KL-Singapore high-speed rail link hit buffers over US$25 billion bill: Malaysian Finance Minister Lim Guan Eng

“Is it worth it? You can get something for cheaper, for half the price,” says Malaysia’s new Finance Minister Lim Guan Eng of decision to cancel the project

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The Bandar Malaysia development was supposed to host terminals for the high-speed rail line connecting Kuala Lumpur to Singapore. Photo: Bloomberg

Published: 8:02am, 1 Jun 2018Updated: 8:02am, 1 Jun 2018

Malaysian Finance Minister Lim Guan Eng has said the government’s decision this week to scrap a high-speed rail project between Kuala Lumpur and Singapore came down to the prohibitively high cost burden his country would be saddled with to maintain the 350km link in the longer term.

The new Malaysian government led by Mahathir Mohamad on Wednesday announced plans to abandon the plan as part of cost-cutting moves to slash federal government debt of over 1 trillion ringgit that had piled up during the nine-year tenure of ousted premier Najib Razak.

In an interview on Thursday with This Week in Asia, Lim said the new administration estimated the initial cost of the high-speed rail project was likely to be more than 100 billion ringgit (US$25 billion) but more vexing were the other costs down the road.

“The backloading is very high … availability payments, maintenance charges, and also asset replacement charges – these are all backloaded,” Lim said.

He added: “The cap-ex [capital expenditure] is expensive, that’s one thing. We feel it’s above cost. But the other aspect is maintenance charges, which we are responsible for.”

Najib, who is facing the prospect of criminal charges over his alleged links to the multibillion dollar 1MDB financial scandal, said in a statement after the cancellation that the project would have brought in some 650 billion ringgit in gross national income until 2069, along with 442,000 jobs in the same period.

Singaporean Prime Minister Lee Hsien Loong and Malaysia's then prime minister Najib Razak at a signing ceremony regarding the Kuala Lumpur-Singapore high-speed rail link. Photo: EPA

When the deal was inked in December 2016, Najib also said the rail link with Singapore would give both neighbours – who have had a fractious history – “a big stake in keeping the relationship stable and warm.”