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KL-Singapore high speed link not ready by 2020 as planned, reports Bloomberg

Achieving a balanced budget by 2020 and meeting the target on Malaysia's fiscal deficit may delay plans for a proposed high-speed rail link between Kuala Lumpur and Singapore, Bloomberg quoted Tan Sri Syed Hamid Albar as saying.

The Land and Public Transport Commission (SPAD) chairman, interviewed by Bloomberg, said there may be problems with the original target of 2020.

"Malaysia initially targeted 2020 for the high-speed rail link to be completed to coincide with its plan to be a developed nation," Syed Hamid said.

"However, Putrajaya recognises there may be problems with the original timeline. There are other factors besides construction Putrajaya needs to study."

Syed Hamid said the project may take six to seven years to complete once it begins in 2016.

"SPAD has been inundated with proposals from various companies who are interested in participating," he said, adding it included French and German companies.

SPAD has been entrusted to prepare a feasibility study on the proposed high-speed rail link from Kuala Lumpur to Singapore, which will reduce the 300km journey over land from 5 hours to about 90 minutes.

Syed Hamid (pic, right) declined to reveal to Bloomberg the estimated cost of the project, although an economist said it could be as much as RM40 billion.

Malayan Banking Bhd economist Suhaimi Ilias said he suspected Putrajaya was mulling over the financing of the project.

“How are they going to do this without affecting the target on fiscal deficit and achieving a balanced budget by 2020?" he told Bloomberg.

Malaysia wants to trim the fiscal gap to 3% of gross domestic product in 2015 from 3.9% last year, and Prime Minister Datuk Seri Najib Razak is targeting a balanced budget by 2020.

Furthermore, Suhaimi said, inflation and soaring land prices mean the cost of building the rail link will probably increase.

With neighbours Indonesia and the Philippines vying for more investment, Malaysia is keen to make better use of Singapore’s financial muscle.

Leaders of both countries announced last year the rail link may be completed by the end of this decade, with Najib calling it a “huge game changer”.

"This rail link will transform the way the neighbors do business. The link would have a similar distance as New York to Washington," Najib said.

Syed Hamid said the high-speed train will operate four times hourly with two services, one non-stop and the other stopping at cities and towns in four states.

"The journey on the train that has stops will take about two hours," he added.

Last month, the New Straits Times reported that Japan was prepared to provide the funds and expertise to Malaysia and Singapore on the new network.

Railway official Tomohiro Kobayashi said the timeline for the project to be completed by 2020 was challenging.

JR Central, as the Japanese rail operator is known, operates the world’s busiest bullet train line.

SPAD has studied various financing and business models for the network, including consideration for public-private partnerships, said Syed Hamid, who recently visited Japan to celebrate the 50th anniversary of the Shinkansen bullet train. – October 30, 2014.