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Thursday, January 22, 2015

IS THIS WHY NAJIB INSISTS ON GST? 'Flawed' RM40bil high-speed rail to Singapore even more uneconomic now

 IS THIS WHY NAJIB INSISTS ON GST? 'Flawed' RM40bil high-speed rail to S'pore even more uneconomic now
The RM40 billion high-speed rail between Kuala Lumpur and Singapore, if built according to the latest deeply flawed plans, will do little to ease travel and will be expensive to use. And rail services could remain unprofitable for years on end after operations because of low passenger numbers.
We don’t know yet what level of private sector participation in the project the government is aiming for, but the end result is likely to be a fully nationalised rail operator should operations by a private operator fail to turn a profit, requiring the government to step in.
Let’s start with the first problem: accessibility. The minority of Malaysians – minority because the train line will serve only the Federal Territory and three states – using the multi-billion ringgit railway years from now will find that they would be better off driving or taking express buses.
Stations on the new high-speed rail line 241014 02Why do I say this? The latest plans call for the construction of the high-speed tracks on reserve land along the North-South Highway. Kuala Lumpur and Singapore can be connected more cheaply this way but intermediary stations would be located far from population centres.
What use is there to spend in excess of RM40 billion (conservative estimate) to build infrastructure connecting Kuala Lumpur to a foreign country but not properly link up Melaka, Muar, Batu Pahat and Johor Bahru?
Passengers travelling to Melaka proper will be dropped off 15 kilometres away in Ayer Keroh, a 30-minute drive at best. Those heading to Muar or Batu Pahat will find themselves not in Muar or Batu Pahat, but at least 20 kilometres away.
Worse still, the high-speed rail line will completely bypass Johor Bahru for Nusajaya, a new property development 30 kilometres away that is part of the Iskandar development zone with a small population but a whole lot of investment properties left unoccupied.
One news report said passengers would be bussed from these out-of-town stations to town centres. This is ludicrous. Why bother getting on a bullet train travelling at 300 kilometres per hour only to end your journey crawling along in a bus travelling at 60 kilometres per hour?
Even getting to the Kuala Lumpur high-speed rail terminus will be a pain. Don’t expect to get there without getting into a taxi or having someone drop you off because the Kuala Lumpur high-speed rail station will not be built at its logical location in KL Sentral. It will be built instead at Bandar Malaysia or the old Sungei Besi Airport and will not be connected to the LRT or MRT urban rail network until the MRT2 line is built, far far into the future.
tun-razak-exchange-and-bandar-malaysia-mapIs it any coincidence that Bandar Malaysia is a 1Malaysia Development Bhd (1MDB) project? Could it be possible that the Kuala Lumpur terminus was sited on 1MDB-owned land in order to boost the standing of any future development there?
What all this means is that any travel to Melaka, Muar, Batu Pahat and Johor Bahru would involve at least three modes of transport and probably take just as long as driving after factoring in time wasted getting to and from high-speed rail stations including all the waiting around. At least in a car you get directly from A to B without fuss even if it will take slightly longer.
It is only between Kuala Lumpur and Singapore that travel by high-speed rail might turn out to be an improvement on current options. High-speed rail will be faster than express buses which take about 5 hours. It will be competitive with air travel on time and will bring passengers closer to the centre of Kuala Lumpur than the airport. It is a hassle to drive in Singapore so its really no competition to high-speed rail.
But high-speed rail will be expensive at about RM180 for a one-way ticket between Kuala Lumpur and Singapore according to estimates by the Land Public Transport Commission (Spad). This is less than the cost of a business class flight, the same as a economy class ticket on a full-service airline and more expensive than flying on a budget airline or taking an express bus.
Spad estimates claim that 24 million passengers will travel on the high-speed rail line annually. This is gross overestimation as only four million people a year travel by air between Kuala Lumpur and Singapore. It is not known for certain how many people travel between the two cities by land transport but Singaporeans made 13 million trips to Malaysia in 2012 and Malaysians only 1.3 million trips to Singapore.
How do we make up for this shortfall in passenger numbers? Simple. Property developers will rush to build homes in Nusajaya, Batu Pahat, Muar and even Melaka to cater to Singapore-based buyers. Most units will be priced above RM1 million, the minimum purchase price for foreign buyers of Malaysian property.
Iskandar Malaysia mapThis is not far-fetched. Iskandar attracts foreign buyers in droves. About 40% of new homes in the Iskandar development zone have been sold to foreign buyers, the vast majority of them from Singapore and China. A station in Nusajaya will spur demand further.
As all the intermediary stations on the high-speed rail line will be on greenfield sites far from populations centres with plenty of land to go around, development can take place unimpeded.
Property developers are salivating at the prospect of high-speed rail. The most eager ones have already published maps and guides on where to buy property in order to best take advantage of the boom in property values along the route. They harp on endlessly on how it will boost local economies, forgetting there is no one silver bullet to economic growth.
It’s unfortunate that high-speed rail is favoured over other projects that would improve the lives of more Malaysians than just property developers and rich Singaporean investors. How do we answer to East Malaysians who have yet to be connected by roads and what of improving services on the current rail network?
It’s a questions of priorities. High-speed rail should only be built if there is a sound economic case and it should have stations that run through or very close to population centres as is the case in other countries that have built high-speed lines. The last thing we want is another half-baked white elephant. - Kinibiz

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