Kuala Lumpur-Singapore High-Speed Rail (HSR): Where is the Governance?

Last month, in a written response in the Dewan Rakyat, Anthony Loke said Malaysia is finalising key parameters on a privately-led basis and will be presenting it to the Cabinet for approval. Have we received any “promising” proposals as suggested by Anwar to finalise key parameters for the Kuala Lumpur-Singapore High-Speed Rail (HSR) and move to the RFP phase?

In January, Anwar said the project can only be revived if there is full participation from the private sector and is still waiting for “promising” proposals as the government has other pending issues for the next two years. So, mega-projects have to be deferred.

The ‘Request for Information’ (RFI), MyHSR issued in July 2023, called for concept proposals to gather innovative business models and supplementary revenue-stream ideas for a privately funded structure. Closed in January 2024, the findings of the RFI evaluation was to be presented to the cabinet and a positive response will lead to a request for proposal (RFP).

Of the seven concept proposals received, three consortia are believed to be shortlisted – YTL Construction Sdn Bhd-SIPP Rail Sdn Bhd, Malaysian Resources Corp Bhd-IJM Construction Sdn Bhd-Berjaya Rail Sdn Bhd-Keretapi Tanah Melayu Bhd (MRCB-IJM-BRail-KTMB) and a Chinese consortium said to be led by state-owned China Railway Construction (CRC).

Japanese companies pulled out as they deemed the project too risky without financial help from the government.

In 2020, the cost of the HSR was estimated at RM72 billion or about 50% more than the industry average. A 2019 World Bank report on HSRs in China stated that the construction cost was on average between US$17 million and US$21 million per km. The 143km Jakarta-Bandung project, started with a cost of US$5.5 billion in 2015 but cost overruns pushed it close to US$8 billion and the Indonesian and China government-owned entities had to cover.

In July 2024, Anthony Loke said negotiations with Singapore on the HSR project can only start after the Cabinet makes a policy decision on the feasibility of the RM100bil project by the end of the year.

However, MyHSR’s statement on the response to the RFI, stated the project will be based on a “public-private partnership (PPP) initiative” on a design-finance-build-operate-transfer model.

In December 2024, MRCB ended their teaming agreement with the Berjaya-led consortium. Note that EPF is the largest shareholder of both MRCB and IJM and also a substantial shareholder of YTL Corp Bhd.

Questions that need answers now include:

• What was the Cabinet’s response on the findings of the RFI evaluation, since it has been more than a year now?
• Why MyHSR said the project would be a PPP initiative since Anwar said it will be fully private-sector-funded? Have we forgotten the experience of the LRT and Monorail projects where the government takes bigger risks?
• Has a comprehensive feasibility study been done and has the Cabinet made any policy decision on the RM100 billion project, supposedly due by the end of 2024?
• What is the justification for the RM100 billion price tag and the utilisation of the HSR? An HSR audit in Europe revealed, on average it needs nine million users per year to be “operationally” viable excluding capital expenditure incurred. A 2019 report on China’s High-Speed Rail Development by the International Bank for Reconstruction and Development (IBRD) said while revenue can cover the operation, they are insufficient to maintain the infrastructure. Even if all the air, bus and car passengers migrate to the HSR, which is highly unlikely, we would still not have the numbers in Malaysia.
• Was there any Environmental and Social Impact Assessment study done since the project will be realigned to run through Forest City?
• With due respect of the technical and commercial advisory consultants, what is the project sustainability and bankability without compromising on service reliability, journey time and safety? And is there any cost reduction, what is the estimated total project cost now and how long will the concession period be?
• Are there any HSR project that has been funded entirely by the private sector and the fact we are doing this with another country?
• Since the line will end in Singapore, will the RFP to be called, include works up to Singapore and have we discussed the parameters with them and how much is their involvement now? The Singapore Prime Minister said they are open to listening to new proposals from the Malaysian side, starting from a clean slate.
• Have we discussed on the structure of the deal? How would operational and development costs and risks be shared and how about assets ownership? Bear in mind, the Singapore Transport Minister revealed in a parliamentary session that the “main concern” leading to the earlier termination of the project was Malaysia’s suggestion to remove the assets company AssetsCo, – a “best-in-class industry player” appointed through an open tender – to run and operate the network as both countries are inexperienced.
• Earlier, Malaysia paid RM320.27 million to Singapore as compensation to cancel the project. Are we very clear now in wanting to proceed? Have we cleared issues regarding geotechnical challenges, land acquisition and community impact, technical complexity, cross-border coordination and timelines?
• Where is the double tracking to Johor Bahru (long-delayed and built by a YTL Group joint venture) in the equation? It is supposed to boost Malaysia’s economic development, strengthen its position as a regional economic hub, attract investment, enhance connectivity and overall economic resilience and reduce travel time from Johor Bahru to Kuala Lumpur. This game-changing HSR project has somewhat similar objectives too!
• How many more catalysts for economic transformation and new economic corridors do we need?
• How many more land around the double-tracking and HSR stations to be developed that will push up prices? Who are we building it for? When in trouble, developers will go back to the government for incentives and exemptions. The government loses revenue while they cover their costs and of course, make profits.
• Does a hallmark of a high-income nation need to include an HSR when we are still struggling with ‘first and last-mile’ connectivity?

We need critical and integrated thinking with input from independent economists and experts and avoid optimistic numbers and profitability. The majority of China’s HSR is reliant on debt financing and depended on financial subsidies. They raise new debts to pay off old ones.

More importantly, transparency.

Apart from other pressing commitments, we should focus on realising the value from the double-tracking, RTS Link and ECRL projects first before embarking on this humungous project.

While we strive for development and high-income nation, we are still stuck with high-cost-low-pay economy and the poor financial literacy of our people.

Last but not least, is HSR sustainable, where is the governance and I hope we do away with considerations towards politically connected elites.

 What say you…