Malaysia and Singapore have finally canceled a fraught high-speed rail line from Kuala Lumpur to the island city-state. The two governments reportedly could not reach an agreement after Malaysia pushed to modify the project yet again over financial concerns.
Plans to build a multi-billion-dollar high-speed railway linking Singapore and Kuala Lumpur have been officially canceled, according to a joint statement from both governments released on January 1. The two governments were reportedly unable to settle disagreements after Malaysia pushed for structural changes to the project and to fast-track construction by two years.
The 350-kilometer rail line was slated to be completed in 2031 and would have reduced travel time between the two cities to 90 minutes. The railway would have been in line with China’s plans for rapid rail links from Kunming to Singapore under the Belt and Road Initiative (BRI).
The Malaysian government estimated at one point that the project would cost 110 billion ringgit (US$27.3 billion) and had recently proposed changes to the rail line “in light of the impact of [the] COVID-19 pandemic on Malaysia’s economy”, according to the governments’ joint statement.
The railway has been suspended multiple times, with the most recent suspension agreement expiring on December 31 as the parties were unable to reach an agreement. Singapore Transport Minister Khaw Boon Wan had called the latest suspension agreement from May 2020 “final”.
Malaysian Prime Minister Muhyiddin Yassin said as recently as June 2020 that construction would proceed despite the impacts of COVID-19 on Malaysia’s economy. In November, Malaysian Finance Minister Tengku Zafrul Aziz said the project would go ahead as it would “generate a positive multiplier effect on the national economy.”
According to Singapore’s transportation ministry, Malaysia will pay for the sunk costs already spent on the rail line.
Railway on Malay Peninsula marred by stops and starts
The project was originally agreed to in 2013 by Singapore’s Prime Minister Lee Hsien Loong and Malaysia’s former prime minister Najib Razak, now convicted on charges related to the 1MDB scandal.
After former Malaysian prime minister Mahathir Mohamad was re-elected in 2018 and replaced Najib, he pushed to cancel the railway over concerns about financial liability. “It’s not beneficial. It’s going to cost us a huge sum of money. We’ll make no money at all from this arrangement,” he said at the time.
Mahathir announced a review of all projects approved by his predecessor’s administration and in September 2018, Singapore agreed to suspend construction of the high-speed rail project until 2020, delaying the expected completion from 2026 to 2031, with Malaysia incurring the cost of the suspension.
Malaysia mulls domestic high-speed rail on its own terms
Malaysia has now said that it will conduct a study to consider whether high-speed rail could still go ahead without Singapore, putting the rail line’s southern terminus at Johor Bahru.
Some observers say that pressing on with the high-speed rail project is useless if the route will end at Johor Bahru in southern Malaysia. Former transport minister Anthony Loke said the route would be “nonsensical” and “redundant” because there is already a train linking Kuala Lumpur to Johor Bahru. The government could potentially redirect the funds to upgrade and expand the KTM rail or electric train service networks.
Malaysia has also been reassessing its East Coast Rail Link, which is formally a part of China’s BRI. The 640-kilometer rail line will link Kota Baru, on peninsular Malaysia’s east coast near the border with Thailand, to a station near Kuala Lumpur. The line has itself been suspended and resumed over the years.
The government set a new, reduced budget of 44 billion ringgit (US$10.57 billion) in 2019—still making it one of the most expensive BRI projects in Southeast Asia—and now has a contract with China Communications Construction. Deputy Transport Minister Hasbi Habibollah said in September 2020 that the East Coast Rail Link will once again be rerouted.
Another BRI development in Malaysia, the US$10.5 billion Melaka Gateway harbor, was apparently canceled in November 2020. The harbor would have included economic zones and Southeast Asia’s largest cruise ship terminal and was also agreed to by former prime minister Najib. There had been little progress on the harbor in three years and it was “not very well grounded in an economic or political sense,” according to Francis Hutchinson, senior fellow at the ISEAS-Yusof Ishak Institute.