Lee Hsien Loong and Najib from Malaysian Insight

According to a visiting professor from Japan in Singapore, the High Speed Rail (HSR) will run into losses as neither Singapore nor Kuala Lumpur has the population density to achieve profits. In his letter to the Straits Times, Dr Tomoo Kikuchi wrote that the two cities will not achieve the population density to make HSR profitable:

“From the population density and profit margin of HSRs in several countries, our study predicts that the international line and the domestic line can have a profit margin of 0.15 and 0.02 respectively. This means that every dollar of sales makes a profit of 15 cents for the international line and a profit of two cents for the domestic line. This may look promising, especially for the international line. However, the profit margin of the KL-SG HSR will mostly likely be lower than this as it is planned to serve solely passenger transport.”

The Japanese academic pointed out that only one Shinkansen line has been profitable off passenger transport, and that is the one between Osaka and Tokyo. Singapore and Kuala Lumpur would not be able to mirror the success due to population limits:

“Will the population density of the KL-SG HSR project be high enough to make a profit from solely operating the HSR for passenger traffic? After all, only JR Central has managed to make a profit from such a model. The United Nations predicts that the population density of Singapore will be as high as that of JR Central but that of KL will only be half as high by 2030.”

Dr Tomoo Kikuchi wrote that only Bangkok and Ho Chi Minh city have the potential to reach a 20 million population. The professor said that the Singapore-KL profitability would only be realised after KL is connected to Bangkok, Ho Chi Minh and Yangon cities:

“So while the KL-SG HSR may not be profitable if you look only at the KL and Singapore populations separately, it can serve as a catalyst for the two cities to strengthen their positions as regional economic hubs to form mega urban agglomerations, which would attract populations from other cities and increase the likelihood of making the project profitable. In other words, for the HSR to be profitable, planners may need to look beyond Singapore and KL, to the regional economic effects of having such a speedy connection that links the two cities to larger cities further north.”

Malaysia has currently put the HSR project on an indefinite hiatus, as the country is currently in a trillion RM of national debt incurred by its former Prime Minister Najib Razak. The Singapore government is however unforgiving of Malaysia’s circumstances and demanded its neighbour to pay up more than RM500 million in compensation if the project is scrapped.

Comments

comments

SHARE