The Malaysian government has received offers to halve the cost of the high-speed rail (HSR) project.
This is following Prime Minister Tun Dr Mahathir Mohamad’s announcement that construction works for the 350km line would be postponed in light of the national debt of RM1 trillion.
According to a news report by Singapore’s Straits Times, Finance Minister Lim Guan Eng said last week that he had yet to receive a formal proposal but the offers showed that the current cost of the Malaysian portion of the project, estimated at RM110bil, was exorbitant.
“If the price was brought down, we could consider reviving the project, pending agreement from Singapore on any changes.
“The project by itself makes some sense, but not at the exorbitant cost,” he had said.
Lim said since Dr Mahathir stated that the Pakatan Harapan government would seek to cancel the HSR project, there had been offers of half the RM110bil estimated.
“We do not know whether these are serious but that would mean the whole thing was way overpriced and that raises more questions,” he said.
Meanwhile, the Singapore government has yet to receive a response from Malaysia, having sent a diplomatic note on June 1 to seek clarification on the government’s stance on the HSR.
The Singapore government has incurred S$250mil in costs for the project to date, and an additional S$40mil is required by year-end.
Earlier this week, Singapore’s Foreign Minister Vivian Balakrishnan said the Singapore government would seek compensation for the cost incurred from the Malaysian government in accordance with the bilateral agreement and international laws in the event Malaysia terminated the project.
Lim said discussions led by Economic Affairs Minister Datuk Seri Azmin Ali and Transport Minister Anthony Loke would be held with the Singapore government before a different plan can be proposed by Malaysia.
Former Prime Minister Datuk Seri Najib Tun Razak had insisted that the HSR would only cost RM74bil, of which RM42bil was for track and trains, RM20bil for systems and RM12bil for land acquisition.
However, Lim said last month that the cost was more than RM100bil with the inclusion of interest payments.
A source in the Straits Times news report had said that the penalty for cancelling the HSR deal was lower than the RM500mil estimated earlier, but this sum did not include compensation for expenses already incurred.
The report also noted that the interest cost could be drastically reduced if the Singapore government is able to offer a soft loan.