Termination of HSR in the best interest of the nation

PETALING JAYA: Malaysia has proposed alternatives to lower the cost of the high speed rail (HSR) project from Kuala Lumpur to Singapore when the Covid-19 pandemic showed no signs...
The Star

PETALING JAYA: Malaysia has proposed alternatives to lower the cost of the high speed rail (HSR) project from Kuala Lumpur to Singapore when the Covid-19 pandemic showed no signs of slowing down last June.

As negotiations between Malaysia and Singapore fell through, the bilateral agreement lapsed on Dec 31,2020, leading to the termination of the mega project.

Experts believed the latest development would enable the government to go back to the drawing board while avoiding a huge expenditure amid the unprecedented economic uncertainties.

Dr Joewono Prasetijo, the head of the Industry Centre of Excellence for Railway (ICoE-Rel) at Universiti Tun Hussein Onn Malaysia, said it was clear that the termination was obliged due to the proposed changes, done in reference to the current economic situation.

“This might be an opportunity to restructure the objectives of the project, such as to reduce financing costs and risk premiums, allow greater participation of local companies and to re-route the links as well as integrate with other public transport facilities.

“Therefore, restructuring the objectives might reduce the project cost further and at the same time, provide us with greater benefits. In that sense, I think, the compensation to Singapore would not put us in any difficulty, ” he told StarBiz, adding that the government has chosen the best solution for Malaysia.

According to the bilateral agreement, Malaysia is required to compensate Singapore for expenses it has incurred since 2016, when both countries inked the agreement.

While Singapore had said that it spent more than S$270mil (RM821.15mil) for consultancy and manpower, Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed had previously said that it would be much lower.

The amount is still being finalised.

“The compensation depends on what has been done, so it should be less than what was mentioned.

“We should view this termination from a different perspective. Yes, it is terminated but I’m confident that another HSR project will be carried out in future with different or domestic routes, for example from KL to Johor Baru.

“I would rather view this as a postponement rather than a termination, ” Prasetijo said.

He believed that the compensation would be negotiable, taking into consideration a KL-JB HSR which may be connected to Singapore in the future.

Assoc Prof Dr Ahmed Razman Abdul Latiff of Universiti Putra Malaysia’s Putra Business School said the termination was a scenario of Singapore insisting to go on with the original proposal while Malaysia would not be agreeable to it due to the potential high cost and liability.He said the compensation would be lower than S$270mil, adding that the Malaysian government would have its right to perform its own due diligence before deciding on the exact cost.

“The compensation will be on what has already been spent rather than future expected losses arising from the cancellation.

“I don’t think it will be more than S$270mil. Singapore has not done any significant infrastructure, specific stations or built dedicated railway tracks.

“The initial estimate of compensation was RM300mil. It will probably be less than half of what Singapore quoted, ” he said.

Ahmed Razman added that land costs would not be included because the parcels of land that Singapore had acquired can be reused for other purposes.

Prasetijo said while the termination is currently the solution, the HSR is a necessary technology for Malaysia.

“Previously, the project was planned as a solution to alleviate congestion and to provide economic benefits.

“But the people need to understand that the termination is also part of the solution. Again, this is economics. Both are solutions but for different times, ” he said.

The Star, Monday, 11 Jan 2021
News Clipping 2021