Singapore: $204 MN Spent on Canceled High-Speed Rail Project With Malaysia

Hadi Azmi
Kuala Lumpur
2021-01-04
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Singapore: $204 MN Spent on Canceled High-Speed Rail Project With Malaysia People wait for a train on the platform of a station in Kuala Lumpur, Oct. 1, 2020.
Reuters

Singapore spent about U.S. $204 million on a now-cancelled high-speed rail project with Malaysia, the Singaporean transport minister said Monday, while Malaysian officials said they could not reveal how much Kuala Lumpur would have to pay the city-state in compensation.

After the $25 billion Singapore-to-Kuala Lumpur railway line was terminated by both sides on Dec. 31, Malaysia said it would study the option of a domestic high-speed rail as a replacement. However, such an effort would be redundant and therefore unviable, a transportation expert told BenarNews on Monday.

“Singapore has incurred 270 million Singapore dollars [U.S. $204.5 million] on the Kuala Lumpur–Singapore High Speed Rail or HSR project,” Singapore’s Transport Minister Ong Ye Kung said in Parliament on Monday, according to a video of the legislature’s proceedings.

“Singapore was fully committed to carry out our obligations under the HSR BA [bilateral agreement] but Malaysia felt that circumstances have changed, including due to COVID-19, and proposed several changes to the HSR project,” Ong said, referring to an agreement his country had signed with Malaysia in 2016.

Under the agreement, Malaysia would have to compensate Singapore for costs that the city-state had incurred for the project, but neither side could disclose the compensatory amount, Mustapa Mohamed, minister in Malaysia’s Prime Minister’s Department, said in a statement posted on Facebook.

“[M]e and the team will discuss with Singapore to get agreement to share information about the total compensation once it is finalized. Thus, any number of compensation mentioned by either party is merely speculation,” Mustapa said, adding that the compensation was “not punitive.”

“[I]t is to pay back the specific cost of the project Singapore has spent,” he said.

Ong, too, said that the compensation which Singapore would receive could not be made public.

Construction on the 217-mile (349.2-kilometer) line was originally slated to start in late 2018. The high-speed line was expected to reduce travel time to 99 minutes, from 7 hours by conventional rail services.

In 2018, the year Malaysia’s short-lived Pakatan Harapan government came to power, it signed an agreement to pay Singapore U.S. $10.9 million to postpone the project for two years, as Malaysia grappled with a national debt of 1 trillion ringgit (U.S. $249.6 billion).

The project was again postponed in June 2020 – this time under the Perikatan Nasional government – as both countries had been discussing Malaysia’s proposed changes to the project. This postponement period then lapsed on New Year’s Eve, and was terminated after the two sides failed to mutually agree on these changes.

Domestic alternative

After announcing the project’s termination, Malaysia said the government planned to study other options, including a high-speed railway linking Kuala Lumpur to Johor, the southernmost state in Peninsular Malaysia that borders Singapore.

However, Malaysia would be better off studying other alternatives because the Kuala Lumpur-Johor route already has a rail system, which is set to be upgraded to allow higher speeds, transportation expert S.M. Sabri S.M. Ismail told BenarNews.

“There is not much merit in a high-speed rail just from Kuala Lumpur to Johor Bahru,” the analyst said.

Former Malaysian Prime Minister Najib Razak, whose government signed the high-speed rail agreement with Singapore, said that a high-speed rail line without Singapore would not be sustainable.

Najib said that he had received information that a Kuala Lumpur-Johor line had already been planned and was projected to cost as much as the cancelled project. The government also planned to pay the operator of this planned line annual compensation because a truncated line would see significantly fewer passengers, he claimed.

Millions of potential jobs as well as potential tourism revenue have also been squandered due to the termination of the KL-Singapore high-speed project, Najib said.

What Malaysia wanted

Meanwhile, Malaysia’s Mustapa said on Monday that the cancellation of the high-speed rail project was “the best solution for Malaysia,” even though the country would have liked to emulate similar successful projects in Taiwan and Japan.

“The emergence of COVID-19 has forced the Government to find ways to reduce the cost of several mega projects as well as identify strategies to restore the country’s economy post COVID-19,” Mustapa said on Facebook.

Malaysia, he said, had proposed changes to the project which would have cut costs but the two countries couldn’t come to an agreement on those changes.

Singapore’s transport minister said the key point of disagreement between the two countries was a Malaysian proposal to remove the project’s assets company, that is, a firm that would essentially run the project.

 “Because neither country has the expertise and experience in operating a HSR, we agreed under the HSR BA to appoint a best in class industry player through an open and transparent international tender to assume the role as the assets company,” Minister Ong said.

“Singapore informed Malaysia that the removal of the assets company constituted a fundamental departure from the HSR BA and could not be accepted.”

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