Tuesday, 29 May 2018

High Speed Rail - thoughts on (from Jan 2017)

[This was drafted sometime in Jan 2017 or before, but somehow I never got around to "publishing" it. And now the HST has been scrapped. Maybe. It's Dr M. Who knows?]

I am sceptical about the KL-SG High Speed Rail.

Firstly, it is going to KL.

I know people who like to go to KL.

I know people who like to go to JB.

I am not one of them.

Secondly, it's a joint project with MY.

The same MY that had a Point of Agreement (POA) with SG to move the railway station from Tanjong Pagar. And took more than 10 years to realise what was agreed in the POA.

The same MY that did away with white immigration entry card, and then didn't and then did, and then I lost track and I don't know and don't care anymore because I can't be bothered to cross the Causeway anymore.

The same MY that claimed SG agreed to replace the Causeway with a bridge (we didn't, never did), and then decided to replace their half with a crooked bridge, and then drop the whole stupid idea.

The same MY that had proposed a Vehicle Entry Permit (VEP) as far back as 2006 but to date it has not. (Wrong! It started on Nov 1, 2016! Wrong! That was the Road Charge which is different from the VEP. See also this article.)

You get the idea.

If you were the govt, and you had to deal with an... "independent" party (wait, did I type "independent"? I meant to type "undependable") whom you cannot rely on to carry out their part of their deal, do you commit your resources wholeheartedly and single-mindedly to the project?

If you were prudent, you would have a Plan B, a contingency, a "what else can I do if the plans fall thru." plan. Otherwise we would end up with unfinished developments (like many residential projects in the Iskandar region).

Which is why I suspect JCC was first earmarked for acquisition. It is prime land.

Which is not to say that the SG Govt is not sincere about the project and the plans. If the MY surprise us and manages to get their act together and actually deliver, we will be happily surprised.

But hope is not a strategy. We can hope for the best, but we should always plan for the worst. Or at least for contingencies if we can.

Or the flip-flops of our partners.

Thirdly, how will MY finance the project? As the MYR falls, it will be harder and harder to pay for the project. which has been projected to cost as much as RM65b. As the MYR falls further (and it is expected to fall some more) the costs in MYR is going to rise.

And the MY govt was running a budget deficit in 2016 of 3.2% (of GDP?). Oil prices are recovering which should help with govt revenue, but it had fallen quite a bit.

The point is, without this MYR65b project, the MY govt budget is already in deficit by about MYR40b in 2016. Assuming the MYR65b is spread out over 10 years of the project, this is an addition cost item of MYR6.5b per year.

But to be fair, I am reasonably sure that they can finance the project. At least initially, and for the foreseeable short term future. And if they run into trouble, they can borrow from China, or from the AIIB (China's World Bank). Or issue bonds. But it would weaken the MYR even further. Possibly. I'm not a Forex expert.

And of course, they need to "upgrade" their customs and immigration clearance. Or Singapore needs to. Or both needs to. Because it doesn't make sense to be able to get to KL in 90 minutes, but custom & immigration clearance takes 90 minutes or longer.

[I think I held up publishing it because I wanted to confirm if the CIQ delay was more MY or more SG, or both. Maybe. Or maybe I just had other things to concern myself.]

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