Singapore, Malaysia may share HSR cost

Romesh NavaratnarajahApril 21, 2015

Singapore Malaysia bilateral agreement

The development cost for the high-speed rail (HSR) project linking Singapore and Kuala Lumpur may be shared between the two countries based on the geographical location of the project’s infrastructure.

Dividing the responsibility that way is considered the main way for Singapore and Malaysia to decide on how the massive investment required for the project will be split.

“Mobile infrastructure cost that will be mutually utilised by both sides of the border such as the rolling stock and system works could be equally shared between Malaysia and Singapore,” said Land Public Transport Commission (SPAD) chief executive officer Mohd Nur Kamal.

“Private sector participation is expected to be done via international tender bidding process that could possibly include local participation clause.”

Since the physical length of the railway system will be longer on the Malaysian side, Malaysia is expected to spend more than its counterpart, noted Mohd Nur.

And with the development cost relatively high against the long-term return on investment, the public-private partnership (PPP) scheme may depend more on government financial support, he revealed.

“For the PPP scheme, we are looking at a long-term concession. So far, this project has garnered a lot of local and international interest.”

Dubbed South-East Asia’s most ambitious infrastructure project, the HSR will significantly reduce travel time between the two neighbours from about four hours by car to just 90 minutes.

The region’s first HSR along a 340-km link, the project has attracted the interest of international players from Japan, China and South Korea.

Mohd Nur added that they are requesting several financial institutions to extend a credit line to help finance the project.

“We know that this project cannot be fully funded by private sector due to its huge upfront capex and long gestation period. Realistically, a substantial amount of government assistance is required in the form of either soft loans or grants.

“An integral criteria for the bidders are to show its ability in creating the optimal environment with the minimal amount of government assistance while not compromising on the project’s long-term socio-economic benefits to be developed along the line,” he stated.

Nonetheless, the overall plan on how the project would be developed is still at the drawing board where everything will be defined in the upcoming Malaysia-Singapore bilateral agreement that is set to be signed in the third quarter.

To date, the regulatory body is busy with the details of the bilateral agreement which will be the first step to kick-starting the project as well as clear any sovereign matters.

“Both governments are to be on the same page on all the technical, commercial and governance frameworks by the signing of the bilateral agreement, only then we can go into procurement stage,” explained Mohd Nur.

 

Farah Wahida, Editor of PropertyGuru Malaysia, wrote this story. To contact her about this or other stories email farahwahida@propertyguru.com.my

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