MRCB’s exit from KL-SG HSR project signals doubts about its viability, says expert

KUALA LUMPUR, Dec 24 — Former National Audit Department principal examiner Gursharan Singh has suggested that MRCB’s exit from the consortium bidding for the proposed Kuala Lumpur-Singapore high-speed rail (KL-SG HSR) project reflects the government-linked company’s belief that the project may not be viable after assessing its costs and benefits.

Gursharan pointed out several challenges with the project, emphasising that claims of the KL-SG HSR enabling a seamless 45-minute journey between Kuala Lumpur and Singapore, are not entirely accurate, news portal Scoop reported.

Gursharan noted that travel times for passengers between their homes and the station must consider factors such as traffic, weather, and other variables.

“For some, their homes might be near to the station, while others may have longer travelling periods,” Gursharan was quoted as saying.

While many have praised the Jakarta-Bandung HSR as a success, Gursharan contended that this was largely because there were no viable travel alternatives between the two cities.

In a Facebook post on December 19, Gursharan described the withdrawal as a “wise decision”, highlighting the significant financial risks of the HSR project due to its high costs. He warned that if the project were funded through borrowing, it could lead to increased public debt and higher interest rates, which could escalate for various reasons.

“The expected time saving may be minimal especially when compared with existing highways and electrification of railways. Also, high fares for HSR may provide little incentive when compared with air fares and frequency of services,” he posted.

He also warned that the HSR project could turn into a white elephant, draining hundreds of millions in taxpayer funds. He explained that this would include compensation, payments to professionals, fees for various studies or services, and other expenses such as the salaries of civil service officials assigned to the project.

Gursharan, who audited several transport infrastructure projects during his time with the Audit Department — including KTMB and the HSR when YTL initially proposed it — highlighted that commuters in Malaysia already have viable alternatives for travelling between Kuala Lumpur and Singapore.

“A flight between Kuala Lumpur and Singapore is approximately 45 minutes and if you take a low-cost carrier it could cost less than RM150 or RM100.

“Driving in on the PLUS highway could allow you to travel within four or three and a half hours and it would be cheaper if you take an express bus.

“Keretapi Tanah Melayu Bhd’s electrified double track system is also already in operation with the last section between Gemas and Johor Bahru expected to be finalised and begin operations soon.

“If HSR tickets are high compared to current airfares, bus or using your own vehicle, then why would anyone choose to opt for an HSR trip,” he was quoted as saying.

Gursharan noted that the KL-SG HSR has been proposed since the 1980s but was shelved due to concerns over its viability and cost. Initially estimated at RM25 billion, the project’s cost later increased to RM120 billion. Currently, estimates range from RM70 billion to RM120 billion, and Gursharan pointed out that funding would likely require borrowing.

“Now when you borrow, finance costs will go up. Plus you have to manage the project and operations, but who has the expertise?

“More likely than not, operations may have to involve expertise from overseas which can be expensive too.

“So, it’s possible that MRCB may have foreseen these issues leading them to pull out from the project,” Gursharan told Scoop.

Last week, Bernama reported that MRCB had issued a notice of termination to Berjaya Rail Sdn Bhd, effectively ending their teaming agreement.

In February 2013, Malaysia and Singapore formally agreed to the HSR project during former primer minister Datuk Seri Najib Razak’s tenure, with plans to complete it in 13 years, according to Scoop.

However, the project was cancelled when Pakatan Harapan, led by Tun Dr Mahathir Mohamad, came to power in 2018, resulting in a compensation payment of S$102.8 million to Singapore.

Last week, Transport Minister Anthony Loke told another local daily New Straits Times that the government is set to make a decision on the revival of the Kuala Lumpur-Singapore High-Speed Rail project by the end of December 2024 or early January 2025.