The Malaysian Insight

MALAYSIA’S keen interest to participate in the proposed trans-Asian railway project may have been widely lauded by the business community but experts are also asking the question on who will fund the Malaysian section of the proposed line.

Singapore has proposed the Singapore-Kunming Rail Link project to link the city state with Kunming, located in southwestern China.

The line passes through Malaysia and Putrajaya has said it is keen to participate in the construction of the line.

Economists want to know if China will fund it or will the contract be given to the private sector, the government or a public-private partnership (PPP).

They said if Malaysia is to pay for it, “where will the funds come from?”

Among those who hailed the project is SERC executive director Lee Heng Guie, who said the rail link “will bring positive development to the country’s transport network”.

Lee said a freight rail link to China would give exporters another transport option, aside from the existing air and sea links.

“It’s a good proposal. But who’s going to finance the construction?

“That part is quite a concern to me,” he told The Malaysian Insight.

Transport Minister Anthony Loke had earlier told the Dewan Rakyat the government hoped to expand the rail link in the future.

This rail line is part of the trans-Asian railway project initiated by China under its “One Belt, One Road” initiative.

The line will connect Kunming with several Southeast Asian countries such as Laos, Thailand, Cambodia, Malaysia and Singapore to spur international trade.

The Chinese in December last year completed the US$5.9 billion (about RM26.45 billion) Sino-Lao rail line to link Kunming with Vientiane.

China funded 60% of the project with a loan of about US$3.5 billion from the Export-Import Bank of China but Laos picked up the rest to plunge the country into serious financial stress.

Technical issue

Political analyst at the Singapore Institute of International Affairs Oh Ei Sun also poses the same question.

“Is Malaysia picking up the tab for its participation? Or will China pick it up?”

Oh said the high costs would certainly place a financial burden on interested countries like Thailand and Malaysia.

He also has a host of other questions to ask in relation to the proposed rail line.

One of the questions that needed to be answered first, he said, is if the goods transported by rail will be tax-free since many of the Southeast Asian countries, including Malaysia, have signed the regional comprehensive economic partnership – a free trade agreement that will create the world’s largest trading bloc.

He also wants to know when the project will start.

“I believe all the questions that are asked would have to be cleared up before implementing the proposed project.”

Urban land use and transport planning expert Goh Bok Yen raised a technical question about the project.

He said in the building of a cross-regional rail project, Putrajaya’s first priority is to sort out the problem of connecting the Malaysian and Thai lines.

He gave the failure to connect the Malaysian line that ends in Padang Besar with the Thai line at Hatyai.

The inability of the two countries to sort out their technical woes meant passengers needed to get off at their respective terminus, cross the border by bus and other means of transport, then re-board the train in each country to continue their journey.

Goh said the proposed line would not only bring a lot of benefits to Malaysia, it would also bring positive development to the region. – April 7, 2023.