Friday 29 Mar 2024
By
main news image

KUALA LUMPUR (May 29): The government’s decision to scrap the High Speed Rail (HSR) rail link project was a wise move as the project cost had outweighed its economic benefits, said an economist.

Yesterday, Prime Minister Tun Dr Mahathir Mohamad had said the decision to drop plans to build the HSR between Kuala Lumpur and Singapore was final, adding that it could see Malaysia facing up to RM500 million in penalty.

Commenting on this latest development, AmBank Group chief economist and head of research Dr Anthony Dass said the returns on this project was not attractive and in fact a stress on the country’s finance.

Dass said the with public debt reaching RM1.09 trillion or 80.3% of the gross domestic product (GDP), it has raised concerns as to whether the borrowings will help improve growth or weigh on the economy and also future generations.

He said by stopping the HSR project, the government would be able to save some of its expenditure on a project of such a scale.

He also pointed out the economic viability of the HSR project.

“Are we saying there are so many travellers on rail that it will outweigh road or air travel connectivity that is already available now?”

“The cost of the HSR is RM110 billion. We have to also look at the ticket cost before project breaks even.”

“Logically, the cost of building (the HSR) is too high when we we look at the already available alternatives for travellers to Singapore, like road and shuttle planes,” he said.

He also pointed out that commuters will start calculating their travel costs against flight or road travel.

Dass said the biggest argument for scrapping the HSR project was the cost versus benefit issue.

He said paying a penalty of RM500 million was far desirable than incurring a cost of US$110 billion for a project that may not provide the expected returns or worse, be a white elephant of sorts.

On the possible investor reaction on this news on Bursa Malaysia when the market resumes trade on Wednesday, Dass said stocks linked to the project will likely be adversely affected.

He said among those that may be impacted were property developers and construction players previously touted to be the main beneficiaries from the HSR project.

 

      Print
      Text Size
      Share