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Friday, 27 July 2018

(NST) Japanese study finds Malaysia could make US$1.589bil annually from HSR


KUALA LUMPUR: Malaysia could make US$1.589 billion yearly from the Kuala Lumpur-Singapore high-speed rail (HSR) project in 2030, more than double the US$641 million per year Singapore would earn from the project, a study by researchers from Institute of Developing Economies (IDE) Japan showed.

The US$1.589 billion figure is the best of five possible scenarios given by IDE director Satoru Kumagai and overseas research fellows Kazunobu Hayakawa and Ikumo Isono in their paper “Potential Economic Impact of the Kuala Lumpur –Singapore High Speed Rail, which was published by the ISEAS – Yusof Ishak Institute in Singapore.

They also said the full economic impact is dependent of the quality of supporting infrastructure (feed roads to stations and customs and immigration clearance) and policies (non-tariff barriers in services). It is also likely to accelerate the structural transformation of the Malaysian economy towards services.

The Kuala Lumpur–Singapore high-speed rail project (HSR) is a 350km rail project aimed at connecting and reducing the travel time between Kuala Lumpur and Singapore. The agreement to implement the project was signed in 2016 but the fate of the project was cast into a limbo recently after Prime Minister Tun Mahathir Mohamad said that the HSR was unnecessary and would be dropped.

However, he later clarified that the project was not scrapped but merely postponed. A key concern of the new government was that the economic benefit from the project does not commensurate with the cost of the project, which was estimated to be around US$13-15 billion.

Under the first scenario, the HSR consists of domestic stops from Kuala Lumpur to Iskandar, Johor; a shuttle service from Iskandar to Singapore; and an express service from Kuala Lumpur direct to Singapore. The scenario also assumes a 50 per cent reduction in non-trade barriers for the service sector.

Under this scenario, Malaysia stands to make US$1.9 billion from the services sector.

However, other sectors such as electronics and manufacturing are negatively impacted by the HSR, bringing the total economic benefits down to US$1.589 billion.

The next best scenario is for the HSR to go directly from Kuala Lumpur to Singapore, with one stop in Iskandar. Under this set up, Malaysia will make US$1 billion a year, while Singapore earns US$88 million.

They said that Malaysia will benefit more for a HSR with domestic stops compared to one that only connects to Singapore exclusively.

“The regions that have no stations tend to be negatively affected by the project. If the HSR express service stops only at Kuala Lumpur and Singapore, then Johor is negatively affected by the development.

“If the HSR stops only at Kuala Lumpur, Singapore and Johor, then states such as Malacca and Negeri Sembilan will be negatively affected. Thus, the specifications of HSR’s express/local services need to be very carefully planned,” they said.

Under the first scenario, the HSR connects KL and Iskandar, Johor with five stops namely Putrajaya, Seremban (Negeri Sembilan), Ayer Keroh (Malacca) and Muar and Batu Pahat (both in Johor).

SOURCE : https://www.nst.com.my/news/nation/2018/07/395111/japanese-study-finds-malaysia-could-make-us1589bil-annually-hsr