Opinion  |  FEBRUARY 21, 2013 5:28AM

From RM8 billion to RM80 billion

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business-questions-p-gunasegaramOn the surface it looks like rather a seductive deal but scratch and just below the surface is a minefield of issues which have to be dealt with before one can even decide to have a high-speed rail (HSR) link between Kuala Lumpur and Singapore.

Top of this is the cost. In 2006, one businessman, Francis Yeoh of YTL fame, estimated it would cost RM8 billion before land costs. But now it could cost as much as RM80 billion if feasibility studies done elsewhere are an indication.

A project of similar length in 2011 costs between RM50 billion and RM80 billion, before the cost of trains, in Australia, one study showed. According to one news report, the cost of constructing such a link between Kuala Lumpur and Johor Baru was estimated at RM40 billion.

And just because the prime ministers of Malaysia and Singapore have agreed to build it by 2020, it does not mean that it will necessarily happen or that it will be the best thing for both countries, the main obstacle being the huge cost – and yes, dubious, but much touted benefits.

It is no accident that very few cities around the world are connected by HSR. There is none in the United States for instance.

high-speed-rail-singapore-malaysiaBut yes, the stories about it are like fairy tales, or is it science fiction? Imagine, you are in KL and suddenly you have to go to Singapore. So you hop on a train from the centre of Malaysia’s capital and presto, you are there in Singapore in a mere 90 minutes.

The more fanciful stories talk about boarding a train in Kuala Lumpur in the morning, concluding a deal by afternoon, relaxing with champagne on ice in one of Singapore’s many trendy bars and getting back home in time for dinner with wife and kids.

Will it transform the way we do business, will it bring prosperity to both countries and will it even improve connectivity between both countries? And how will it increase property prices, and even if it does, is it something we want? Ask the Singaporeans who know a thing or two about having property go beyond their reach.  Proponents are notoriously short on precise reasons of how the transformation will take place.

If connectivity between the two countries were bad, yes there will be benefits. But it is not, there are already comprehensive, road, air and even rail links. So what’s the deal? How much incremental benefit can we get? Probably not much for the price you pay.

Also, there is much room to improve alternative means of transport to cut down the commute to Singapore and this is likely to be much more effective for cost than HSR.

Remember that 90 mins is just the travelling time from one point in Singapore to one point in Kuala Lumpur. Does it include stops in over five cities? Does it include immigration and custom checks. Does it include time taken to travel from station to office/home? No! Include those and time taken will rise to two and half hours at least.

The silly assumption is that if you use HSR you can forget about these. But you can’t. Flying time is half the 90 minute travel time on HSR and if you include check-in, time before travel and all that, you could do point-to-point in about the same time – if you use Subang for instance.

Or better still Sungei Besi, which is in the city and was probably Kuala Lumpur’s first international airport. That would make travelling time not far off from the two and half hours all-in for HSR. Importantly it would incur far less expenditure that the up to RM60 billion or even more after the inevitable cost overruns that such projects will have.

Even building a new compact airport at Singei Besi would cost perhaps RM2-4 billlion, a mere fraction of the cost of HSR.

That feasibility studies, if any, have not been made public does not engender any confidence at all that the project is really feasible and viable.

But let’s take a look, probably the most recent one on an HSR, in Australia. The phase one study was released in 2011, and yes, the report is public and can be obtained on the net. This is for HSR linking the east coast cities of Brisbane, Newcastle, Sydney and Melbourne. The report states the obvious that HSR is not commercially viable – implying public subsidy.

For our purpose, what is interesting is the estimated cost of building a  stretch of 290 km of track – roughly corresponding to the distance between Kuala Lumpur and Singapore – is a massive A$15 to A$24.5 billion ( that’s roughly RM50 to 80 billion!). And that does not include the cost of trains and cabins.

And if all those starry-eyed proponents with dollar-signs in their eyes are still convinced that this will be the best thing ever, just take a look at our single largest infrastructure project, currently being overtaken by the MRT.

I refer to the RM30 billion plus double-tracking project for our rail system. If you exclaimed what! I don’t blame you for like you I am at a loss to explain what benefits it has brought to the country despite its massive cost.

Before we get seduced and embark on yet another mega project – the biggest ever – lets make a feasibility study, make it public, and invite feedback and debate. Tell us clearly what benefit we will get in return for this up to RM80 billion we are about to spend – perhaps foolishly. If it’s not enough, let’s scrap it.

Until then, it is way too early to raise and clink champagne glasses in a toast – whether in Singapore, Kuala Lumpur or any of perhaps five cities in between.

P. Gunasegaram is publisher and founding editor of KiniBiz. He is appalled at the massive wastage taking place in Malaysia in the name of development.

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