No impact from revised cost of ECRL project, say analysts

The quick approval by the new govt to continue the project has averted the disruptive effect of govt change

by S BIRRUNTHA

THE revised cost of the East Coast Rail Line (ECRL) project is not expected to affect track alignment, the economic impact, as well as the social impact of the states involved.

Sunway University Business School professor and economist Dr Yeah Kim Leng said given that about 25% of the ECRL project has been completed, the quick approval by the new government to continue the project has averted disruptive effects that may be caused by the change in government.

He added that the reported RM11.01 billion cost saving will also lighten the government’s long-term debt burden.

“Since the track alignment is not affected or changed minimally, the states connected by the ECRL railway will benefit from greater development potential brought about by the rail link.

“Employment opportunities for locals, domestic sourcing of domestic inputs, and the use of local suppliers and service providers could benefit the various states during the rail construction stage that is targeted for completion by the end of 2026,” he told The Malaysian Reserve (TMR).

Yeah said, however, a development masterplan needs to be formulated or if not already done to identify industrial development and investment opportunities arising from the strategic rail link.

He noted that this is important to ensure efficient inter-state coordination and to maximise socio-economic benefits.

Meanwhile, the Pakatan Harapan (PH)-led government has also been urged by many parties to be more transparent with the cost of the ECRL project to avoid doubts and confusion, especially now that the project costing seems to differ.

Commenting on this, Yeah opined that more details and clarification on the actual alignment, tunnels, stations, interest payments and project variation will be helpful to dispel doubts given the varying total project costs stated by previous administrations.

Apart from costs, he added that it would also be beneficial if the government can reveal the development benefits, economic activities, and commercial ventures and social projects that are being planned.

“This is to maximise the spillovers from this mega infrastructure investment that is touted as a part of China’s ‘Belt and Road’ initiative involving more than 140 countries,” he noted.

Transportation expert and consultant YS Chan concurred that the revised cost of the ECRL project will not have any adverse social or economic impact, as the cost was lowered without significantly impacting the overall efficiency of ECRL.

He added that there will always be gainers and losers for the respective states, but national interest comes first.

“In the future, we expect that there will be feeder train services from large catchment areas into major ECRL stations.

“ECRL is not the be-all and end-all, it is only the start.

“Just look back at the first high-speed rail (HSR) track in China in 2008. Today, HSR in China spans 40,000km,” he told TMR.

Commenting further, Chan said any government of the day could attempt to make changes for various reasons if alterations are not prohibited under contracts already signed.

He noted that the ECRL project will now cost a total of RM74.96 billion, RM11.01 billion lower than the original RM85.97 billion.

“The savings of RM11.01 billion is because there were no changes made to the design and construction.

“In this case, the cost reduction was reduced because of construction changes without affecting much on the efficiency of ECRL,” he said.

Additionally, Chan said since there were no huge changes made to the ECRL project, there won’t be any negative impact on bilateral relations, considering that China is one of Malaysia’s main trading partners.

He noted that many developing countries have state-owned firms including China and Malaysia, and these businesses must compete like any other corporations.

He emphasised that as long as they are not treated unfairly, contracts and payments are not dishonoured, bilateral relations and trade are not affected.

On that note, Chan also expressed that it is important for the government to be open and clarify the cost of the ECRL project, however, it will take time because of deep-rooted government bureaucracy and culture.

“Even among ministries, government departments and agencies, they may not be transparent enough with one another, more so with the public.

“There are two main reasons for this. One is that public officials cannot freely divulge information, unlike those in the private sector that could do so based on business interest.

“Another is the weak and poor communications skills that are prevalent among Malaysians at all levels,” he said.

We managed to bring down the total cost by RM11b, says Anwar

Recently, Prime Minister (PM) Datuk Seri Anwar Ibrahim announced that the ECRL project would proceed at a lower total cost of RM74.96 billion compared to the initial cost of RM85.97 billion approved in 2016.

Despite “a minor rise” in costs incurred owing to a new realignment, the overall cost was reduced by RM11.01 billion, he said during a press conference broadcasted live, after the Cabinet meeting in Putrajaya on Dec 21.

“Although there was a slight increase (in cost) to accommodate the realignment of the ECRL project that we approved, we managed to bring down the total cost by RM11.01 billion,” Anwar said.

The new total cost of RM74.96 billion is, however, higher than the RM50.27 billion stated by former Transport Minister Datuk Seri Dr Wee Ka Siong last year, after many revisions were made to the project’s alignment.

In July 2018, former Finance Minister Lim Guan Eng stated that the total cost of the ECRL project was RM81 billion, but the government will aim to considerably decrease the price to make the project financially viable.

Meanwhile, Anwar said the new government will not make many changes to the project as this will delay its implementation and complicate existing works and negotiations.

The PM also congratulated the transport, finance and works ministries for helping to speed up the negotiation process.

According to Malaysia Rail Link (MRL) official website, the 665-km ECRL will traverse the East Coast states of Kelantan, Terengganu and Pahang before linking the Klang Valley on the West Coast of Peninsular Malaysia.

“The overall alignment of the ECRL rail network was designed as such to provide a much-improved connectivity throughout the East Coast region, as well as connecting it to the West Coast, while at the same time, taking into consideration the potential growth for the industrial, commercial and tourism sectors along the ECRL corridor,” it noted.

As a national infrastructure, the ECRL will link cities and towns, as well as upgrade public transportation along its rail network.

At speeds of up to 160km per hour, the ECRL passenger trains will significantly cut travel time from Kota Baru to the Integrated Transport Terminal Gombak to approximately four hours.

The ECRL is also expected to spur commercial activities, drive investments, increase job opportunities and boost tourism activities along its rail network.

The ECRL project is expected to be completed by the end of 2026.

In terms of infrastructure, the ECRL project provides for the double-tracking and standard gauge railway line.

The infrastructure includes spur lines, tunnels, bridges, viaducts, depots, stations and a signalling system.

The project provides 20 stations, comprising 14 passenger stations, five combined passenger and freight stations, and one freight station.

China Communications Construction Co Ltd (CCCC) is the engineering, procurement, construction and commissioning contractor for this project.

The ECRL will be owned by MRL, a special-purpose vehicle wholly owned by the Finance Ministry.

It will be jointly operated and maintained by a 50:50 joint venture between MRL and CCCC.