Out-Law / Your Daily Need-To-Know

Malaysia-Singapore rail link to go ahead after 36% cut in projected cost

15 Nov 2019, 4:58 pm

Malaysia has agreed to continue with a rail project linking it to Singapore after the projected cost of the project was cut by 36%, according to Reuters.

The Rapid Transit System Link will bridge one of the world’s busiest border crossings, carrying up to 10,000 passengers an hour each way between Singapore and Johor Baru in Malaysia. Original cost estimates were RM4.93 billion ($1.12 bn) but these have now reduced to RM3.16bn ($757 million).

The Edge Markets reported last month that the Malaysian Transport Ministry had received cabinet approval to continue with the RTS Link with changes to the structure, scope and specification of the route. It is expected to sign a new agreement early next year.

According to Straits Times an important change to the project structure will be that the developer/owner of the Bukit Chagar land will be involved, meaning that the use of this land will be free.

A Singapore Ministry of Transport (MOT) spokesman said that it welcomed Malaysia's decision to proceed with the project.

Malaysia requested in April that the project be suspended for six months. Malaysia wanted to review the project’s scope, structure and costs. Today Online said that the agreed cost of RM4.93bn was expected to reduce as passengers could be charged high fares under the present agreement.

In May the countries signed an agreement to formalise the suspension until September 30. Malaysia agreed to pay Singapore over $600,000 for costs incurred by the delay. Malaysia then requested one more month extension till October 31. Singapore agreed and did not charge for the additional month.

Project finance expert John Yeap of Pinsent Masons, the firm behind Out-Law, said, "Malaysia and Singapore’s shared common history has meant high levels of connectivity between the peoples of the two nations with familiar culture, tradition and language being some of the factors that bond the people. The development of the RTS will further help facilitate this connectivity which will deliver benefits to both Singapore and Johor and further afield in Malaysia."

The governments signed an agreement last January to build the link, which will connect Woodlands North station on the Thomson-East Coast MRT Line to Bukit Chagar. The cross-border link was initially targeted to begin operations by the end of 2024.