KUALA LUMPUR, Jan 4 — Datuk Seri Mustapa Mohamed today said that the Kuala Lumpur-Singapore High Speed-Rail (HSR) project was cancelled due to the impact brought by the Covid-19 pandemic on the country’s economy.
The Minister in the Prime Minister’s Department in charge of Economy said the situation has forced the government to re-evaluate the HSR project.
“The project was postponed in May 2018 after the 14th General Election following a review of several key government investment commitments.
“The government at that time had reviewed the implementation of all mega projects such as the East Coast Rail Link Project (ECRL), Malaysia Vision Valley and MRT3.
“The emergence of Covid-19 has forced the government to find ways to reduce the cost of several mega projects as well as identify strategies to revive the country’s economy after Covid-19,” he wrote in his Facebook posting.
Mustapa said the development has resulted in the original terms of the Bilateral Agreement signed in 2016 between Malaysia and Singapore, no longer viable for the government.
“We had to re-examine the overall project structure and business model enshrined in the agreement.
“In May 2020, Singapore has agreed to grant a final adjournment to implement this project until the end of 2020.
“We have used this space to review the entire project. The study includes project structure, business model, infrastructure and system design,” he explained.
Following the review, he said that the government have proposed a new HSR model structure which is not only neater, but widely used worldwide, among others in Europe, the United Kingdom, Japan and South Korea.
He said the proposed new project structure also prevents the government from providing guarantees amounting to RM60 billion for 30 years.
He added that it also gives more flexibility in financing the project.
“Apart from that, we have also suggested some changes to station alignment and design which will all reduce spending by about 30 per cent.
“All of the above suggestions can reduce costs and at the same time maintain project benefits,” he said.
Mustapa also said the government is considering to commence the project two years early from its initial planned date in order to help in accelerating the recovery of Malaysia’s economy post Covid-19.
“This will create more high value employment opportunities as well as business opportunities for small, medium and large scale enterprises at this critical time,” he said.
He added that the government is also proposing changes that will enable the HSR to be connected and integrated with Malaysia’s existing transport network more effectively.
“Several intensive discussions at the technical and ministerial levels have been held over the past six months. Our Prime Minister and the Prime Minister of Singapore also held a video conference on December 2, 2020. Unfortunately, we failed to reach an agreement.
“As an individual who has been directly involved in bilateral discussions over the past six months, I would like to emphasize that we have done our best to safeguard the interests of the country,” he said.
“However, I would like to share with all that discussions between the two countries have taken place in a friendly and constructive atmosphere. Malaysia-Singapore relations are very close and both countries intend to further strengthen this close relationship,” he added.
Mustapa said the government will continue to hold discussions, although the bilateral agreement has expired, to enhance connectivity between the two countries for mutual benefit.
“The possibility of connecting the two countries through high-speed connectivity in the future will continue to be explored,” he said.
He also explained that the compensation of the project is not punitive in nature, but is to reimburse the specific cost of the project that Singapore has already spent.
“We are waiting for the cost details from Singapore, and once received, it will be scrutinized before being confirmed. The types of claims allowed have already been agreed upon.
“However, the amount of compensation cannot be disclosed because under the Bilateral Agreement, both countries are bound by a confidentiality clause,” he said.
Mustapa stressed that the authorities will discuss with Singapore to get an agreement to share information on the amount of compensation after it is finalised.
“Therefore, any figures on compensation mentioned by any party are mere speculation,” he said.
On the question of whether the KL-Singapore HSR project be replaced with the Kuala Lumpur-Johor Bahru project, he said the government will conduct a detailed study to determine the next direction.