KUALA LUMPUR, Feb 13 ― Malaysia and Singapore are likely to revive the suspended high-speed rail link between the two countries in the “short term”, Fitch Macro Solutions Research predicted.
The Fitch Group unit said the economic benefits of the Kuala Lumpur-Singapore High Speed Rail (HSR) were too great to ignore, adding that there was a strong business case to proceed with the project that was deferred due to its high cost.
It noted that the Pakatan Harapan government has reversed its decisions to suspend or cancel other major developments, including Bandar Malaysia that would benefit from the HSR.
“We also see 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 research house said in its note.
The price tag for the project rose significantly over the years, going from RM43 billion during its announcement to an estimated RM110 billion at the time it was suspended.
Fitch Macro Solution’s point about cost-cutting will strike a chord with the PH administration, which has embarked on cost-cutting exercises after coming into power and discovering the extent of the country’s financial difficulties.
Among others, it has renegotiated several transportation projects to arrive at discounted prices that will save the country tens of billions on paper.
These include the East Coast Rail Link (ECRL), the MRT Sungai Buloh-Serdang-Putrajaya (MRT2), the Light Rail Transit line 3 (LRT3), and most recently, the Pan Borneo Highway.
The research house further predicted that the HSR could be brought back as part of the government’s larger plan to prop up the local economy that has been battered by the US-China trade war as well as the novel coronavirus (Covid-19) outbreak this year.
Finance Minister Lim Guan Eng previously disclosed that the government was planning a stimulus package to mitigate the effects of both, and Fitch Macro Solutions predicted that this would include funds to reignite the HSR project.
“Even if that is absent, the revival of the project will bring about a heightened level of foreign direct investment, as well as construction activity, which could both feed through to economic growth.”
Announced in 2010, the high-speed rail link was set to cover the 350 kilometres between Singapore and Kuala Lumpur, cutting travel time to just 90 minutes instead of 11 hours by regular rail.
In September 2018, Malaysia and Singapore agreed to delay the project that the former initially planned to cancel entirely due to its cost.
The project is now scheduled to begin operations in 2031 instead of 2026 as originally agreed.