Do we really need a Singapore-Kuala Lumpur high-speed rail link?

By Bloomberg News, May 31 2018
Do we really need a Singapore-Kuala Lumpur high-speed rail link?

Malaysia’s Prime Minister Mahathir Mohamad has said he’ll cancel a planned high-speed railway that was intended to reduce journey times between Kuala Lumpur and Singapore from about five hours to 90 minutes. Bloomberg Opinion columnists David Fickling and Adam Minter debate the topic.

David Fickling: I think we both agree that high-speed rail, or HSR, doesn’t make sense in all areas. The economic benefits can be surprisingly slight and depend a lot on construction cost, population density, route length and ticket pricing.

But Singapore-Kuala Lumpur seems to me to be one of the corridors where it would clearly work. It’s overtaken Hong Kong-Taipei as the world’s busiest international air route and the potential travel time puts it well within the range where rail can supplant aviation, which would also help free up space at airports.

Add to that the huge reductions in carbon dioxide emissions and it seems a no-brainer to me. What’s not to like?

Adam Minter: On the surface, there’s much to like. But is it necessary?

At the 2015 signing ceremony, then-Malaysian Prime Minister Najib Razak envisioned a glamorous future in which one “can have breakfast in Kuala Lumpur, lunch in Singapore and be back in time for dinner in Kuala Lumpur.”

But one can already do that (I've done it!) by boarding one of the more than 30,000 flights per year between the two cities, most of which are operated by low-cost airlines. Book early, and you often won’t pay more than $100 per round-trip.

Can HSR compete? Both governments indicate they’re looking at a roughly $100 round trip (highly speculative, considering the line wasn’t scheduled to be complete until 2026). But that price will require subsidies, on top of steep and still uncertain construction and financing costs. With Malaysia’s current fiscal issues, and more pressing transportation needs, I don’t think that’s a necessary or responsible investment.

David Fickling: We both agree that the aviation market on this route is impressive – but I see it as evidence of strong demand that HSR could meet, rather than a reason to dispense with this option. Even if you cut the project’s estimates of 22 million passengers a year by half, it would have as much traffic as the London-Paris Eurostar – and those round-trip price estimates include the discounted cost of finance and construction, so it’s not implausibly expensive.

All HSR is built with government money because such networks are multibillion-dollar mega-projects that operate local monopolies – but that doesn’t mean they can’t pay for themselves. Japan’s Shinkansen has long done without public operating subsidies, with the state only stepping in to fund the development of new lines.

There are significant second-order benefits, too: Singapore and Kuala Lumpur are the main destinations from each other’s airports, and releasing that capacity would go a long way to relieving the congestion that’s holding back the Malaysian capital’s development as an aviation hub.

Adam Minter: I agree that high demand is a precondition to a successful high-speed rail development. The problem is it’s difficult to predict demand a decade out – and boosters of these highly political projects have incentives to exaggerate. I think Kuala Lumpur-Singapore suffers from that problem.

Between March 2017 and February 2018, 4 million people flew the Singapore-Kuala Lumpur route. Yet as you note, HSR’s supporters would have us believe that 22 million people will ride the line by 2036. Even cut in half, such a projection is unrealistic.

Which brings me back to costs. As many a tourist has learned, the Shinkansen is one of the most expensive ways to move around Japan – and that certainly is one factor that keeps it in the black. By contrast, China’s HSR is wonderfully inexpensive and egalitarian – and loses money on all but a handful of routes. For Singapore-Kuala Lumpur to avoid being a long-term fiscal burden, it’d presumably need to follow Japan’s model, which would inevitably limit ridership from the lower-income Malaysian side.

Finally, I agree that HSR would relieve congestion at airports in Singapore and Kuala Lumpur. But is it the cheapest way? Malaysia’s airport authority is working on a plan to double capacity at Kuala Lumpur over the next 10 to 20 years. Though it won’t be cheap, it’ll be less expensive than the US$28 billion that Prime Minister Mahathir claims HSR could cost. That’s a better option, at least for Malaysia.

David Fickling: I’m not sure that airport expansions these days are all that cheap, either. Singapore Changi’s Terminal 5 expansion alone will cost “tens of billions,” according to its Ministry of Transport.

An airport expansion only increases capacity in two cities, but HSR would help develop a densely populated corridor along Malaysia’s southwest coast that already carried 7.5 billion passenger-kilometers on road and air in 2011 – and the vast majority of displaced traffic will initially be from cars and trains, not planes.

A World Bank study of China’s network found that the agglomeration benefits lifted the economic output of affected cities by between 0.55 percent and 1 percent per year, with Guangdong province seeing an increase in business productivity of about 10 percent. Malaysia – a country that’s been worrying about the middle-income trap for a generation – shouldn’t take those benefits lightly.

There’s another long-term reason to back HSR. Singapore and Kuala Lumpur are already among the top 10 cities in the world for international tourism arrivals, according to Airbus. Inter-Asian air traffic (excluding China) will take up the largest share of global growth up to 2036, Boeing forecasts. Managing that will impose a major toll on both capacity and the world’s climate – so switching to a mode that could in a future grid produce one-fiftieth of the emissions generated by aviation seems not just an option, but a necessity.

Adam Minter: I agree carbon emission reductions are among the key benefits of an HSR system. But in considering emissions, we can’t just look at those related to operating the HSR. We also need to look at the significant emissions associated with building it, from raw materials to the actual process of construction. They are not insignificant.

One 2012 study posited that an HSR line needs roughly 10 million annual one-way trips “to compensate for the annualized construction emissions.” Furthermore, for the reduction to be meaningful, most traffic must be diverted from air travel, and tunnels can’t be used extensively in construction. Those could be high bars for this particular HSR.

Of course, there are a lot of “ifs” in that study and our debate – the crucial one being whether the HSR line would hit ridership predictions. The uncertainty counsels against building the line. Nonetheless, even though Mahathir’s decision ends the project for now, I suspect it will be resurrected in the future. (Mahathir said Wednesday that the government may revisit the decision once Malaysia restores its finances.) Whenever that happens, I hope we’ll get a chance to debate the issue again in light of new circumstances.

13 Dec 2017

Total posts 4

These are two of southeast asia’s most competitive cities, back to visit KL recently and it was absolutely booming, every time I visit, KL looks different, in a good way. Imo no other city in SEA is remotely close. So I think connecting them is a good idea and will definitely create a prosperous corridor, but maybe in the future when they can afford, and when connecting infrastructure within Malaysia and KL matches up.

10 Apr 2018

Total posts 3

I agree with David Fickling, that HSR is not just about the two cities at both ends. It's also about optimizing economic efficiency along the corridor where it serves and overall productivity gain for the whole region. That's why HSR stand alone does not make much economic sense, and it has to be government project but overall country benefits. Just one example, MNCs can relocate there expensive Singapore back office to lower cost cities along the HSR, and lift income in that area. Cost of doing business reduced in Singapore, and more business will move in. HSR between SIN and KUL makes senses in terms of time saved, 1.5 hr train (3 hr door to door) vs 5 hr door to door for air travel? I will take the bullet train!

17 Sep 2015

Total posts 382

And that's one of the other keys. While Jurong (proposed terminus) is perhaps not ideal, it's good, and the Kuala Lumpur location even better. Air travel for short hops is an annoyance, and HSR punctuality is fantastic compared to airlines, plus getting one into the city centre.

This HSR would be a huge success so in time Malaysia has to become in favour of it.

11 Dec 2015

Total posts 85

If the people planning the HSR can just make sure that immigration at the Malaysia end doesn't take longer than the trip itself (as happens regularly when flying) they'll be onto a winner.

Qantas - Qantas Frequent Flyer

09 Dec 2013

Total posts 12

One of the Dumbest Business Cases I have ever Seen! Look at the Proposed Costs! Then Counter in The Inevitable Overruns! No wonder they have been Bickering over this Proposal for Years! .... Anyone heard of Changi Aiport!

08 Feb 2018

Total posts 128

Who are these columnists and what are their qualifications on the subject? Sounds like a lot of opinions rather than any real facts

Qantas - Qantas Frequent Flyer

22 Jul 2015

Total posts 220

Anything which involves getting from point A to B without the aggravation of an airport is fine be me as a traveller. Recently I had cause to be in Paris (Sydney to CDG on EK) and was then flying back from London. It was a pleasure to jump onto the Eurostar at Gare du Nord and end at St. Pancras where I had booked to stay. Avoiding the nightmare that is LHR is more than a bonus. Comfortable ride through France and England and just enjoy the concept of rail travel compared to air. Whether KL/ SIN works is anybody's guess but there is something to eb said for rail which is now lacking in the sanitised world of . air tarvel.

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