Reviving KL-Singapore HSR via private investment is feasible, but plenty of hurdles to overcome: analysts

[KUALA LUMPUR] Long thought to be dead in the water, the Kuala Lumpur-Singapore High Speed Rail (HSR) could yet get a fresh lease of life, but only if the mega-project – once estimated to cost as much as RM110 billion (S$33.2 billion) – is paid for by the private sector.

Last month, Malaysia’s Transport Minister Anthony Loke said that the unity government under Prime Minister Anwar Ibrahim has not decided if it wants to revive the project, nor has it set a timeline to do so.

He added that the government is, however, open to receiving proposals from private firms. A Mar 30 report in The Edge quoted unnamed sources as saying that five companies were invited to meet with two government agencies to assess their interest in reviving the HSR. The five include MMC, WCT, YTL, Berjaya and Malaysian Resources.

Analysts whom The Business Times spoke to say that the HSR remains relevant because it can enhance the connectivity between Malaysia and Singapore, as well as open up opportunities for railway connection to other parts of South-east Asia.

It’s been more than two years since the HSR – which was set to reduce travel time between Singapore and Kuala Lumpur to just 90 minutes – was scrapped after numerous postponements at Malaysia’s request.

The bilateral agreement eventually lapsed at the end of December 2020, and Malaysia forked out a sum of over S$102 million in compensation to Singapore as a result.

The 350km line was supposed to include a stop at Iskandar Puteri in Johor, as well as Malacca and Seremban, before terminating in the heart of the capital Kuala Lumpur. The target was for both sides to complete the project by 2026.

Since the start of the year, some senior figures in Anwar’s government have spoken about a possible revival of the HSR. Apart from Loke, International Trade and Industry Minister Tengku Zafrul Aziz also said that the authorities are open to the idea of restarting the project, and he too welcomed interested companies to submit their proposals.

Koong Lin Loong, chairman of the finance and planning committee at the Associated Chinese Chambers of Commerce and Industry of Malaysia, said a mega infrastructure project of this scale that is led by the private sector is not out of the question.

“Private companies could be the main driver to spearhead the development, but the government must back it up by providing support, as well as supervision and regulation,” he told BT.

In Malaysia, there are several public infrastructure developments that are spearheaded by private consortiums, such as KLIA Express, the airport rail link operated by YTL that services Kuala Lumpur International Airport. A number of highways are also owned and operated by concession companies including Gamuda.

Koong noted that Anwar’s recent visit to China at the invitation of Chinese President Xi Jinping has opened up opportunities to attract interested parties from China to participate in Malaysia’s major infrastructure projects, and this could include the HSR.

“It will be better to let the private companies drive the development. This is the best way to kickstart the HSR project, rather than wait for another few years,” said Koong, noting how Anwar’s government has a strong stance in wanting to duce its fiscal deficit.

There are other benefits of having the HSR, with observers pointing out that the link could one day be expanded to connect to other key cities in the region such as Bangkok, which would give a significant boost to Kuala Lumpur as a regional business hub.

In 2022, former prime minister Ismail Sabri Yaakob brought up the idea of reviving the HSR to link Malaysia, Singapore and Thailand, and one day extending the link to as far as China.

Singapore’s Deputy Prime Minister Lawrence Wong had said then that Singapore was open to fresh proposals from Malaysia on the HSR.

Oh Ei Sun, a senior fellow with Singapore’s Institute of International Affairs, said the HSR remains relevant for both Malaysia and Singapore, given how the two neighbours have such close bilateral trade and investment relations.

“The air route between Kuala Lumpur and Singapore is the busiest in the world. There are thousands of people travelling between the two cities, so the HSR is still a viable option for businesses,” he said.

While Dr Oh feels private firms could lead the development, he also said there are huge risks and challenges to navigate as this would be a long-term project.

“It depends on how the potential (interested parties) would lay out a business case for it, such as having exclusive operating rights for a number of years, and (ensuring) ticket prices are optimal,” he said.

Urban planner and transport analyst Goh Bok Yen is one of those who remains sceptical about the HSR for now as “things are still uncertain and there aren’t any details from the government”.

“It’s viable for private companies to construct and operate the project, but this is a bilateral project that involves both governments. The Malaysian government would need to initiate talks with Singapore if there is any interest to resume the project,” he added.