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Malaysia’s Prime Minister Tun Dr Mahathir Mohamad has announced that his government will not continue the Kuala Lumpur-Singapore high speed railway (HSR) project, which involves the development of a 350km/h eight station HSR, expected to cut travel time between the two cities to 90 minutes, at an estimated cost of MYR110 billion (US$37 billion).

As reported on this platform, the respective government entities of Malaysia and Singapore set up to develop the project launched a joint tender for the design, construction, financing and maintenance of all rolling stock and rail assets (e.g. trackwork, power, signalling and telecommunications) in December. The total value of the PPP contract was estimated to be MYR43 billion (US$9.6 billion).

However, the newly-elected Prime Minister of Malaysia has made a final decision that the project will not go ahead. He labelled it "unnecessary", which is interesting given that there are clear benefits - the land journey from Kuala Lumpur to Singapore currently takes five hours.

This does away with years of preparations - the countries first signed a Memorandum of Understanding on the project in July 2016. This was followed by a Kuala Lumpur-Singapore HSR Bilateral Agreement in December 2016.

These will not be easy to undo; the process to pull out of the project is likely to be lengthy and costly for Malaysia. The Prime Minister stated that he had been informed that the compensation may be as much as 500 million, but couldn't say whether this was in ringgit (US$125.5 million) or dollars.

This unexpected decision is primarily fiscal. The Prime Minister believes that the HSR will not earn the country any money. Furthermore, he estimates that Malaysia could cut almost a fifth of its US$250 billion national debt and liabilities by scrapping big, unnecessary infrastructure projects.

Bids for the project were due in December, the submission deadline recently having been extended from the initial 28 June. The HSR line was scheduled to be operational in 2026.