$14.9b KL-SG high speed rail construction braces for bumpy ride as delays mount

It could be delayed beyond 2022, analysts say.

Rome wasn’t built in a day, and the proposed commercially attractive high-speed rail between Kuala Lumpur and Singapore wouldn’t be finished any faster, too.

According to analysts from BMI Research, though the railway is projected to provide a cheaper and faster alternative to existing modes of transport between both countries, its construction would go through a lot of stops before it arrives at its completion.

“Despite these recent developments indicating that both governments are committed to the completion of the KL-SG HSR, crucial details of the project have yet to be finalised, and we highlight significant scope for the project completion date to be delayed beyond 2022,” BMI Research said.

Headlining the challenges are complications between both governments and their commitment to the project. In May 2015 alone, both governments announced that the completion would be pushed back by two years beyond 2020, but BMI says it would take a longer time to finish the ambitious project.

Project structure is also a huge roadblock for the proposed railway, as ownership of the project is foreseen as a major point of contention between the countries.

“We expect difficulties in arriving at an equitable agreement considering that majority of the high speed rail will be located in Malaysia. Currently, whether single or multiple stakeholders should be responsible for the construction and operation of the railway has yet to be confirmed,” the report said.

BMI Research says other issues include project funding, land acquisition permits, and deterioration in the bilateral relations between the countries.

“The project is expected to be completed under a public-private partnership structure, although the specific model and level of government involvement has yet to be finalised. Both countries are also undecided on a capital structure for the project,” the report said.

“Although relations between the two countries have seen a marked improvement in recent years, we do not rule out the possibility of such progress being undermined. Historically, relations between the two countries have been stormy due to a wide range of disagreements such as the ownership of Pedra Branca. We also note that Malaysia's opposition alliance (Pakatan Harapan) had publicly stated in November that it will scrap the KL-SG HSR project should it gain federal power,” it added.