HSR (High Speed Rail) Malaysia: What Is This Mega Project About?

The development of the KL-SG High Speed Rail (HSR) will be on hold till 2020 for the Malaysian government to review its high cost, but it was recently announced that it has been approved again! As it is, this mega project holds plenty of benefits for both Singapore and Malaysia.
KL-SG Higher Speed Rail (HSR)
Image source: freemalaysiatoday

Modern life is pretty fast-paced, which means you need fast-paced transport to keep up! That’s where Malaysia’s long-planned Kuala Lumpur to Singapore High Speed Rail (KLSG HSR) came into play.

However, unless you’ve been living beneath a coconut under a rock in the middle of nowhere, you'd have probably heard that the KLSG HSR has had somewhat of a troubled history.

So what’s the deal with this mode of transportation today, and how would it affect the property market at all?

 

The History Of HSR In Malaysia

With the close economic and cultural ties between Singapore and Malaysia, it makes sense to support the building of closer logistical ties as well.

The ability to travel between the two countries is a significant benefit for citizens of these neighbouring nations. Yet, we all know those logistics aren’t always as easy as we might like.

Trains between Malaysia and Singapore are a fairly tangled and inefficient option as it stands, with journeys taking up to ten hours and often including multiple connections.

The pressure on road connections suffers from its own particular set of problems, with massive traffic jams causing delays and bringing out the worst side of drivers.

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High-speed rail had been discussed as a way of tackling these challenges as far back as the 1990s. Various analysis projects over the years rejected the idea, based on the significant economic costs.

A more committed approach over the last decade finally saw an agreement reached. So, it was in 2013 that Malaysia's then Prime Minister Najib Razak, and Singapore Prime Minister Lee Hsien Loong signed up our respective nations to develop the HSR project.

 

What Was The HSR Supposed To Bring To Both Tables?

HSR aims to reduce travel times along the 350-kilometre route between Kuala Lumpur and Singapore to just 90 minutes (as compared to the current time of 11 hours on existing lines), creating a new era of connectivity between these partner nations.

This complex and comprehensive project was set to deliver the HSR link alongside a domestic service from KL to Iskandar Puteri, as well as a shuttle service from Iskandar Puteri to Jurong East.

As if the excitement of super-fast train travel wasn’t good enough, there were also plans to develop super-fast customs arrangements to complement the service!

Singapore-Malaysia customs facilities were planned at Bandar Malaysia in KL, Iskandar Puteri in Johor, and Jurong East. The end result was intended to deliver speedy yet efficient international travel that was cooler than an ice kacang!

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The KLSG HSR agreement was signed in 2016, committing both nations to this RM50-RM60 billion project. The aim was to have this visionary infrastructure project completed by 2026. Then things changed.....

 

What Was The HSR Controversy?

With the sudden change in government during the 2018 elections, time was taken to reassess many of the financial commitments made under the previous administration.

This cost-checking initiative formed part of a wider view to reduce Malaysia’s RM1 trillion debt that was controversially inherited from the previous administration.

The current Prime Minister, Tun Dr Mahathir Mohamad, expressed concern about the significant cost of the HSR project, as part of a wider review of the scheduled mega-projects in Malaysia.

Having originally called for a cancellation of the project, it was later announced that the project would instead be temporarily suspended.

With the concern about costs fresh in mind, alongside an assessment of the economic benefits and penalties of cancellation, HSR now resides in a kind of infrastructure limbo till 2020.

 

What Happened To The HSR In 2020?

It would be fair to say that the original announced cancellation of the KLSG HSR project caused a little bit of friction between Malaysia and Singapore.

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On one hand, the Malaysian government was rightly concerned about the affordability of the HSR project as well as the long-term financial implications.

On the other hand, the Singapore government was a little vexed at the costs already sunk into this massive infrastructure project.

Thankfully, the respective governments did their best to address this issue as quickly. It’s not unfair to say that Malaysia paying US$15 million (roughly RM62 million) reimbursement for the cost of delays to Singapore has almost certainly helped smooth those relations.

As a result of discussions, Malaysia and Singapore had explored ways to reduce the cost of the HSR project, creating a more affordable development that still unlocks the substantial projected benefits for each country.

One such possible solution was to reduce the speed of the trains, with Tun Dr Mahathir Mohamad stating that it's not necessary for it to be travelling at 400km/h.

The deadline for this assessment on how to adjust and balance the project was till 31 May 2020, after which, the suspension period agreed between the two countries expired.

While Singapore was still largely committed to developing this state-of-the-art transport link for high-speed efficiency, it conceded time to Malaysia in order to ensure the best possible outcome for both countries.

Under the deferment, the long-planned HSR service was tentatively envisioned to be completed by January 2031. So if weren't all using flying cars by then, we would have a shiny new train to use instead!

klsg-hsr-4

 

What's Happening With The HSR In 2021?

On 1 January 2021, it was regrettably announced that the bilateral agreement for the KL-SG High Speed Rail would be terminated, as both countries were not able to come to a satisfactory conclusion that's beneficial for both.

On one hand, some of Malaysia's proposals included a change in the design of the stations and the track alignments. This would have reduced the overall cost by 30%.

Singapore, however, did not agree to two of Malaysia's proposals: Connecting the HSR to the Kuala Lumpur International Airport (KLIA), and removing the HSR's systems supplier and network operator (AssetsCo).

While it may seem that this is the end of the rail for this mega project, there's still hope that it could be revived in the future once Malaysia is able to deal with the economic crisis that came from COVID-19 and its political turmoil.

As a result of the cancellation, Malaysia had to fork out RM320 million (approximately SG$102.8 million) as the full and final compensation payment for the costs that Singapore had incurred.

While there were questions swirling around that amount (compared to the more than SG$270 million that Singapore had spent on the HSR project so far), a spokesperson for the Republic's Ministry for Transport had clarified that the SG$270 million included land acquisition cost.

With their land, they could still recover value: "For example, one piece of land acquired will be used to develop the Integrated Train Testing Centre, which broke ground recently."

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There are also talks that Malaysia is considering a domestic HSR network instead, stretching from Kuala Lumpur to Johor Bahru.

Experts are divided on the matter, with some saying that the spending involved in the Malaysia-only project would be able to benefit local construction firms.

Others believe that it would not work out in the long run as there's already a line from KL to JB: "Another railway line would be redundant...it is likely to become a white elephant or a long python stretching from KL to JB," said transportation consultant YS Chan.

Public transport researcher SM Sabri SM Ismail is of the opinion that the government should explore the option to upgrade or extend existing infrastructure: "I don't see any good terminal location in JB for a separate KL-JB HSR, but if a 'higher' speed rail is really needed in JB, upgrading KTM's Electric Train Service (ETS) and the KL-JB metre-gauge tracks would make more sense."

 

What Were The Benefits Of HSR, Especially For The Real Estate Market?

The HSR project was projected to add RM21 billion to the economies of Singapore and Malaysia, creating 111,000 jobs by 2060.

The long-term benefits for low-carbon travel were also seen as a significant plus point, reducing carbon emissions in travel between KL and Singapore.

But the benefit to the property market was also set to be significant! First up, was the case of substantial infrastructure developments spurred by the proposed KLSG HSR route.

Flagship developments like Bandar Malaysia represent the multibillion Ringgit tip of this lucrative iceberg, creating a huge urban redevelopment area which was set to benefit from its role as a national and international transport hub.

While the Bandar Malaysia project has once again received the green-light, the current gross development value (GDV) of RM140 billion would undoubtedly be enhanced further by the addition of a KL-SG High Speed Rail terminal.

It’s not just the end points of the line where development was set to deliver benefits. KLSG HSR was due to include other stations throughout Malaysia, located at Sepang-Putrajaya, Seremban, Ayer Keroh, Muar, Batu Pahat, and Iskandar Puteri, before finally terminating at Jurong East.

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These six Malaysian stations would each enjoy the benefits of significant urban development and the consequent economic catalyst as a result.

That means more jobs, more money flowing in, and at the end of it all – better links and opportunities for each local area.

If you’re living near the KLSG HSR, you could rightly expect some benefits to your property prices (imagine: capital appreciation and better rental yield)!

Think of the KLSG HSR like a super-powered MRT line. Experts believe that the construction of an MRT route can add as much as 20% to property prices in nearby areas. Not bad if you’ve picked the winner in that infrastructure race!

When all is said and done, the HSR Malaysia is undoubtedly an expensive project. So it stands to reason that there should be detailed studies and careful planning to ensure that our country stands to benefit without any unnecessary additional spendings.

 

Does all this talk of property price increases sound like a good opportunity? Remember – no investment is guaranteed. Get yourself up to high-speed with our article What Are The Risks Of Property Investment In Malaysia?

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