Malaysian minister says HSR's S$37b price tag includes hidden costs

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Malaysia's Economic Affairs Minister says new $37b estimate reflects cost of rail project that was not disclosed by previous government

Malaysia's Economic Affairs Minister Mohamed Azmin Ali said yesterday that his government's estimated RM110 billion (S$37 billion) price tag for the Kuala Lumpur-Singapore High Speed Rail (HSR) project included hidden costs.

"There were hidden costs that the previous government did not disclose to the public. So the Pakatan Harapan (PH) government is disclosing the entire cost of the project," he told Parliament.

"We need to ascertain whether the government can afford this project under the current economic situation," he said, adding that the project was too costly as the country faced a national debt of RM1 trillion.

Datuk Seri Azmin was replying to questions by former prime minister Najib Razak and former minister Wee Ka Siong over how the PH government had arrived at the RM110 billion figure.

The previous administration under Barisan Nasional, which was defeated in the May 9 general election, had said the HSR project would cost RM72 billion.

Finance Minister Lim Guan Eng told The Straits Times in a recent interview that the government has received offers to halve the cost of the project, showing that the current cost of the project's Malaysian segment was "exorbitant".

Najib, who retained his Pekan seat in the general election, also questioned the basis for the RM110 billion price tag, saying that the international tender will close only on Dec 28, and therefore the cost of the project is not yet known.

Mr Azmin replied that the costing was done by his ministry and the Finance Ministry and maintained that "it was just costing" for now.

"Of course in any tender processes, there will be some savings. This is why from the beginning, Pakatan Harapan has always asked for all projects to be done via open tender," he said.

Malaysia and Singapore had signed the legally binding bilateral agreement on the 350km-long rail line in December 2016. The agreement provides for how compensation is to be dealt with if the project is terminated.


Singapore's Coordinating Minister for Infrastructure and Minister for Transport Khaw Boon Wan told Parliament earlier this month that Singapore had dispatched a diplomatic note to Malaysia on June 1 to seek clarification on Kuala Lumpur's stance on the HSR project, but had yet to get a reply.

Singapore said it has incurred $250 million on the project already, with a further $40 million needed by the end of the year.

Mr Azmin told Parliament, in response to a question on the HSR from opposition leader and Umno president Ahmad Zahid Hamidi, that he will lead a delegation to Singapore for talks, and he had conveyed his intention to meet to Mr Khaw in their telephone call on June 6.

"The HSR agreement allows either side to cancel the project, subject to the terms of the contract. I wish to emphasise that any agreement must be fair and just to both parties," said Mr Azmin .

"I will lead a delegation to Singapore soon to hold talks to reach an agreement with the Singapore Government for a fair solution, as well as maintain the diplomatic ties that have long been established between Malaysia and Singapore."

Mr Azmin added: "The Attorney-General has given the opinion that this matter must be settled according to the law as well as bilateral talks. Based on the Attorney-General's advice, we are studying all options available"

He did not give a date for the meeting but later told reporters he had proposed it be held before the end of this month.

He also did not rule out the possibility of Malaysia proceeding with the project, saying: "I am not saying it is a terrible project. The best solution is for both parties to sit down and discuss what is in our best interests. I do not want to exclude the possibility."