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KUALA LUMPUR – Malaysia wanted to advance the start of construction of the high speed rail (HSR) to Singapore by two years, one of several changes to the 350 km link to Kuala Lumpur that resulted in the project being abandoned after the deadline from Thursday. elapsed.
Prime Minister Lee Hsien Loong and his Malaysian counterpart Muhyiddin Yassin announced the end of the project in a joint statement on Friday (January 1) morning.
“Both governments had held various discussions regarding these changes and had not been able to reach an agreement. Therefore, the HSR Agreement had expired on December 31, 2020,” he said.
In Kuala Lumpur, a statement by the minister in Prime Minister Mustapa Mohamed’s department said that the Malaysian government had proposed changes to the HSR project in light of the impact of the Covid-19 pandemic on the country’s economy.
Datuk Seri Mustapa said Kuala Lumpur has “explored a number of alternatives to reduce cost” since late 2018, when a two-year extension to the 2016 bilateral agreement was agreed.
He explained that “this has become more urgent with the onset of the Covid-19 pandemic” which “negatively affected Malaysia’s fiscal position.”
“More importantly, the proposed changes to the project structure would have allowed us to leverage the HSR project to accelerate Malaysia’s economic recovery after the Covid-19 pandemic, bringing the start of the construction phase forward by nearly two years. This would have it provided a much-needed boost to our construction industry and its supporting ecosystem, “said Mr. Mustapa, who is in charge of the Economic Planning Unit that oversees mega projects like the HSR.
Malaysia is in the midst of a recession caused by closures intended to slow the spread of the coronavirus, and official estimates project a contraction of the economy from 3.5% to 5.5% by 2020.
In November, the Muhyiddin administration released Budget 2021, Malaysia’s largest at RM323 billion, in a bid to stimulate the economy.
However, this means a projected deficit of 5.4 percent this year, slightly lower than last year’s 6.0 percent, which saw additional spending on stimulus packages and lower tax collections.
Malaysia had a 2018 goal of achieving fiscal balance by 2023, a goal that has since been abandoned.
Singapore’s Ministry of Transport, in a separate statement, said Malaysia has to compensate Singapore for costs already incurred, according to the HSR agreement.
Mr. Mustapa stated that “Malaysia will comply with its obligations under the Bilateral Agreement. Both countries will initiate what is necessary to determine the amount of compensation.”
Malaysian news reports have also quoted unidentified sources as saying that the Cabinet was planning to continue the project without Singapore’s involvement and finish the line in Johor.
Mustapa said that if Kuala Lumpur will proceed with an alternative HSR plan it will now be subject to “a detailed study to explore all possible options.”
He said that “the new project structure” that had been proposed “would provide the government with flexibility in financing options, such as deferred payments, public-private partnerships and the possibility of accessing financing at favorable rates.”
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