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PETALING JAYA: The terms of the 2016 bilateral agreement between Malaysia and Singapore on the high-speed rail (HSR) project that would supposedly link Kuala Lumpur and Singapore were no longer viable due to the economic situation, leading to its eventual termination, says Datuk Seri Mustapa Mohamed.
The minister of the Prime Minister’s Department said that the current economic situation had negatively affected Malaysia’s fiscal position.
He said that since late 2018, the government had explored a number of alternatives to reduce the cost of the HSR project, which became more urgent with the onset of the Covid-19 pandemic.
He said that since the middle of last year, they had proposed changes to the project that included the project structure, alignment and layout of the station.
“The structure of the original project would have required substantial and long-term government guarantees.
“The new structure of the project was expected to provide the government with flexibility in financing options such as deferred payments, public-private partnerships and the ability to access financing at favorable rates,” it said in a statement on Friday (January 1).
Previously, both countries announced the termination of the project saying that they could not come to terms with the changes proposed by Malaysia.
He added that the proposed changes to the project’s structure would have allowed the country to take advantage of the HSR project to accelerate Malaysia’s economic recovery after the Covid-19 pandemic, bringing the start of the construction phase forward by almost two years.
“This would have provided a much-needed boost to our construction sector and its supporting ecosystem,” he said, adding that both governments had held a series of discussions on their respective positions.
Mustapa said they were unable to reach an agreement on these changes and therefore the bilateral agreement expired on December 31.
He said that under the agreement and the previously agreed terms, Malaysia will fulfill its obligations and that both countries will initiate what is necessary to determine the amount of compensation.
“In the future, the government will carry out a detailed study to explore all possible options, including the feasibility of a national ISS project and its benefits for Malaysians.
“Malaysia and Singapore enjoy very close bilateral ties. We will continue to strengthen these ties, including enhancing connectivity between our two countries for mutual benefit,” Mustapa said.
The HSR was expected to be operational by 2026 and was expected to reduce the travel time between Kuala Lumpur and Singapore to just 90 minutes.
The HSR line was to be extended 350km, with 335km in Malaysia and 15km in Singapore.
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