KL to see how to cut S'pore compensation if HSR ditched

The 350km rail deal between Singapore and Malaysia was inked in 2016 under Malaysia's previous prime minister Najib Razak.
The 350km rail deal between Singapore and Malaysia was inked in 2016 under Malaysia's previous prime minister Najib Razak. PHOTO: EDELMAN

Malaysia will have to pay a very large sum if it breaks high-speed rail project deal: Mahathir

PETALING JAYA • The Malaysian government is looking at how it might reduce the compensation it has to pay to Singapore if it decides to drop the Kuala Lumpur-Singapore high-speed rail (HSR) project.

With Malaysia looking at ways to cut costs to pare its debt of RM1 trillion (S$337 billion), mega projects such as the 350km HSR deal inked in 2016 under previous prime minister Najib Razak and the RM55 billion East Coast Rail Link (ECRL) have come under fresh scrutiny.

In an interview with The Edge weekly published yesterday, Prime Minister Mahathir Mohamad, whose coalition swept to power on May 9, raised the possibility of both rail projects being dropped.

"The terms and agreement for the HSR are such that if we decide to drop the project, it would cost us a lot of money," he said.

"We have entered into an agreement with Singapore. If we break the agreement, we have to pay a very large sum of money."

The HSR is estimated to cost up to RM50 billion, and will slash the travelling time between Singapore and Kuala Lumpur to 90 minutes when completed in 2026.

Most of the line - 335km of it - will be in Malaysia, with the remaining 15km in Singapore. The HSR will have eight stops - seven in Malaysia and one in Jurong East.

The Land Transport Authority called for tenders for the design and construction of tunnels and associated facilities for Singapore's end of the HSR last month, with construction expected to start next year.

Early this month, Mr Mohd Nur Ismal Mohamed Kamal, chief executive of MyHSR Corporation, the state firm tasked with implementing the HSR on the Malaysian side, estimated that Malaysia could lose RM209 billion in gross national income if the project was scrapped.

Mr Lim Biow Chuan, who sits on the Government Parliamentary Committee for Transport, said yesterday it would be a waste if the project were to fall through.

"With so many people moving back and forth, the HSR will benefit both countries," he told The Sunday Times.

Dr Walter Theseira, senior lecturer at the Singapore University of Social Sciences, said it would be a "great missed opportunity" for both countries if plans for the HSR were to fall through, as the project would have strengthened both Singapore's and Kuala Lumpur's positions as regional business hubs.

In the interview with The Edge, Tun Dr Mahathir also said that the ECRL, which will connect Malaysia's east and west coasts, is expected to cost RM92 billion by the time it is paid off, due to interest.

Work on the project - a major part of Beijing's Belt and Road infrastructure push - started last year.

The project was planned to stretch 688km, connecting the South China Sea at the Thai border in the east with the shipping routes of the Strait of Malacca in the west.

It is being built by China Communications Construction, and is mainly financed by a loan from China Exim Bank.

"We are renegotiating the terms," Dr Mahathir said.

"The terms are very damaging to our economy."

He questioned the need for the project in the first place, saying "it is not going to serve any purpose, it is not going to give us any returns".

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A version of this article appeared in the print edition of The Sunday Times on May 27, 2018, with the headline 'KL to see how to cut S'pore compensation if HSR ditched'. Print Edition | Subscribe