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THE proposed high-speed rail (HSR) link from Kuala Lumpur to Singapore is not merely a transportation project, said Datuk Mohd Nur Ismal Kamal, CEO of the MyHSR Corporation Sdn Bhd (MyHSR Corp).
“The current administration firmly believes in the benefits of HSR, and is key to revive the project. However, due to fiscal constraints arising from the country’s debt level, annual debt servicing costs, other commitments, the government wants to explore to see if the public-private partnership route (PPP) is the way to go,” said Mohd Nur Ismal at the Women in Rail Conference 2023 recently.
Held in Kuala Lumpur on Aug 3, the conference brought together key stakeholders in the transport ecosystem, including students, with the aim of inspiring the future generations to think of how they could participate meaningfully in the rail industry.
Incorporated in 2015, MyHSR Corp is wholly owned by the Minister of Finance (Incorporated) while coming under the supervision of the Transport Ministry as it plays the role of the Malaysian project delivery vehicle for the development and implementation of the project that was proposed during the tenure of Datuk Seri Najib Tun Razak.
The project was reviewed after the change in federal government following the 14th General Election in May 2018.
On Jan 1, 2021, Malaysia and Singapore announced the termination of the bilateral project after failing to reach a consensus on the changes proposed by Malaysia before the expiry of the project agreement on Dec 31, 2020.
Mohd Nur Ismal: ‘The current administration firmly believes in the benefits of HSR, and is key to revive the project. However, due to fiscal constraints, the government wants to explore to see if the public-private partnership route is the way to go.’ — MUHAMAD SHAHRIL ROSLI/The Star
Mohd Nur Ismal’s comments are timely considering that MyHSR Corp will start to disburse the detailed documents pertaining to its request for information (RFI) exercise by this Friday, Aug 11, where it is seeking for market information on the willingness of the private sector to fund the bulk of the project.
“To be clear, even the original Kuala Lumpur-Singapore HSR (version 1.0) has a public-private partnership element in it, with private funding constituting about 20 to 30% of the project structure.
“What we are looking at now is to move the private funding portion to be as close to 100% as possible,” said Mohd Nur Ismal, who added that if this succeeds, then this HSR project will be the first in the world that is entirely reliant on private funds under what is known as the private finance initiative.
Private finance initiatives are quite a common way to fund major public infrastructure projects, including highways, airports, bridges, tunnels, along with the construction water and wastewater facilities, prisons, schools, arenas, and sports facilities.Instead of funding these projects upfront using public funds, the private sector are contracted to finance, manage, and complete the projects.
The private firms typically make their money back through long-term repayments from the government or revenue generated from the project – for example, highway tolls. Under this arrangement, the government does not have to lay out a large sum of money upfront to fund major projects. For example, Nusantara, Indonesia’s new capital that is currently under construction, relies only on 20% government funding, with the rest funded by public-private partnerships, foreign direct investments, and other investments.
When it comes to the Kuala Lumpur-Singapore HSR, the RFI exercise will give an idea who will be willing to bear the bulk of the commercial risk of building and operating the line, which in its original iteration, has eight stations, seven of them on Malaysian soil.
The Malaysian stations begin at Bandar Malaysia (which will have co-located Malaysian and Singapore customs, immigration and quarantine facilities), before heading to Sepang-Putrajaya, Seremban (near Labu), Ayer Keroh, Muar, Batu Pahat, and Iskandar Puteri. For those opting to take the HSR shuttle from Iskandar Puteri to Singapore’s Jurong East, there will be another co-located CIQ facility at Iskandar Puteri to make this journey seamless as well.
Otherwise, the non-stop or express service from Bandar Malaysia to Jurong East and vice versa, will not take more than 90 minutes in order to make the HSR a superior alternative to flights, other than a viable contender to driving, taking a bus, or KTM Bhd’s proposed ETS service from Johor Baru to Gemas (that typically travels below 140kph).
“The alignment distance from Kuala Lumpur to Singapore (350km) falls within the ‘sweet spot’ for HSR (where it trumps aviation in terms of time savings, among others). The RFI exercise we are undertaking now is meant to see if it can be done with the most innovative business models, multiple revenue streams, as well as cost effective and creative funding mechanisms,” said Mohd Nur Ismal.
For sure, this is not the first time that Malaysia has subjected the Kuala Lumpur-Singapore HSR to the rigours of market testing.
On Oct 7, 2015, Singapore’s Land Transport Authority and Malaysia’s Land Public Transport Commission (SPAD) jointly announced the launch of a “market sensing exercise” for the Kuala Lumpur–Singapore HSR.
In a joint statement, they said since the announcement of the HSR in February 2013, both governments have been working to develop this strategic cross-border project further.
“The request for information (RFI), which marks the next phase of the project, is designed as a consultation exercise to gauge market interest in the project and gather industry opinions on selected commercial and technical aspects of the project,” they said.
The detailed feedback received was eventually used in bilateral discussions and the drawing of the tender documents.
Much work has been done leading up to 2018, and this includes highly detailed surveys of the HSR corridor using Light Detection and Ranging.
Better known as LiDAR, this form of survey is an active remote sensing system that uses laser beams to read the topography to produce accurate readings of the elevation.Arising from such detailed surveys (along with geotechnical studies), there are at least four alternatives when it comes to alignments that pass through all the Malaysian growth centres – while ensuring that Bandar Malaysia and Jurong East remain the termini.
“Investors are free to tweak the locations of the (Malaysian) stations slightly, though we will be sharing our baseline data on the alignment as reference. Whatever the case, the (non-stop) Kuala Lumpur to Singapore journey time must be capped at no more than 90 minutes,” said Mohd Nur Ismal at an earlier media briefing in July.
“We are optimistic that the KL-SG HSR project is more than just a transportation solution as it will form the major backbone between the Klang Valley and the southern corridor of Peninsular Malaysia, spurring developments of key economic centres, intermediate cities, high-value industrial parks, and many more,” he added.
The industry-focused briefing on July 27 at the Finance Ministry office provided an overview of the RFI process, including the timeline for local and international firms and consortia to submit concept proposals for the bilateral project based on a public-private partnership model.
During the July 27 briefing, MyHSR Corp said the project structure will be based on the Design-Finance-Build-Operate-Transfer (DFBOT) model, and participating firms must show the ability to develop this project with the appropriate technical expertise, resources, and project management capabilities to complete this major infrastructure development within cost and timelines.
The briefing marked an important step in bringing the project to reality, in line with the aspirations of the government by providing interested companies with the relevant information such as the key components, submission requirements, and evaluation criteria for them to prepare and deliver a comprehensive concept proposal.
MyHSR Corp said it is important for participating firms to demonstrate their ability to sustainably build and operate the HSR services with realistic commercial expectations including, but not limited to, demand forecast, cost optimisation, revenue diversification (not just from ticket sales or the farebox model), and financial projections.
Additionally, bidders must have the ability to raise the required funding from diverse sources and develop a financially sustainable model that minimises reliance on government funding while ensuring successful project implementation and operations.
So far, MyHSR is cautiously optimistic that its latest RFI will be well received by potential investors.
“We are truly heartened by the positive response from the industry and look forward to receiving high-quality proposals that can align with the national and regional development plans.
“Participating firms or consortia should include a clear vision and plan that leverages rail connectivity to boost economic growth while ensuring that the sustainability and low-carbon aspects of the system are incorporated,” said Mohd Nur Ismal at the industry briefing event attended by a crowd of around 700, comprising Malaysian companies, along with industry players from the United Kingdom, Spain, Germany, the Netherlands, Italy, Australia, China, South Korea, Japan, Hong Kong, Thailand, and Singapore.
As of this week, close to 50 sets of RFI documents have been ordered by industry players, underscoring the healthy level of interest.
It is understood that virtually every Malaysian construction giant has already expressed interest to be part of the action.
Datuk Seri Azmi Abdul Aziz, CEO of YTL Construction (Rail Division), said there is clear economic justification for this HSR will help enhance the participation of foreign investors.
Likewise, Farizul Hazli Baharom, Berjaya Rail Sdn Bhd CEO, also expressed his excitement at this game-changing project for the country.
“As proven in other developed countries, HSR is able to catalyse associated developments in so many constructive ways.
“On our part, Berjaya Rail is eager to do its share, and we urge more members of the private sector to step up to the challenge,” he said.
With the closing date for the HSR proposal submissions set for Nov 15, prospective investors have three months to perform their due diligence.
Information on the RFI exercise can be found at www.myhsr.com.my/rfi.
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