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'How is it going to impact our economies? It will be a game changer'

KUALA LUMPUR – Singapore Prime Minister Lee Hsien Loong and Malaysia Prime Minister Najib Razak answered questions on the economic benefits and challenges of the Kuala Lumpur-Singapore High Speed Rail (HSR) project in a Q&A session after the signing of a memorandum of understanding in Kuala Lumpur on Tuesday (July 19).

Prime Minister Lee Hsien Loong and Malaysia Prime Minister Najib Razak at the signing of the memorandum of understanding for the Kuala Lumpur-Singapore High Speed Rail on July 19, 2016. Photo: Jason Quah

Prime Minister Lee Hsien Loong and Malaysia Prime Minister Najib Razak at the signing of the memorandum of understanding for the Kuala Lumpur-Singapore High Speed Rail on July 19, 2016. Photo: Jason Quah

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KUALA LUMPUR – Singapore Prime Minister Lee Hsien Loong and his Malaysian counterpart Najib Razak took questions on the economic benefits and challenges of the Kuala Lumpur-Singapore High Speed Rail (HSR) project after witnessing the signing of a memorandum of understanding in the Malaysian capital on Tuesday (July 19). The high-speed rail link could be up and running by 2026, bringing travel between the two cities to just 90 minutes. Here's a lightly edited transcript of their comments:

Q: What will be the economic benefits of this project?

Singapore PM Lee Hsien Loong: The economic benefits include the convenience of being next door to one another, one-and-a-half hours away  a very affordable, very simple, and very easy way to get in touch to do business and make friends, in order to be one integrated economy. That means opportunities for businesses and tourists to get both destinations for the price of one. 

There are many spin-off benefits in terms of development potential around the terminus in Singapore and also in Malaysia. In Malaysia, they are building it in Bandar Malaysia, and in Singapore, we are doing it in the Jurong Lake District. There will be indirect benefits to businesses which can take advantage of this convenience and therefore flourish and grow in both territories.

If you look at Taipei and Kaoshiung in Taiwan or Shanghai and Nanjing in China, two cities are connected together and both cities benefit. There is more competition, more business to be done. This means vitality and a wide variety of options and a more rapid pace of progress. I see this as a very positive project and it is a major undertaking that will cost quite a lot on both sides and we have to get it right. If we do, it will be a lasting and strategic contribution.

Malaysia PM Najib Razak: I share Prime Minister Lee Hsien Loong’s optimism about the impact of this project to the economies of both Malaysia and Singapore. 

You can do an initial study in terms of the multiplier effect that this project will bring to both countries in terms of increase in Gross National Income. And in terms of jobs, we expect the creation of almost 30,000 jobs through the implementation of the HSR.

Beyond the numbers, if you look in terms of the big picture, this project will bring about tremendous change in Klang Valley and Singapore, (and also) the towns in between: Seremban, Malacca, Muar, Batu Pahat, and Johor. All these towns along the way will see a new impetus in terms of economic development.

Beyond that, we are talking about the future of Malaysia and Singapore. You can visualise what it is going to be like. We will see a very, very exciting future and that future will be a reality once this project is operational. And don’t forget a change in lifestyle. We will not see Singapore as too distant, but we will be two cities that are very closely connected in the true sense of the word. 

And of course, there will also be an increase in land value, for example, properties in the areas of the HSR will see a tremendous increase in value. So when you ask the question how it is going to impact our economies, the short answer is that it will be a gamechanger.

Q: Singapore and Malaysia will be calling for international tenders in areas like assets operating companies and rail assets companies. How to ensure the entire process is fair, transparent and open, and tenders go to the best bidders?

Mr Lee: This is one of the items which has to be settled and has been discussed by the two sides as to how the project is going to be structured, how the tenders will be called, the sequence of which they will be called, the structure has to be right in regards to how the packages and tenders are evaluated. 

The execution has to be properly done and when we evaluate the tenders, evaluation has to be objective, fair and transparent, so that we can ensure the best value and best choice for the project. This is something both sides will be working together on.

Mr Najib: Because this project has attracted so much international interest, it is incumbent upon us to ensure that the process will be very fair and transparent. We are both committed to ensure this will happen because the image and integrity of both countries will be at stake, so you can rest assured the process will be carried out in the fairest possible way.

Mr Lee: At the end of it, we will have to make a joint decision because this is a joint project and we both have to carry the consequences of our choice.

Q: How much will the project cost and what would the fees be like if this HSR is going to be considered a commuter service?

Mr Najib: Well, various figures have been bandied about by the press but I do not think it is right for us to mention any figure at this stage because of the bids that are to be opened, and only when we know the final outcome, can we be specific about the cost of the project.

As you know the process can be very competitive and technology will change over time. You’re talking about delivery in 10 years’ time and obviously more changes would have taken place. Therefore it is not appropriate for us to mention any figure at this stage.

Q: We understand that the train services are expected to begin in 2026. Ten years is not a short time, so how do we ensure that timeline will be met, and are there any potential bumps you can foresee given the global economic and political environment?

Mr Najib: I think the timeline is doable, although as PM Lee mentioned, it is going to be very tight, given the scale and complexity of this project. ... We will put our efforts in a collaborative manner, working together as closely as possible to ensure the deadline will be met. It is going to be tight, but we will do our best.

Mr Lee: I think we will work very closely together, it is a very tight timeline, and many potential bugs. The global economy may or may not be one because that is an external factor and as long as the countries have been able to put aside their resources which are available, the project will proceed. But the project itself has many complexities and they all have to be put together like a very complicated jigsaw puzzle and we must make sure that we get all those things right in order to get the project done in the most expeditious time.

Mr Najib: Once you get the business model right, then even if the world economy is rather volatile or uncertain, the project itself can be funded and that is the most important thing. Get the business model right and we should be able to implement the project according to our timeline. 

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