To save time, the plan for the high-speed bullet train linking Kuala Lumpur and Singapore was a good one. If not for the huge cost, the proposal should serve both nations well especially in transporting tourists to and fro. Just imagine the potential huge money earned from currency exchange from the tourism industry. Traveling from Singapore and Kuala Lumpur will be like traveling from Britain and France, minus the underwater tunnel. Job-seekers would be delighted at the prospect of earning Singapore dollar but spending Malaysia ringgit as traveling between both cities will merely takes 90 minutes.

Also If not for the humiliate defeat by Abdullah Badawi’s National Front in the recent 12th general election, this mega-project should have no problem getting the green-light. The tainted former Transport Minister Chan Kong Choy could have seen it coming thus his refusal to get nominated. The project could easily scream for “bail-out” since the proposed cost of RM8 billion (US$2.5 billion) would surely escalate looking at how certain individuals would like to get a “lick” from the lollipop, judging from previous projects.

Otherwise it would be a wonderful project, not to mention it would give other players such as AirAsia Berhad (KLSE: AIRASIA, stock-code 5099) a run for their money. The statement from Economic Planning Unit (EPU) director-general that the plan was dropped because the government would have to bear a significant cost based on the financial model that was submitted by YTL Corporation Berhad’s (KLSE: YTL, stock-code 4677) goes to show that the project (agreement) would be lopsided once again. Taxpayers money would be used to bail out the mega project should the business did not take off as planned.

YTL tycoon Francis Yeoh must have thought that the government could be fooled again by applying the same concept as his Independent Power Producer (IPP) which forces all the output into the Tenaga Nasional Berhad’s (KLSE: TENAGA, stock-code 5347) throat – used or excess. But who can blame Francis Yeoh since the foolish TENAGA has been taken for a wild ride for so many years. The political landscape is different now. When even during Mahathir’s dictator period the project could not proceed, what makes Francis Yeoh thinks this time could be any different, save for the fact that Abdullah Badawi is economically illiterate?

Now, let’s get real. The RM8 billion figures do not includes land acquisition costs. If I’m not mistaken, land cost normally accounts for about 60 – 70 percent of the overall rail projects. Since RM8 billion estimation are for technology, materials and other costs, the land cost could easily balloon the ambitious project to above RM20 billion. I’m not sure I want to spend the time calculating the gigantic number of passengers required to use the bullet train to recover the cost. In short if the study done shows a very feasible result, YTL could finance the whole project by itself and not ask guarantee from government.

The nation has seen classic example of how the people were taken as suckers, example toll roads. You do not need a genius to tell you that such bullet train project would be affordable only to certain class of users as low fares are not possible. Simply put the old Subang Airport back to the air serving Kuala Lumpur – Singapore route might just do the trick, minus the huge expenditure. The bullet train’s cost is simply too high, silly.

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April 23rd, 2008 by financetwitter

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