Governments of Malaysia and Singapore sign agreement to defer US$10 billion high speed rail PPP

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Governments of Malaysia and Singapore sign agreement to defer US$10 billion high speed rail PPP

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The governments of Malaysia and Singapore have confirmed in a joint statement that construction of the Kuala Lumpur-Singapore High Speed Rail (HSR) project is suspended for a period up to 31 May 2020. 

The 350km high speed rail link, which will reduce the travel time between Singapore and Kuala Lumpur from four hours to around 90 minutes, was scheduled to begin operations by 31 December 2026.

The suspension comes at the request of the government of Malaysia. The government signed a Memorandum of Understanding (MoU) to develop the HSR project with its counterpart in Singapore in July 2016. However, this government lost the 2018 election. A new Prime Minister was sworn in in May, and shortly afterwards announced that he did not support the project.

The design, construction, financing and maintenance of all rolling stock and rail assets (e.g. trackwork, power, signalling and telecommunications), valued at MYR43 billion (US$10.36 billion), was to be undertaken by a private partner. The joint statement does not disclose when the tender, launched in December 2017, will recommence. Submissions were due on 28 December 2018.

The statement also does not disclose the projected cost of suspending the project. It states that Malaysia will bear the agreed costs, which is significant, as the new government's key motive for pursuing the suspension was that the project was unaffordable given Malaysia's current deficit.

Despite Malaysia originally pursuing the outright cancellation of the HSR, this new agreement with Singapore sets out strong incentives to avoid cancellation at all costs. If by 31 May 2020, Malaysia does not proceed with the project, the country is bound to bear the costs incurred by Singapore since December 2016. According to the country's Transport Minister, this is over SGD250 million (US$181.6 million).

The focus on funding is clear, with the joint statement outlining that Malaysia and Singapore will continue to deliberate the best way forward for the HSR project with the aim of reducing costs.

The rail link, which is planned to have eight stations and three operating services, is now expected to open by 1 January 2031.

List of country news

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  • May 29, 2018

    New Prime Minister of Malaysia to halt multi-billion Kuala Lumpur-Singapore HSR PPP

    Malaysia’s Prime Minister Tun Dr Mahathir Mohamad has announced that his government will not continue the Kuala Lumpur-Singapore high speed railway (HSR) project, which involves the development of a 350km/h eight station HSR, expected to cut travel time between the two cities to 90 minutes, at an estimated cost of MYR110 billion (US$37 billion).

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  • January 24, 2018

    Malaysia and Singapore agree to second cross-border rail PPP

    The Transport Ministers of Singapore and Malaysia have signed a bilateral agreement to develop a cross-border urban rail link between Singapore and Johor Bahru, Malaysia. The project will be developed in a similar manner to the US$9.6 billion Kuala Lumpur-Singapore high speed rail project, for which the governments launched a tender in December.

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  • January 04, 2018

    Chinese consortium to bid for Kuala Lumpur-Singapore HSR PPP

    It has been announced that a consortium led by China Railway Corp will bid for the Kuala Lumpur-Singapore high-speed rail project. The consortium is comprised of eight companies, including CRRC, China Railway Construction Corporation, China Communications ConstructionChina Railway Signal and Communication and Export-Import Bank of China.

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  • December 22, 2017

    Tender for US$9.6 billion Kuala Lumpur-Singapore HSR launched

    MyHSR Corporation Sdn Bhd (MyHSR Corp) of Malaysia and SG HSR PTE LTD (SG HSR) of Singapore have launched a joint tender for the Kuala Lumpur-Singapore High Speed Rail (HSR) project. The estimated total value of the project is MYR43 billion (US$9.6 billion).

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    MMC Corp Bhd's subsidiary MMC Port Holdings Sdn Bhd has acquired a the remaining 51% stake in Penang Port Sdn Bhd (PPSB), the operator of Malaysia's oldest port.

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