HSR project shelved


PETALING JAYA: After more than two years of uncertainty, the curtain has finally fallen on the proposed Kuala Lumpur-Singapore high speed rail (HSR) project.

In a joint statement yesterday, Prime Minister Tan Sri Muhyiddin Yassin and his Singapore counterpart Lee Hsien Loong said the two governments decided to let the HSR agreement lapse on Dec 31,2020, after negotiations and several discussions failed to yield acceptable outcomes.

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“In light of the impact of the Covid-19 pandemic on the Malaysian economy, the Malaysian government had proposed several changes to the HSR project.

“Both governments had conducted several discussions with regard to these changes and had not been able to reach an agreement.

“Therefore, the HSR agreement lapsed on Dec 31,2020 – both countries will abide by their respective obligations, and will now proceed with the necessary actions resulting from this termination of the HSR agreement, ” read the statement.

It includes determining the compensation that Malaysia will have to pay Singapore.

“Both countries remain committed to maintaining good bilateral relations and cooperating closely in various fields, including strengthening the connectivity between the two countries, ” said the statement.

In a separate statement later, Minister in the Prime Minister’s Department Datuk Seri Mustapa Mohamed said the pandemic had severely impacted Malaysia, to the extent that the details behind the project were no longer tenable.

“The terms of the bilateral agreement signed in 2016 are no longer viable for Malaysia, given the current economic situation that has adversely affected Malaysia’s fiscal position.

“Since late 2018, the government has explored a number of alternatives to reduce the cost of the HSR project.

“This became more urgent with the onset of the pandemic.

“Since the middle of last year, the Malaysian government had proposed some changes to the project, including the project structure, alignment and station design.

“The original project structure would have required substantial and long-term government guarantees, ” said Mustapa.

He said under the amended project structure, Malaysia had hoped for more flexibility in financing options, such as deferred payments, public-private partnerships and the possibility of accessing financing at favourable rates.

“More importantly, the proposed changes to the project structure would have allowed us to leverage on the HSR project to accelerate Malaysia’s economic recovery post-pandemic, by bringing forward the start of the construction phase by almost two years.

“This would have provided a much-needed boost to our construction sector and its supporting ecosystem.

“Taking into account these changes, both governments had conducted a number of discussions on our respective positions.

“However, we had not been able to come to an agreement on these changes, ” Mustapa said, adding that the two countries would proceed to determine the quantum of compensation, as per the terms of the bilateral agreement.

He also broached the possibility of a slower train service as an alternative.

“Moving forward, the government will undertake a detailed study to explore all possible options, including the viability of a domestic HSR project and its benefits to Malaysians, ” he said.

Prior to yesterday’s official announcement, some media outlets had reported that Malaysia “will go it alone”, possibly by opting for medium-speed trains like those used for the Express Rail Link (ERL) that serves the 56km distance between KL Sentral and the Kuala Lumpur International Airport.

The ERL rolling stock (a combination of European and Chinese train sets) has maximum speeds ranging from 160kph to 170kph, which is rather similar to the ETS train sets used by KTMB.

The HSR project was mooted as part of the Economic Transformation Programme in 2010 during Datuk Seri Najib Razak’s administration, which aimed to bring Malaysia towards a high-income nation status by the year 2020.

When it was proposed, the HSR was touted as a bridge between two of South-East Asia’s most vibrant and fast-growing economic engines, seamlessly connecting eight cities or growth centres (seven in Malaysia, with Singapore’s Jurong East).

When the Pakatan Harapan coalition took over Putrajaya in 2018, then prime minister Tun Dr Mahathir Mohamad announced that the project would be scrapped, citing the cost.

He later said the project would be deferred and the two governments went to the negotiating table.

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