KUALA LUMPUR: Malaysia's bullet train project may finally see the light but there will be more economies of scale if the rail line extends all the way to China, said Dr. Yeah Kim Leng, a professor of economics at Sunway University Business School.
Singapore's participation is crucial for the high-speed rail (HSR) project's economic viability and success, he added.
Yeah said the rail link to China via Thailand is already being pursued using existing rail tracks, including the completed north and south double-track railway system.
"The high-speed Asian rail network is a long-term aspiration that is gradually becoming a reality with the completed project in Laos and with both Thailand and Vietnam also actively pursuing having their own high-speed rails," he told Business Times.
Yeah, who is one of five advisors to the Ministry of Finance, said given the government's fiscal constraints and the project's high cost, a critical consideration is the financial resources and support the government needs to commit to the selected private sector consortium.
Samuel Tan, a senior consultant, believes that the Kuala Lumpur-Singapore high-speed rail (KL-Singapore HSR) project will transform Malaysia's transportation and property landscape.
"Malaysia can potentially become a key part of the Pan Asian Railway Network, linking the country, Singapore, Indo-China, China and Europe. With that in place, more investors will be keen to invest here, as traveling by rail becomes seamless," he said.
Business Times reported in April that the HSR project might cost around RM70 billion, a notable decrease of 30-35 per cent from the previously estimated RM110 billion.
Market insiders noted that while it could cost around RM70 billion-RM80 billion, no definitive cost estimate has been provided for the HSR project.
The RM70 billion-RM80 billion figure was a projection based on factors such as the railway line's length and alignment, as well as the number of trains and stations required, they said.
Prime Minister Datuk Seri Anwar Ibrahim's administration is considering proposals from a narrowing list of private consortiums and will decide in the coming months whether to proceed with the project.
Transport Minister Anthony Loke Siew Fook said in an interview with an online business portal recently that he hoped the Cabinet would determine the project's viability by the end of the fourth quarter of this year.
Loke added that negotiations with Singapore would begin once a policy decision to proceed with the HSR is made.
MyHSR Corporation, the government-owned entity overseeing the HSR's development, received concept proposals from seven local and international consortia by the January 15 2024 deadline.
The RFI was conducted to assess the private sector's ability to fully finance the project without state funds or guarantees.
Business Times had also reported that three consortiums had been shortlisted for the project.
They were YTL Construction Sdn Bhd-SIPP Rail Sdn Bhd, Berjaya Rail Sdn Bhd-Keretapi Tanah Melayu Bhd-Malaysian Resources Corp Bhd-IJM Construction Sdn Bhd and a Chinese consortium led by state-owned China Railway Construction.
The government's policy is to allocate strategic assets like the HSR to a group that is at least 51 per cent owned by Malaysian firms.
YTL is controlled by Tan Sri Francis Yeoh Sock Ping, while Berjaya is controlled by Tan Sri Vincent Tan Chee Yioun.
The YTL Group proposed the 330-350 km-long project over 20 years ago, with an estimated cost of RM8 billion at that time.
In December 2016, a legally binding agreement was signed between Malaysia and Singapore, with the goal of having the line operational by 2026. However, it was delayed at Malaysia's request, leading to the agreement's lapse in December 2020.
Malaysia paid over S$102 million in compensation to Singapore for the project's termination.
Talk of reviving the project intensified following the 2022 general elections and Anwar's visit to Singapore early in the year, where he met with Singaporean leaders.
Dr. Ahmed Razman Abdul Latif, an associate professor at Putra Business School, said the HSR line between Kuala Lumpur and Singapore is a positive development that could enhance the country's economy by facilitating the movement of human capital within the Asean region.
However, the project's cost remains a significant obstacle for the government, which is reluctant to finance it due to the increasing financial burden, he told Business Times.
He also said other critical aspects of the HSR project include governance related to day-to-day operations and management, especially concerning the sovereignty of the country's critical assets.