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KUALA LUMPUR, July 28 — Malaysia’s economy may gain RM6.5 billion annually from the Kuala Lumpur-Singapore High Speed Rail (HSR) project by 2030, according to the best-case scenario in a research paper.
In the analysis by three researchers from Japan’s Institute of Developing Economies (IDE), they said this scenario would see Singapore benefiting RM2.6 billion annually.
Japan is among the countries bidding for the HSR project, which is currently in limbo pending Malaysia’s discussions with Singapore.
“The estimated economic impact of the HSR for Malaysia and Singapore in the best policy mix scenario are US$1.589 billion and US$641 million per year in 2030, respectively,” the researchers said in a 12-page research paper released yesterday.
“The project’s economic impact arises partly from a shift from the manufacturing to the services sector,” it added
The three biggest economic beneficiaries in 2030 under the best-case scenario are Johor (US$695.5 million or RM2.82 billion), Kuala Lumpur (US$423.5 million or RM1.72 billion) and Selangor (US$284.3 million or RM1.15 billion), the research paper asserted.
The research paper said the industry in Malaysia that will benefit the most from this scenario is the services sector with US$1.906 billion (RM7.74 billion), while the electronics and electrical sector (E&E) and other manufacturing sectors are projected to suffer with impacts of -US$167.4 million (-RM679.86 million) and -US$115.3 million (RM468.27 million) respectively.
The best-case scenario is based on the assumption that the bullet train project is implemented with an all-in combination of a domestic rail service from Kuala Lumpur to Iskandar, Johor (KL-Putrajaya-Seremban-Ayer Keroh-Muar-Batu Pahat-Iskandar), shuttle services of between Iskandar and Singapore, and a non-stop express service of KL to Singapore.
It is dependent on there being a 50 per cent cut in bilateral non-tariff barriers (NTB) in the service sector, which it said would boost the economic impact by 60 per cent compared to if the NTB was not halved.
“Thus, there is a need to consider policies that facilitate business transactions and travel between the countries alongside the HSR development,” it said.
Traffic jams, long clearance may hamper
The research paper stressed the need for good supporting infrastructure for the HSR to unlock its full potential, noting that failure to do so would reduce the economic impact of an all-in scenario (without a 50 per cent to NTB).
“Smooth access to and from city centres to HSR stations is crucial. Congestion and/or poor access around HSR stations may reduce the economic impact of the HSR by 64 per cent and 38 per cent for Malaysia and Singapore, respectively.
“In addition, a smooth CIQ is also important. An increase in CIQ time from 15 minutes to one hour reduces the economic impact by 9 per cent and 34 per cent for Malaysia and Singapore, respectively,” it said, referring to the customs, immigration and quarantine (CIQ) process at the Malaysia-Singapore border.
Citing its simulations, the research paper also found that Malaysia will benefit more from an HSR with domestic stops instead of a service that connects Kuala Lumpur to Singapore only, while regions in Malaysia without any HSR stations tend to be negatively affected by the project.
“If the HSR express service stops only at KL and Singapore, then Johor is negatively affected by the development. If the HSR stops only at KL, Singapore and Johor, then states such as Melaka and Negri Sembilan will be negatively affected,” it said.
“Thus, the specifications of HSR’s express/local services need to be very carefully planned.”
The research paper was published by Singapore’s ISEAS-Yusof Ishak Institute, and was co-authored by three researchers from Japan’s Institute of Developing Economies (IDE) — IDE overseas research fellow and ISEAS-Yusof Ishak Institute visiting fellow Kazunobu Hayakawa, IDE overseas research fellow and European Commission visiting fellow Ikumo Isono, and IDE director Satoru Kumagai.
The fate of the KL-Singapore HSR project is currently unclear, as Malaysia has sought to cut spending by deferring the project.