Singapore and Malaysia Terminate High Speed Rail Project

A multi-billion-dollar high-speed rail link between Singapore and Malaysia’s capital Kuala Lumpur has been terminated.

The two countries were unable to reach an agreement on the project after Malaysia sought changes because of the pandemic’s economic impact, according to a joint statement Friday. Malaysia will have to compensate Singapore for costs already incurred, the city-state’s transport ministry said in a separate statement.

The announcement came just after a Dec. 31 deadline for the second and final extension of the suspension of the project, which was first mooted a decade ago and given the green light in 2013. In June, the Southeast Asian neighbors had agreed to put the development, which has already incurred multiple suspensions, on hold again amid a discussion around costs.

The on-again, off-again 350 kilometer (218 mile) high-speed rail link would have cut travel time between the centers down to about 90 minutes versus more than four hours by car. Although flying between the two only takes about an hour, that’s a lot longer once airport check-in and security is taken into account. The service was due to start in 2026.

“In light of the impact of Covid-19 pandemic on the Malaysian economy, the Government of Malaysia had proposed several changes to the HSR project,” according to the joint statement by Prime Minister Muhyiddin Yassin and Prime Minister Lee Hsien Loong. “Both Governments had conducted several discussions with regard to these changes and had not been able to reach an agreement.”

Malaysia had proposed changes in the project structure, alignment and station design as well as advancing the start of construction by two years to give a boost to the economy battered by the pandemic, Malaysian Economy Minister Mustapa Mohamed said in a separate statement. It also wanted to allow for more flexible financing options, including deferred payments and public-private partnerships.

The administration of former Malaysia Prime Minister Mahathir Mohamad, who resigned in February, sought to cancel the project as the country grappled with debt and liabilities amounting to more than 1 trillion ringgit ($249 billion), before settling for a deferment and a S$15 million ($11.4 million) compensation fee to Singapore.

Mahathir had at one stage estimated the project would cost around 110 billion ringgit for Malaysia.

“Both countries will abide by their respective obligations, and will now proceed with the necessary actions, resulting from this termination of the HSR Agreement,” said the joint statement.

Malaysia will explore all possible options for the project, including keeping it within the country, Mohamed said. Local media in Malaysia reported in November that Malaysia was considering ending the line in its southern city of Johor Bahru rather than in Singapore.

©2021 Bloomberg L.P.

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