(July 11): Malaysia's Finance Minister has received offers to halve the cost of the high-speed rail (HSR) after Kuala Lumpur expressed reluctance to go ahead with building the 350km line to Singapore.
Speaking to The Straits Times last week, Mr Lim Guan Eng said while he has not received a formal proposal, these offers showed the current cost of the Malaysian portion of the link — estimated at RM110 billion (S$37 billion) — was "exorbitant".
He said if the price was brought down, "we can consider" reviving the project, pending agreement from Singapore on any changes.
"The project by itself makes some sense but not at the exorbitant cost," he said in an interview.
The HSR deal, inked in 2016, is one of several mega projects being reviewed by the new Malaysian government, after it took power in May.
Mr Lim said since Prime Minister Mahathir Mohamad floated a "trial balloon" in May, stating that his Pakatan Harapan (PH) government would seek to cancel the HSR project, "we have people offering we can cut (the price) by half".
"We don't know whether that's serious... (but) that means the whole thing was way overpriced and that raises more questions," he said.
Singapore said this week that it has yet to receive a response from Malaysia, after sending a diplomatic note on June 1 seeking clarification on Kuala Lumpur's stance towards the HSR.
The Republic has so far incurred S$250 million on the project, with a further S$40 million needed by the end of the year.
"Should Malaysia cause the HSR project to be terminated, we will deal with the question of compensation from Malaysia for costs incurred in accordance with the bilateral agreement and international law," Foreign Minister Vivian Balakrishnan told Parliament on Monday.
Asked if Malaysia could propose a different plan, Mr Lim said discussions will be held with Singapore first, and that these will be led by Economic Affairs Minister Azmin Ali and also involve Transport Minister Anthony Loke.
Former premier Najib Razak had insisted the HSR would cost only RM72 billion, but Mr Lim said last month that the cost is above RM100 billion if interest payments are included. Based on Najib's estimates, RM40 billion was for the track and trains, RM20 billion for systems and RM12 billion for land acquisition.
Analysts say that the scale of the rail link — comprising eight stops — would need to be reduced to lower costs. "The number of stops in between could be reduced to save money, and station development plans could also be scaled back," risk consultancy Eurasia Group's Asia director Peter Mumford told The Straits Times.
A top government official told The Straits Times that Malaysia was not opposed to the HSR, but the project was not viable, after PH discovered its debts stood at RM1.1 trillion.
The source added that the penalty for cancelling the HSR deal was lower than the RM500 million estimated earlier, but this sum did not include compensation for expenses already incurred.
"If Singapore can offer a soft loan, it would drastically reduce the interest cost," the official said.
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