Fitch: Other projects may be delayed if HSR revived

  • Corporate News
  • Friday, 20 Dec 2019

Fitch’s infrastructure analyst James Su noted that Prime Minister Tun Dr Mahathir Mohamad had mentioned decreasing the speed of the line as a possible way to lower the cost.

KUALA LUMPUR: The government is likely to delay or push back some of its other infrastructure projects in the pipeline if the KL-Singapore High Speed Rail (HSR) project is revived.

Fitch Solutions said the government is likely to do this as a measure of financial prudence, so as to keep the amount of public debt in check, given the hefty price tag attached to the HSR project.

Fitch’s infrastructure analyst James Su said the project is expected to be revived, but only if the a new deal to lower the cost of the project can be struck between the Malaysian and Singaporean authorities. “We see this as a key challenge that both parties will face as they continue to negotiate the project, ” he said.

He noted that Prime Minister Tun Dr Mahathir Mohamad had mentioned decreasing the speed of the line as a possible way to lower the cost.

This, Su said, had its limitations, for if speeds were too low, commuters between KL and Singapore may opt for air travel instead, lowering the demand for the HSR line and possibly making the project financially unfeasible.

Dr Mahathir had said on Tuesday that talks on the resumption of the HSR project may happen next year.

He told reporters that the government hoped to reduce the cost of the project, and one way to do this is by reducing its speed from 400kph.

In December 2016, the Barisan Nasional administration signed a bilateral agreement with Singapore to build a 350km high-speed railway, linking Kuala Lumpur and Singapore, with an estimated cost of RM110bil.

However, the project was later temporarily suspended by the Pakatan Harapan government, citing high costs.

Su said the potential revival of the project could boost growth, not only within the infrastructure sector, but also within the broader buildings construction sector.

“Enhanced accessibility, especially in smaller locations along the proposed HSR alignment, will create opportunities in real estate, industrial development and tourism-related projects, ” he said.

On potential beneficiaries of the HSR, Su said businesses operating in the construction industry (contractors, real estate developers, raw material providers, equipment providers) and residents and businesses located along the planned route would benefit from the enhanced connectivity.

He added that the country providing the HSR technology and expertise – expected to be Japan, China, South Korea or France – would also benefit.

For China, he said the completion of the HSR project will bring them one step closer to completing the Pan-Asian railway network, a network conceived by China that aims to connect Kunming to Singapore, and enhance railway connectivity within the Mekong region.

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