PETALING JAYA: The Kuala-Lumpur to Singapore High-Speed Rail (HSR) project will likely be revived in the short term, opined Fitch Solutions.
This is because of the potential economic benefits that could be reaped, the growing possibility of a reduced project price tag, the revival of the Bandar Malaysia project and a weak short-term economic outlook for 2020.
“The project has been suspended indefinitely following Pakatan Harapan’s victory in the 2018 Malaysian general elections. However, we believe that Malaysian authorities are likely to proceed with the project, as opposed to cancellation,“ it said in a report yesterday.
Fitch believes that there is a strong business case for the construction of the HSR line as the KL-Singapore air route is one of the world’s most heavily trafficked international routes but it is estimated that a journey from downtown KL to downtown Singapore takes more than four hours by air.
“The original HSR plan, on the other hand, could shave travel time by one-and-a-half hours, reducing the number of man-hours lost due to travel, and at the same time, reducing total carbon footprint of the journey. With increased accessibility, the local economies of Batu Pahat, Muar and other locations along the proposed alignment are also likely to benefit from the project.”
Fitch also sees scope for a reduction of overall project cost, which will go well with the Malaysian government as it seeks to reduce the financial burden of the project on its balance sheet.
“The revival of the East Coast Railway Link proves that the Malaysian government is willing to bring back big ticket infrastructure projects if they are satisfied with the reduced cost. That said, failure to reduce project cost to a level more palatable to the Malaysian government is a significant downside risk to revival of the project.”
Meanwhile, it added that the mega project is expected to elicit strong bids from Japan and China, as the two countries continue to compete with each other for large scale infrastructure projects abroad.
“With a number of countries beginning to explore the option of constructing their first HSR lines, or have already embarked on their first projects, we have observed a high level of interest from both Japan and China, as they seek to export HSR technology and equipment. These projects include Indonesia’s Jakarta-Bandung HSR, India’s Mumbai-Ahmedabad HSR, Thailand’s Bangkok-Nong Khai HSR and Vietnam’s Hanoi-Ho Chi Minh HSR.”
Fitch said prior to the suspension of the project, a Chinese consortium comprising of China Railway Construction Corporation, The Third Railway Survey And Design Institute Group Corp and CSR Qingdao Sifang Co Ltd, were reportedly bidding for the project.
“While little information regarding a possible bid by Japanese companies have been made public, we expect a bid from Japan in the event the project is officially revived.”
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