PETALING JAYA: The Kuala Lumpur-Singapore high-speed rail (HSR) project cannot be funded entirely by the private sector as the high levels of capital investment required make such an endeavour unfeasible, transport experts said.
Former transport official Wan Agyl Wan Hassan said the risks associated with such huge investments and its uncertain returns would discourage private investors.
“Historical precedents, including the Putra LRT in Malaysia, show that relying solely on private sector funding for such projects can lead to financial difficulties that necessitate government intervention.
“So, a fully private-funded model appears to be impractical and high risk,” the former land public transport commission (SPAD) official told FMT.
Last Wednesday, MyHSR Corporation Sdn Bhd said the project could be funded fully by the private sector, despite being developed and operated through a public-private partnership (PPP).
When contacted, a MyHSR spokesman said the PPP for the project could take different forms depending on the level of the government’s contribution towards project cost.
“In this sense, PPPs can be fully privately funded if the projected revenue collection over the concession period exceeds the total project cost and profit margin on a net present value basis,” the spokesman added.
Wan Agyl said the concept of a PPP transcended monetary contributions and was a strategic alliance that sought to harmonise the strengths of both public and private entities.
“Even when the financial onus is entirely on the private sector, the public sector remains an invaluable stakeholder. It often steps in to streamline processes like land acquisition, obtaining regulatory permissions, assuring potential revenue streams or alleviating certain associated risks,” he said.
He added that while the government is appearing to target a model that is entirely funded by the private sector, it remained to be seen whether the private sector could bear the costs.
Meanwhile, transport consultant Rosli Khan said the project, although very ambitious, was not feasible.
“Cost of borrowing, interest charges, exchange rates and other associated costs will be high. My calculations do not generate positive numbers, so I can’t see positive returns on investment,” he said.
Rosli also said that reconfiguring the project in such a way would only benefit the private sector.
“Only project funders and private sector corporations would win, as avenues for misappropriation, financial manipulation and irregularities in such a huge project are open (to abuse) by interested parties,” he said.
Rosli said the project value was often set by the bidder, with the government resigned to being the weaker party in negotiations with corporate players.
He suggested that the project be classified as a private funding initiative rather than a PPP.