This article first appeared in Corporate, The Edge Malaysia Weekly, on June 20 - 26, 2016.
THERE could be more than RM100 billion worth of rail jobs up for grabs in the next few years, with many huge projects in the pipeline. While there is some uncertainty as to whether some of these projects will materialise, there is still considerable excitement in the market place. And these jobs do not include the various light rail transit and mass rapid transport contracts that will be awarded in the future.
For starters, there is talk of a memorandum of understanding (MoU) to be signed next month by the Malaysian and Singaporean governments and the many agencies related to the building of the multibillion ringgit Kuala Lumpur-Singapore High-Speed Rail (HSR) project, sources familiar with the matter tell The Edge.
It is understood that this will kick-start much of the prerequisites such as soil investigation and detailed engineering studies that will lead to the pre-qualification and tenders later in the year.
“The MoU indicates that the bilateral arrangements between Malaysia and Singapore are completed,” the source says, declining to elaborate.
While talk of this MoU has been making the rounds, it is worth noting that preparations for the project are ongoing as planned. In April this year, MyHSR Corp chairman Tan Sri Ali Hamsa had indicated that Malaysia would be finalising the draft alignment with Singapore and would sign an MoU in July, which indicates that things are on track. MyHSR is the Ministry of Finance-owned company responsible for the development and promotion of the HSR project.
“At the moment, we are finalising the draft alignment. It is almost complete but we have to work together with Singapore,” Ali had said in April after unveiling the MyHSR logo at the Perdana Putra Complex.
While the HSR has been talked about for some time, there are other large rail jobs that are being discussed without much fanfare.
Last week, Prime Minister Datuk Seri Najib Razak announced that Bandar Malaysia will be the integrated transport hub for the Kuala Lumpur-Singapore HSR and the proposed Pan Asean Rail Transit to Bangkok.
“Bandar Malaysia will also serve as Malaysia's gateway to the world through the high-speed rail to Singapore with direct links to the Kuala Lumpur International Airport and Changi Airport, and the proposed Pan Asean Rail Transit to Bangkok and beyond,” he said at the signing ceremony, where China Railway Group Ltd (CREC) and its local partner Iskandar Waterfront Holdings bought a 60% stake in Bandar Malaysia for RM7.41 billion.
This would indicate that the multibillion ringgit Pan Asean Rail Transit, connecting Kuala Lumpur to Bangkok in Thailand and going on to Kunming in China, is closer to becoming a reality.
The shortest, most central, route from Kunming to Singapore spans just under 4,000km and it would take a high-speed train 10 hours to complete the journey.
While the HSR linking Kuala Lumpur to Singapore could have a price tag of RM40 billion to RM70 billion, the cost of the line from Kuala Lumpur to Bangkok, spanning more than 1,400km, is not yet known.
Taking the lower band of the Kuala Lumpur-Singapore HSR’s price tag of RM40 billion for 340km, simple back-of-the-envelope calculations place the value at RM117.65 million per km, assuming similar conditions. The closest Thai town to Kuala Lumpur is Betong, 385km away. This would indicate that the distance for a high-speed rail line to the Thai border would cost RM5 billion more than the RM40 billion to Singapore, at the very least.
While some speculate that the railway track to Bangkok may take time to consider and push through, others say the project could speed up and be completed even ahead of the Kuala Lumpur-Singapore HSR, but this remains speculation.
“There is some irritation with the delays in the Kuala Lumpur-Singapore HSR … so, just to prove a point, the HSR to Bangkok may be expedited,” a source familiar with the plan says.
For the Kuala Lumpur-Singapore HSR, many tout the Chinese as the front runners to construct the infrastructure and build the system, with the Japanese, South Koreans and a consortium of European companies — which could include Siemens AG of Germany, Alstom SA of France, Talgo SA and Construcciones y Auxiliar de Ferrocarriles SA or CAF, both of which are from Spain — also eyeing the large-scale contract.
Some market watchers suggest the Europeans have a strong chance of bagging the job with the support of the Singaporeans, who are seen to be more aligned to the Japanese and European bids.
The Edge understands that there is also a proposal by China Railway Construction Corp (CRCC) to build a passenger and freight railway line linking Kuantan to Bangkok, but details are scarce.
The job is likely to be another multibillion ringgit contract. One source says CRCC is looking at building this railway line via a barter trade agreement, much like the one some 15 years ago when Malaysia had contracted with Chinese and Indian parties to build a double-tracking railway line from Johor Baru to Padang Besar, to be paid in crude palm oil.
Indian Railway Construction Co and CREC had received letters of intent from the Malaysian government in mid-2002 to build the multibillion ringgit rail line, after three years of negotiations, but a counterbid by MMC Corp Bhd in a joint venture with Gamuda Bhd was awarded the contract in 2003.
It is worth noting that Kuantan Port Consortium Sdn Bhd, which operates Kuantan Port, is 38% controlled by Chinese company Beibu Gulf Holding (Hong Kong) Co Ltd, with the remainder under IJM Corp Bhd.
Some analysts The Edge spoke to were aware of the plan to build a railway line from Kuantan to Bangkok but were not familiar with the details.
“There are so many plans now, it’s hard to keep track. There’s this Kuantan to Bangkok railway line, the HSR to Singapore (and Bangkok) and there’s also an East Coast Rail Line (ECRL) being mooted as well ... it’s a costly affair. A lot of money is likely to be spent on rail,” he says.
The ECRL is slated to connect Kuala Lumpur to Mentakab, Kuantan, Kuala Terengganu, Kota Baru and Tumpat on the East Coast.According to news reports in March, the Land Public Transport Commission (SPAD) is gauging market sentiment before acting on the ECRL.
SPAD CEO Mohd Azharuddin Mat Sah had said in a statement, “Both SPAD and ECERDC (East Coast Economic Region Development Council) are in the process of analysing different types of business, technical models and procurement strategies and alternatives for the implementation of the ECRL project. The joint market study, via a request for information (RFI), is designed as a consultation exercise to seek industry opinion and collate market feedback.”
The deadline for RFI was May 15.
While information, such as the length of the railway track (600km) and the speed of the trains (200kph), have been disclosed, very little information has been revealed about the cost of the railway line, but it is also likely to fall in the category of billions of ringgit.
“At the moment, all of the rail links are on the western side of the peninsula. We do have a rail link to the eastern side but it covers what I would call rural areas. The new line will serve major towns in this area of the country,” Azharuddin had said.
One of the goals of the railway line is to assist the East Coast Economic Region, which was introduced during Tun Abdullah Ahmad Badawi’s administration, with the main objective of correcting the regional imbalances that exist between the west and east coasts of the peninsula.
While these are some of the jobs being talked about, others are likely being discussed more quietly. With so much going on, the rail industry is likely to remain in the limelight for the medium term.