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KL-S’pore high-speed rail will generate economic benefits

Monday July 20, 2009
Hock's Viewpoint – By Choong Khuat Hock

A KL-Singapore high-speed rail would generate more economic benefits than the double-tracking railway from Ipoh to Thailand

WITH negative export growth and private consumption, fiscal stimulus is playing a more important role. In Japan, building bridges to nowhere has not generated long-term economic benefits but has instead burdened future generations.

In Malaysia, building a double-tracking railway from Ipoh to the Thai border for RM12bil can never generate as much economic benefits as a high-speed rail (HSR) from Kuala Lumpur to Singapore for around the same price tag. (Please vote or express your views on the blog http://klsingaporehsr.blogspot.com/)

Malaysia appears to be far behind in HSR development. China has completed six high-speed rail projects with design speeds of up to 250km/h and in July 2008, it completed the 108km Beijing to Tianjin HSR with a design speed of 350km/h.

This would be equivalent to travelling from KL to the Malacca border in 30 minutes. The 1,302km Beijing to Shanghai HSR will be ready next year.

China's HSR network of 6,000km by 2013 will exceed Japan's current HSR network of 2,459km. France, with an HSR network of 1,700km, has the most extensive HSR network among European countries followed by Britain (1,400km), Germany (1,290km) and Spain (1,272km).

Even the United States is jumping on the HSR bandwagon with Obama unveiling plans for 10 potential high-speed intercity corridors.

Other Asian countries that have successfully built HSR include South Korea and Taiwan. Interestingly, the 335.5km Taiwan HSR from Taipei to Kaohsiung (taking 90 minutes) is approximately similar in distance from KL to Singapore. I was able to buy tickets and board the train 10 mins before departure.

The train ride was very smooth and the speedometer on the train showed train speeds of close to 300km/h. As in Taiwan, the HSR in Malaysia could have direct services from KL to Singapore and also services that cover KL International Airport (KLIA), Malacca and Johor. Malacca's tourist potential will be enhanced while Iskandar Malaysia's viability will be improved.

The positive economic impact from the HSR from KL to Singapore would be tremendous. It would anchor KLIA-LCCT-Changi as the top airline hub in South-East Asia where foreign and domestic passengers will have a choice of full service or budget airlines.

The HSR may attract additional visitors to the KL-Singapore hub due to the clustering effect. Furthermore, it would boost the number of Singaporean and foreign visitors (from Singapore) visiting Johor, Malacca and Kuala Lumpur.

Airline frequency between KL and Singapore may decline but airlines could generate additional traffic from the cementing of KL-Singapore as the premier transportation hub of the region. Property prices in Kuala Lumpur should also benefit from greater demand from Singaporeans and foreigners who are attracted by the improved accessibility of KL.

With better accessibility, foreign companies may be attracted to place their operations in KL or Iskandar where operating costs are lower. The better accessibility would also make it easier to attract talent to work in KL or Iskandar.

The high-speed Eurostar train link from London to Paris in just 2.5 hours has helped narrow the discount of Parisian property prices to London property prices.

The differential between KL and Singapore property prices remains large with high-end condos in Malaysia going for around RM1,000 per sq ft while high-end Singapore condos are at least five times more expensive at over S$2,000 per sq ft.

Based on an estimated built-up area of 1.8 billion sq ft in the Klang Valley, property values could be boosted by a massive RM180bil if property values rise by RM100 per sq ft and the gain could rise to RM360bil if property prices appreciate by RM200 per sq ft. The positive wealth effect is an important ingredient for better consumer confidence.

Asian giants like China and India are increasingly dominating the economic field, hence, there is a greater urgency for Malaysia and Singapore to work together to carve out a niche (while it still exists) as the indisputable destination for investments, tourism, services and selected manufacturing in the Asean region.

Since the energy consumption per person using a train is less than those for cars and planes, the HSR will lead to lower carbon dioxide production, which contributes towards global warming. The KL-Singapore HSR will reduce the number of cars and planes plying between KL and Singapore and reduce road accidents.

Should the Malaysia and Singapore governments decide to carry on with the HSR, it is important for the project to be implemented by a group that can build the HSR within the stipulated cost and as quickly as possible.

We cannot afford another Port Klang Free Zone where massive cost overruns and accusations of misdemeanors in a privatised project have burdened taxpayers without any tangible economic benefits.

The Taiwan HSL was plagued with delays and severe cost overruns. The final cost at a staggering US$15bil (RM55bil) equates to a cost of US$45mil per km compared to US$27mil per km in South Korea and only US$12mil for the express rail link to KLIA which was built by a YTL-led consortium.

As a Malaysian consumer, I am very keen on being given the choice to travel on HSR to Singapore even if it costs more than the bus fare. As a taxpayer, I am keen on taxpayers'money being spent on infrastructure projects that generate economic returns.

Economically-viable private sector-funded investments should be encouraged at a time when government finances are tight. As a property owner in KL, I am keen to see better property prices and KL becoming a vibrant international city with excellent connectivity. What do you think?

Choong Khuat Hock is head of research at Kumpulan Sentiasa Cemerlang Sdn Bhd. Readers'feedback is welcome. Please email to starbiz@thestar.com.my

This article is a verbatim copy of the original article from The Star.

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