ECRL – hardly a gravy train

THE game changer for Malaysia was the construction of the North-South Expressway (NSE).

Today, that road artery serves as the spine along the west coast of Peninsular Malaysia, driving development along the expressway and opening up new economic opportunities in cities and towns along the corridor.

The development of new modes of transportation, however, has not seen the same return on investment.

The marginal utility of rail projects such as the Electric Train Service (ETS) has been a big improvement over the old Keretapi Tanah Melayu Bhd (KTMB) train service, but has done little to alleviate traffic ­congestion on an increasingly choked NSE.

It, nonetheless, offers passengers a hassle-free way of travelling up north and, soon, to Johor Baru. KTMB has occa­sionally made a profit and, a long time ago, was offered for sale for RM1.

Now, we will have the East Coast Rail Link (ECRL) opening for use soon, but the marginal utility it will bring to the movement of people and cargo towards the east coast of Peninsular Malaysia will be ­overstated.

That is especially so given the gargantuan ­RM70­bil-plus it cost to develop the project.

For people daydreaming about how fast the journey from Kuala Lumpur to Kota Bharu will be, building a costly rail network that will be impossible to recoup its cost, or even make an operational profit, just to shave a few hours off travel time is, for now, a colossal waste of funds.

That is because doubts over the viability of the project were evident when the first Pakatan Harapan government took over in 2018, and one of the early decisions it made was to cancel the ECRL.

Negotiations ensued, and the cost of the project was scaled down, with the project going ahead. But doubts have lingered over its viability since.

It was reported that the ECRL was projected to generate a revenue of RM418mil from passengers and cargo by 2029. Those numbers are based on what consultants projected, and there have been instances where projections from consultants have fallen short of reality.

Even if a revenue of RM418mil is reached, it would not be enough to cover the yearly loan payments of RM3.7bil, which will kick in from next year onwards once the payment moratorium ends.

The hope is that the ECRL will be able to cover its operational costs, but the odds of the project making enough money to pay back its capital investment are slim to none.

The loan exposure for Malaysia Rail Link Sdn Bhd is RM72bil, and its chief executive officer was reported to have said that its investment in the ECRL cannot be recouped in the next 30 to 50 years.

He said in the report that the project should be judged by its economic multiplier effects ­rather than returns from operations.

The capacity for cargo and passengers on the ECRL serves as a minor outlet for relieving traffic heading towards the east coast.

Even though the ECRL hopes to capitalise on hauling cargo from coast to coast, the reality is that the amount of cargo it can carry now is far less than what one large container ship can ferry from Port Klang to China.

And it remains to be seen how much traction there will be in terms of cargo shipped between the coasts, given the cost versus time saved. Even the number of passengers will be capped by how many people the train can carry each day.

It has been reported that the 2027 target is to ferry 1.4 million passengers, or around 3,800 people daily, assuming a load factor of 60%.

The daily number of vehicles heading to the east coast along the highways is in the tens of thousands, rising significantly during festive periods. Each vehicle, on average, will have multiple people on board, hence ferrying many more people from coast to coast.

Then, there is the cost. The one-way ticket price looks reasonable, but apply that to a family and add the return fare, and there will be a rethink, considering that passengers will also need to take public transport or e-hailing services from ECRL stations, which are quite a few kms from the major east coast cities.

The hope is that the rail network can lead to economic spillovers, predominantly on the east coast. The plan is to create industrial parks along the ECRL to take advantage of the connectivity, but such a plan has a long way to go before generating significant economic spillovers from the ECRL.

Apart from Kuantan Port needing massive upgrades in terms of capacity, the East Coast Economic Region recorded realised investments of RM10.3bil across Kelantan, Terengganu, Pahang and the Johor districts of Mersing and Segamat in the first 10 months.

That is a small amount compared with the total approved investment of RM431bil in 2025 and RM218.5bil in the first half of this year.

It does take time for ridership to gestate and grow. Even for the MRT in the Klang Valley, ridership has taken some time to expand, even though it is debatable whether it has reached initial projections.

Governments cannot start projects only for the profit they generate, as the economic welfare and spillover benefits of the projects they undertake have to be considered seriously. Ultimately, our tax ringgit has to go towards benefiting the public.

With the ECRL not expected to reach anywhere close to optimal targets anytime soon, perhaps the link to Thailand will need to be considered appropriately.

The main issue is that the gauge between Malaysia and Thailand is different, and questions will be asked about what economic ­spillovers can be generated from extending the ECRL northwards.

The questionable economics will also cast doubt on the viability of a high-speed rail link to Singapore, a project that will undoubtedly benefit Singapore more than Malaysia. There is a reason it was cancelled.

But the burden the ECRL will place on government finances will be substantial.

As it is, the amount of money being paid just to service interest on government debt is RM61bil and growing, and big-ticket items such as the ECRL will only add to that. The cost of bringing development and connectivity to the east coast is high, and hopefully, the economics of the ECRL will make inroads towards justifying the decision to build it.