Potential Economic Impact of the Kuala Lumpur - Singapore High Speed Rail

Abstract

The Kuala Lumpur–Singapore high-speed rail project (HSR) is an ambitious 350km rail project aimed at connecting and reducing the travel time between Kuala Lumpur and Singapore. Though the agreement to implement the project was signed in 2016, the fate of the project was cast into a limbo recently after the ruling coalition Barisan Nasional was decisively defeated in Malaysia’s 14th general election on 5th May 2018. Mahathir Mohamad, who became Malaysia’s prime minister for the second time but now leading the Pakatan Harapan coalition, first opined in an interview with the press that the HSR was unnecessary and would be dropped. However, in another press interview two weeks later, he clarified that the project was not scrapped but merely postponed. A key concern of the new government is that the economic benefit from the project does not commensurate with the cost of the project (estimated to be around US$13-15 billion). To date, very few details on the economic benefit of the project have emerged. In this essay, we provide some estimates of the potential long-term economic benefit from the HSR project. These estimates, which cover the project’s impact on overall economic activities, were derived using computer simulations.