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Scepticism over Malaysia's unexpected proposal to revisit HSR plan, as sticking points remain

SINGAPORE — The recent political upheavals in Malaysia were primarily why Singapore’s northern neighbour is revisiting the idea of a High Speed Rail (HSR) connecting the two countries, transport and economics experts said. However, the issues surrounding cost and economic benefit still exist as it did when the project was terminated 11 months ago, they added.

Scepticism over Malaysia's unexpected proposal to revisit HSR plan, as sticking points remain

A photo published in 2016 during an exhibition in Malaysia of the progress of the High-Speed Rail proposal.

  • Experts in Malaysia were caught by surprise that the High Speed Rail project between Singapore and Kuala Lumpur could be revived
  • The idea was mooted to Singapore Prime Minister Lee Hsien Loong during Malaysia premier Ismail Sabri’s first official visit here on Nov 29
  • Since the project was terminated on Jan 1, some Malaysian leaders had been raising the idea as a possibility
  • The changing nature of politics in Malaysia is likely why the idea has once again gathered steam, experts said
  • But there remains sticking points such as the AssetsCo model that both countries had differences 

 

SINGAPORE — The recent political upheavals in Malaysia were primarily why Singapore’s northern neighbour is revisiting the idea of a High Speed Rail (HSR) connecting the two countries, transport and economics experts said.

However, the issues surrounding cost and economic benefit still exist as it did when the project was terminated 11 months ago, they added.

The idea to revive the project came up during a  meeting between Malaysia prime minister Ismail Sabri Yaakob and Singapore Prime Minister Lee Hsien Loong on Monday (Nov 29), during Mr Ismail Sabri's first official visit here.

Mr Lee revealed that it was Malaysia that proposed to rekindle the project, after an earlier iteration of the deal hit a snag when there were disagreements over the ownership structure of the Singapore–Kuala Lumpur HSR.

He then said: “Nevertheless, Singapore is open to fresh proposals from Malaysia on the HSR project and the two ministries of transport will discuss the matter.

“Singapore looks forward to receiving more details from Malaysia so that we can study them and consider the matter again starting from a clean slate.”  

Since the announcement on Monday, the reactions from politicians in Malaysia have been mixed. Former finance minister Lim Guan Eng panned the idea and said that Malaysia has become a laughing stock for re-proposing the HSR.

On the other hand, Johor chief minister Hasni Mohammad supported the move, stating that any new HSR project would have to “start from scratch”.

Commenting on this latest development, observers such as Professor Ahmad Farhan Mohd Sadullah from the Penang-based Universiti Sains Malaysia said that he did not see this coming.

“Honestly, the news also took me by surprise.”

After all, there had been strong views given when the termination was announced, he added.

And although there were those who wanted the project to continue, pre-existing concerns over the HSR’s costs and revenue model as well as the impact of the pandemic on travel demand meant that if anything, it is still too soon to revisit the proposal with Singapore, the transport economist said.

“It is quite premature to plan for mega transport projects when matters are still very dynamic and uncertain,” Prof Ahmad Farhan said.

Dr Rosli Azad Khan, managing director of transport consultancy MDS Consultancy based in Selangor, said: “(Malaysians) are equally surprised by the Malaysia PM’s announcement, as there was no indication to that effect when he left Malaysia for this Singapore visit. 

“He was meant to officiate the vaccinated travel lane between Malaysia and Singapore and resolve the travel issues related to Covid-19. That’s what we all understood and Covid-19 is still a threat.”

WHY MALAYSIA IS STILL PURSUING THE IDEA

Weighing in on the issue, transport experts and economists in Malaysia told TODAY that they believed one key reason for the revived project was that political realities in Malaysia have shifted dramatically in the past 11 months of this year after the earlier agreement expired on Dec 31 last year.

Professor of economics Geoffrey Williams from the Malaysia University of Science and Technology noted that the cancellation of the HSR project was under the previous government headed by former premier Muhyiddin Yassin.

“Although the current government is within the same Perikatan Nasional coalition with largely the same ministers, the change of prime minister is a significant factor in whether the project has support or not,” Prof Williams said. 

There is a significant group within the United Malays National Organisation (Umno) party, especially those around former prime minister Najib Razak, who support the idea of carrying out mega infrastructure projects for various reasons, including the economic and development impact, he said.

Mr Ismail Sabri, the present Malaysian prime minister since August this year, is the current vice-president of Umno. Mr Muhyiddin was previously from Umno as well, but left to join Bersatu party after falling out with Mr Najib.

Mr Najib, who was ousted after the watershed 2018 election that saw Umno’s first defeat in the national polls, was one of the main proposers of the HSR from as early as 2010. 

Since the project’s termination on Jan 1 this year, Mr Najib has been calling for the HSR’s comeback to revitalise the economy, create jobs and “excite the world again”.

The economic arguments for a HSR that links the two city centres is not without merits for Malaysia, but could also be exaggerated, the experts said.

Dr Ahmad Hilmy Abdul Hamid, a transport expert from Universiti Sains Malaysia, said that connectivity between any two countries can bring tremendous benefits to business, social relations, industry, tourism and many other aspects that are key to a positive bilateral relationship between the two nations. 

“But for this HSR project, I gather that the more important points to consider are financial viability and sustainability.”

Prof Williams said detractors of mega-projects believe that the HSR benefits vested interests, big-business, foreign investors and financiers. 

“People from this perspective see HSR as a distraction from post-Covid development needs in rebuilding small- and medium-sized enterprises, creating widespread jobs and focusing on rebuilding social and health infrastructure.” 

Dr Ahmad Farhan emphasised that the demand and the revenue model will not be enough to make the project viable, especially for a route that terminates in Singapore and Kuala Lumpur.

WHAT THE NEW DEAL MAY HOLD

The contentious points about economic benefit is the reason why the alignment of the HSR and the cities that it would connect would be a key issue, the observers added.

Former prime minister Muhyiddin had suggested to Malaysia’s parliament in September that the line be extended to Thailand, so as to link up with the rest of Asia, Dr Rosli noted as an example.

However, Dr Francis Hutchinson from the Singapore-based Iseas-Yusof Ishak Institute said that any future discussion of a HSR model will likely share structural similarities with what was previously discussed, given the “piecemeal” manner in which the HSR had proceeded.

For example, a viable proposal will likely continue with the clustering of customs and immigration processes to make it easier and faster for travellers to transit between the two countries.

“In addition, it is also likely that the Malaysian part of the HSR would connect a range of secondary urban centres in order to maximise the catalysing effect of the infrastructure spend, and to enable better connectivity between larger and smaller cities,” Dr Hutchinson said.

He noted how the intermediate stops were smaller urban centres such as Muar, Ayer Keroh, and Batu Pahat, adding: “All of the new stations were meant to be ambitious urban renewal projects to revitalise town centres, and were part of the large-scale boost to rail transport that the Malaysian government has been trying to support.”

Dr Rosli, on the other hand, suggested that the current Malaysian premier might have his own plans “to run a new alignment through his Bera parliamentary seat in Pahang state, along the east coast states of Johor, Pahang, Terengganu and Kelantan” before connecting with Thailand.

THE ASSETSCO ISSUE

Aside from the rail alignment, a key point of contention was the AssetsCo model that Singapore saw as the “centrepiece” to the HSR agreement. 

When the agreement was first inked, Malaysia and Singapore agreed to a jointly appointed, privately financed AssetsCo that would own and operate the rolling stock of the HSR, such as the trains. 

The transport authorities from both countries launched a tender in 2017 — and then extended the deadline to end-2018 — to appoint an AssetsCo, which reportedly attracted six potential bidders.

The tender was aborted in 2018 following Malaysia’s general elections, when former premier Mahathir Mohamad said that he wanted to review the HSR project.

Later, Malaysia would propose to alter the HSR agreement to remove the AssetsCo, which Malaysia officials then claimed would hamper their ability “to expand the HSR to other parts of the country to enlarge its economic impact”, since decisions had to be made jointly. 

Malaysia’s MyHSR chairman Esa Mohamed said in a letter to the country’s The Star newspaper in May: “We would have been hamstrung, after spending billions of dollars, from leveraging this railway to deliver much-needed economic development to other parts of Malaysia.”

Mr Ong Ye Kung, who was then Singapore's transport minister, said early this year that the Government could not accept Malaysia’s proposal to get rid of AssetsCo.

Neither country had the expertise and experience in operating the HSR and so, both countries had agreed to appoint a “best-in-class” industry player who is accountable to both Singapore and Malaysia, he added.

Given Singapore’s position, Prof Williams said that the new proposal from Malaysia would likely adopt an AssetsCo model.

He believes that private funding should be used more actively due to the economic and commercial benefits of the HSR.

“Since Singapore appears justifiably adamant about AssetsCo, Malaysia will likely concede on that and a face-saving deal will be found to allow the project to go ahead,” Prof Williams said.

Dr Rosli disagreed, though, stating that Malaysia is unlikely to back down on the AssetsCo matter and could possibly look to suggest a different model such as the one adopted for the Johor–Singapore Rapid Transit System (RTS).

The RTS Link is operated by RTS Operations, a joint venture between Singapore’s public transport operator SMRT and Malaysian rail operator Prasarana.

One way or another, it remains to be seen whether any proposal from Malaysia is feasible, Dr Rosli said.

“I dread to think that any decision made by Mr Ismail today will continue to stand. It might get cancelled again by the next Malaysian prime minister, whoever that might be. With or without AssetsCo, I don’t think Malaysia is ready for this project.”

Dr Ooi Kee Beng, a senior fellow at the Jeffrey Cheah Institute on Southeast Asia, stressed that in any case, nobody knows for sure what the new HSR proposal may look like given the vagaries of Malaysian politics.

Dr Ooi, who is also the executive director of the Penang Institute, added: “In many cases of high-speed rail connections, it is often the case that you build the infrastructure first, and then you hope (economic) development starts happening.

“But I think anybody watching from outside would think that there should have already been a HSR from Bangkok all the way down to Singapore a long time ago.

Ultimately, both countries would theoretically stand to benefit from the project, but that is only if decisions are made apolitically.

Dr Ooi said: “Instead of making technocratic decisions, we take political decisions that are not only populist, but highly dependent on the top man.

“I’m sure Singapore has learned that they better take it easy with this, because nothing is permanent in Malaysia.”

Related topics

HSR high-speed rail Malaysia transport economy Politics

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