60 per cent of the cost will go towards infrastructure development, including civil works and track laying, and about 30 per cent on rolling stocks.
The rail network is expected to cut travel time between Kuala Lumpur and Singapore from six hours to 90 minutes. This will require trains travelling at 250kph.
The project is important for Malaysia as the same alignment can carry freight during off-peak hours Germany’s Siemens proposed the use of its Velaro trains, which have a top speed of 350kph.
UEM Group-Hartasuma, China Infraglobe Consortium-Global Rail and YTL Corp have made presentations on the project to the National Key Economic Area laboratory.
http://www.nst.com.my/top-news/kl-s-pore-rail-project-may-cost-rm30b-1.75495
Next, news reports quote sources to say that the rail link could cost as much as RM30bil, which has ballooned considerably from YTL Corp's original proposal of around RM8bil before land acquisition costs.
It looks like that RM30bil does not include land costs but it's not clear at this ill-defined stage.
But for our economic analysis, let's assume the cost is RM30bil which is funded 10% by equity (RM3bil) and the rest of RM27bil by loans. At an interest rate of just 6%, yearly loan interest alone before repayment comes up to RM1.62bil! Earnings before interest will have to be that much before it makes profits.
Let's say its shareholders are not greedy and want a return of 15% pre-tax on their equity which means a pre-tax profit of RM450mil. That means, its pre-tax earnings before interest is around RM2bil, a nice round figure to work with.
Can it make that much? Let's see. We assume the pre-tax profit margin on sales is say one third or about 33%, which is quite large. Then its sales need to reach RM6bil a year! That's more than Air Asia's entire revenue last year of RM4.5bil.
The key question is this: Is the travel market between Malaysia and Singapore large enough to sustain a RM30bil link? The clear, unambiguous answer is: No! Simply impossible.
What is the travel market between the two countries? One easy way is to calculate the amount of air, road and rail travel into and out of Singapore. That's not likely to garner even RM2bil in total and remember that alternative travel sources are not going to disappear with the KL-Singapore express link, especially since it's likely to be priced at more than airline tickets to recover the massive costs involved.
http://biz.thestar.com.my/news/story.asp?file=/2012/4/21/business/11145911&sec=business
Maybe another 1000 years will happened/materialised. Talk only no actions.
ReplyDeleteHigh Speed Train's cost will not only be recovered by the number of the ticket sales. The rail will not only be used for passengers but also cargo trains. Business between Singapore and Malaysia will be more efficient and the cost of the train will be recovered by the market sales in Malaysia alongside with the ticket sales.
ReplyDeleteWe have double track connected from Padang Besar to Gemas. Why not complete the missing link and use it for cargo trains?
ReplyDeleteThe existing track is old and it is live. It will be highly congested to add more cargo trains on the existing track. The use of public transport and trains are becoming more popular among the young generations today. People are finding other ways to get to Singapore from KL and flights are not eco-friendly alternative. Building a train track will open new businesses and improve existing ones along the track. This will then reduce the congestion on the highway between KL and Singapore. It is a solution with benefits outweighing the cost.
ReplyDeleteThe track can be upgraded during construction of the double track. Don't think it is an issue. Double track is still cheaper.
DeleteIn Malaysia, the trains can take up a lot more capacity. You will understand when you look at railway system in Tokyo which has much higher density than KL. There are several categories of train from normal to super express. Even for the same route, a train can overtake the another along the line. So I really don't see congestion issue here in Malaysia.
Visit Tokyo and experience yourself the railway system there if you have not. It is a real eye-opener.
Agree that flights are not so eco-friendly. I think double track can address the issue, as well as traffic congestion on highway.
Yes, new line can bring prosperity to some towns along the track but is RM40b financially visible? Isn't double track a much better alternative?
Before the govern body take the solution of building high speed train, they must have considered the option for upgrading the line. Clearly time is being prioritise here. Speed and convenience is the key!
ReplyDeleteWhen we break it down the upgrading process: it will interupt the existing line to replace new tracks and the potential of scheduled train cancellation.
The overtaking system have been applied to the KLIA express line so I dont really need to go to Tokyo to see it.
It is funny how you put that the govern body should look into the Japanese system when this project is collaborating with the same people.
And why the new line is necessary... clearly, there are higher demands for it than going to places at the existing lines.
How much is the time difference transporting goods using electrical train that can travel at 140km/hr on double track? Does the cargo need to be transported so urgently, considering higher cost using high speed train line?
ReplyDeleteWhile there is resheduling to KMT train, the upgrading has been successfully implemented for the Northern part between Ipoh and Padang Besar. So I dont see big issues here. Short term pain for long term gain. Do you know that by having a double track instead of single track, it can improves the number of trip by at least tens of time. Isn't this worth the effort?
I did not say the government should look into the Japanese railway system. It was referring to you if you did read the comment properly.
You are right that double track will improve the number of trips but the demand might not be as high as the demand for travelling to Singapore in 1 hour and half. We are talking about the alternative option to flights or cars. Upgrading the existing track will not improve the travelling time to singapore to the same degree as the high speed train.
ReplyDeletehttp://sharenkaur.blogspot.com/2014/08/high-speed-rail-for-70pc-less.html
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