Thailand’s Land-Bridge Project vs Malaysia’s HSR…

Three months ago, Thailand’s deputy transport minister said, Thailand will benefit from its southern land bridge project as the Strait of Malacca is to reach full capacity in 10 years.

Recently, news reports showed Thailand plans to scrap the megaproject, costing about US$29.7billion after a government study found it is no longer economically viable and poses significant environmental risks.

The study showed the expected financial return had fallen to 4.8% from 8%, while cargo volumes were projected to be as much as 16% lower than previously estimated. Shipping lines have already invested in competing projects, leaving limited interest in the proposal. It also warned of environmental risks including Ranong’s biosphere reserve and wetlands and threaten key marine tourism sites.

The 100km connection would cut shipping times between the Indian and Pacific oceans by bypassing the Malacca Strait and is an alternative to a decades-old proposal to dredge a canal through the Kra Isthmus.

Alternative plan now is to upgrade the Ranong Port and develop a rail link that would connect the Andaman coast with Thailand’s existing rail network. No losses were incurred because no land had been acquired and construction has not started.

This project offers an important lesson that large infrastructure investments should begin with a clear assessment of strategic priorities including financial viability and environmental considerations before agencies proceed with detailed project studies.

Let us now look at the Kuala Lumpur–Singapore high speed rail (HSR) project.

It was first announced in 2010 with studies conducted into the feasibility and conceptual details. In 2013, Singapore formally agreed to the joint project and a committee was tasked with looking into ‘the details and modalities’.

In 2015, MyHSR Corp (under the control of the Ministry of Finance and the supervision of the Ministry of Transport) was established to facilitate development and implementation.

In 2018, both countries formally agreed to postpone and Malaysia remitted S$15 million in abortive costs.

A new government in 2020 reviewed the project and decided to proceed alone, stopping at Johor Bahru and the project was terminated in 2021 where Malaysia paid Singapore S$102 million in compensation.

Singapore’s Transport Minister subsequently revealed in parliament that the “main concern” for the termination was Malaysia’s suggestion to remove the assets company AssetsCo, a “best-in-class industry player”, appointed through an open tender, to provide the means to run and operate the network.

The Madani government revived the project in 2023 calling for new proposals through a Request for Information (RFI) on a private sector initiative (Public-Private Partnership (PPP)) with minimal government funding.

As of today, nothing has been finalised.  

Singapore’s position remains open to fresh proposals starting from a clean slate, before committing to a new treaty.

The selling point has always been economic potential that will drive massive property demand with massive appreciation including transit-oriented development potential and connectivity (cross-border professional mobility, to a historic royal town, to the UNESCO World Heritage city and to the industrial and commercial centres).

A PwC study which shows that every RM1 spent on infrastructure could generate RM1.80 in economic output lent support as economic potential.

Be mindful that HSR projects are operationally profitable only in dense corridors due to the massive construction costs.

With that, I would suggest MyHSR Corp to seriously consider the following:

1. To do in-depth studies on regional HSR lines in China.
2. Be more transparent on quantitative numbers rather than qualitative justifications.
3. Make public the feasibility and ‘the details and modalities’ done since 2010.
4. Is the HSR project a property investment game-changer?
5. Malaysia has about 23,000 completed unsold residential units worth roughly RM15.8 billion and the highest concentration is in Johor (holding about 23.5%), followed closely by the Klang Valley.
6. Has the realignment through Forest City been finalised and what is the impact on total cost and the environment?
7. Finding local private investors for a project costing more than RM100 billion is not easy. Are we ready for a major national infrastructure project with foreign ownership with a minority local portion where economic spillover flow back overseas?
8. Are we bending-backwards for this project to move but Singapore is still non-committal?
9. Since the HSR will directly compete with air travel and highway driving, what will be the impact on all the Malaysian airlines since the KL–Singapore corridor is the third busiest international air route in the world and we are also expanding and upgrading highway capacity along the key southern corridor connecting Kuala Lumpur to Johor?
10. How much has MyHSR Corp and other government agencies spent on this project on top of the S$15 million and S$102 million paid as compensation to Singapore?

Let us learn from Thailand. What exactly is the primary objective of the HSR project? Let us be very clear and transparent on assessment of strategic priorities including financial viability and environmental considerations before spending more money, then to postpone or cancel it again.

What say you…

 

Saleh Mohammed