High-speed, high-cost rail

By P. Gunasegaram, The Star

Why we should look for cheaper alternatives before embarking on an expensive rail link to Singapore

STRANGELY, one reason given for a high-speed rail link between Malaysia and Singapore is that it will increase property values in Kuala Lumpur.

The way it is phrased is interesting, “unlock property values in Kuala Lumpur.” Tell me, who locked property values in Kuala Lumpur in the first place? Perhaps that is key to understanding this convoluted logic.

I can understand that it reduces travel time between Kuala Lumpur and Singapore considerably – by land that is. I can see how it might – might – improve tourist arrivals here, though I don’t see why the ingresses into Malaysia right now are insufficient.

Thailand and Indonesia don’t have high-speed rail links to anywhere but that has not stopped a burgeoning in their tourist arrivals. In fact, the easiest access to these countries continues to be by air. Lack of rail links has certainly not hampered Bali, for instance – the planes make a beeline to it.

The Government through one of its agencies, the Public Land Transport Commission, expects to finish a feasibility study in eight weeks. But let’s do a back-of-the-envelop, quick feasibility study here, which may take, oh, about eight minutes.

The cost, we presume before land acquisition and rolling stock (trains to you and me), is expected be RM8bil–RM14bil. Let’s take the upper end, because by the time all approvals are obtained, that’s how much it will cost and add to it a further RM6bil as land acquisition and contingency costs.

That brings the figure up to a nice neat RM20bil. And let’s say we need a return on this of 10% a year. That means a net profit of RM2bil a year, a huge amount which only a handful of public-listed companies achieve. And let’s say that takes a revenue of 10 times that or RM20bil a year!

That RM20bil is less than the entire revenue of both AirAsia and Malaysia Airlines in a year, implying that we will not in the near future get anywhere near the revenue required to make this rail link profitable on a standalone basis.

Conclusion: It is not commercially viable.

That’s why advocates are touting its advantages such as “unlocking” KL property values, increasing tourist arrivals, reducing travel time to Singapore and, in short, becoming a significant contributor to the economy.

Let’s take each of these reasons in turn. First, why would a faster link to Singapore result in higher property prices in Kuala Lumpur? Is anyone going to relocate to Kuala Lumpur and commute from KL to Singapore daily? Yes, we agree with you it’s a bit far-fetched. Anyway, why do we want to increase property prices in KL? From a Malaysian’s point of view, they are already expensive.

As far as tourist arrivals are concerned, cheap fares will get them in faster than a fast, expensive rail ticket. Just let more low-cost airlines come in and let them set up hubs wherever they want.

Yes, time to travel to Singapore will reduce. Advocates say it will be 90 minutes but clearly they have not taken into account immigration procedures. This is not the European Union where they don’t check passports. Add 30 minutes for this.

And yes, it takes time to get to the station, let’s say 15 minutes. Add these two up to 90 minutes and you get two hours and 15 minutes.

By air, it takes perhaps three hours because people need to get to the airport an hour earlier at least and travelling time is a further 45 minutes to an hour from KL to the international airport.

But, there is a way to cut that time down. Simply make Subang the airport from which to fly to Singapore. That saves 15 minutes. Next, cut check-in time to half an hour before flight if you have no check-in luggage. That’s 45 minutes saved.

And, presto! That brings the travel time to the same two hours and 15 minutes – and let’s not quibble about a few minutes here and a few minutes there, you know what we are getting at.

Even if we are very generous, we may need just RM200mil to upgrade facilities at Subang, which can already take the biggest jets. That’s just one per cent, yes one per cent, of RM20bil.

Why don’t we do this? Perhaps it is the cost – RM200mil is a lot less and a lot less sexier than a massive RM20bil, which is hundred times more. It’s just too cheap to be of interest to anybody but for the likes of Tony (you know who), low cost is big money.

Just one last point – can anyone tell me where our RM20bil plus double-tracking project has got us so far?