singapore.

“If changes happen between these companies, it would certainly increase the cost and a superfluous amount is needed. So, our proposal is to simplify the structure.

“There are two layers that we are proposing. The infrastructure should be covered by the governments, while the operations can be covered by a government-linked company,” he told The Malaysian Reserve (TMR) recently.

Japan is globally recognised for their Shinkansen bullet train that connects key cities across the island country with a speed of up to 300kph. Japanese engineering and electronic firms were among the frontrunners to bag major supply contracts for the RM60 billion rail link deal prior to the suspension of the project in September last year.

Both Malaysia and Singapore agreed to suspend the construction of the HSR project for a period up to May 31, 2020.

TMR had previously named Japan’s East Japan Railway Co, Sumitomo Corp, Hitachi Ltd, Mitsubishi Heavy Industries Ltd and electronic giant NEC Corp as contenders for the project. The KL-Singapore HSR also attracted interest from Chinese, South Korean and European companies.

Although Miyagawa did not elaborate further on the cost-cutting programme, he underlined that the plan would also place an emphasis on local companies.

“The previous scheme was to depend upon foreign companies entirely where Malaysian and Singaporean engineers do not participate, rather allowing foreign companies to operate. This heavy dependence upon foreigners, even to the Japanese, would not benefit local engineers.

“So, our proposal is for Malaysian and Singaporean engineers to conduct this project by themselves. For this, I think we have been proposing that we would offer human resource development and technology transfer. This is what we have been doing,” Miyagawa said.

Citing Japan’s bullet train deal with India, Miyagawa said Japanese companies have sent nearly 200 engineers and operators to India for technology transfer and help bring up the human resources.

“This spirit is part of the Look East Policy,” he said.

The Malaysian government is expected to deliberate on the HSR project by May next year.

Malaysia has so far paid Singapore S$15 million (RM45.32 million) for the deferment of the project and would be liable to pay more if it fails to resume in two years.

Earlier in June, MyHSR Corp Sdn Bhd — the government’s project delivery vehicle for the HSR — announced the appointment of Minconsult Sdn Bhd and Ernst & Young Malaysia as its technical advisory consultant and commercial advisory consultant respectively.

MyHSR Corp said the two parties would review proposed changes to the project and further identify cost-reduction options for the government.

It said Minconsult would focus on the engineering aspects of the project by reviewing and validating the proposed infrastructure design changes within Malaysia. These would include issues such as the HSR’s alignment, stations and train maintenance facilities.

On the other hand, Ernst & Young will focus on the project’s commercial aspects such as developing new business models, identifying funding and financing options, updating the ridership forecast, and reviewing the economic benefits the project will bring to Malaysia.