Wednesday, September 11, 2013

High speed rail unaffected by Budget 2014 cuts

High speed rail unaffected by Budget 2014 cuts
Business & Markets 2013
Written by Ben Shane Lim of    
Wednesday, 11 September 2013 09:43

KUALA LUMPUR: The high speed rail (HSR) project linking Kuala Lumpur and Singapore will not be affected by the government’s 2014 Budget that is scheduled to be unveiled by Prime Minister Datuk Seri Najib Razak on Oct 25.

“As of current information, we do not expect it [HSR] to be affected by the budget. We are still looking at a 2020 completion date,” said Land Public Transport Commission chairman, Tan Sri Syed Hamid Albar, at the Rail Business Asia 2013 conference yesterday.

“It [HSR] is definitely still on track. The project is still a long way off and not a significant item in the coming budget,” he said, putting to rest doubts that the project could be delayed.

He explained that the Malaysian government would first have to conclude negotiations with Singapore before the project would become a major item of consideration in the budget. Until the actual start of physical works for the project is in sight, the cost of feasibility studies is relatively miniscule.

Analysts expressed concern that the estimated RM40 billion mega infrastructure project would be delayed when Najib announced that the government would be reviewing and prioritising public projects in order to meet the national deficit targets.

Projects with high foreign content and low multiplier effects would be given lower priority, said the prime minister.

The Klang Valley Mass Rapid Transit project was the only project that would not be affected. For the HSR project, Najib had merely stated that it was “still under negotiations”.

An industry executive pointed out that roughly 80% of the cost of the 330-km line would cover civil works. Since a big portion of these works can be carried out by local CONSTRUCTION [] players, it would minimise foreign content in the project.

On top of that, the project is likely to be funded by a mix of public and private funds, which will ease the burden on the government’s balance sheet.

Given the sheer scale of the project, it could also attract investments from China, noted one industry player. He pointed out that the project could be one of the key discussion items on the agenda when China’s president Hu Jintao visits Malaysia next month.

“Cheap Chinese money would be a big boost for the project in terms of funding. They also have a lot of experience in building HSR infrastructure,” he explained. China has the largest HSR network in the world with over 9,300 km of tracks.

For the time being, the main hurdle for the project will be negotiations with Singapore.

“There are a lot of things to discuss. Not only in terms of funding, but also modality and technical issues. We hope that we will be able to provide a clearer picture next year,” said Syed Hamid, who declined to provide an estimated cost for the project.

Railway Business Asia drew attendees from all over the world, with many showcasing  their HSR TECHNOLOGY [] capabilities at the exhibition yesterday. They hoped to get a slice of the action in Malaysia’s rail projects, which are expected to total RM160 billion by 2020.

This article first appeared in The Edge Financial Daily, on September 11, 2013.

Publish date: 11/09/13

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