East Coast Rail Line stimulate economic growth

KUALA LUMPUR:  Minister in Prime Minister’s Department, Datuk Abdul Rahman Dahlan said, the East Coast Economic Region Development Council (ECERDC) had proposed the East Coast Rail Line ECRL since the year 2007 as a critical project to stimulate economic growth in this corridor where initial cost estimates had ranged from RM30 billion to RM70 billion then.

In fact,  he said, the project has been periodically discussed and at various stages of planning since 1981.

“Since its initial proposal, extensive planning, financial modelling, market sensing exercises and studies had been done including three feasibility studies since 2007.The arrangement with the government of China will involve a financial framework arrangement of up to RM55 billion based on very favourable terms to Malaysia – and is via a 20 years low-interest soft loan by the  Export-Import Bank of China (Exim) and bond raising exercise. During the first 7 years of the project, there will be no principle repayments necessary,” he clarified in a statement.

It was  reported that  China’s largest construction company, the state-owned China Communications Construction Co (CCCC) will build the ECRL.  

There were some quarters who had implied that the Government was hasty in its decision to commit to this project.

“CCCC has a good track record in construction projects in Malaysia including the successful completion of the Sultan Abdul Halim Muadzam Shah Bridge in 2014 and the ongoing RM2.3 billion STP2 land reclamation project by a joint-venture company partly-owned by the Penang Development Corp,” he said.

The 688 kilometer long rail project will connect Port Klang to Gombak to Tumpat and it will cut through Peninsular Malaysia’s major Titiwangsa mountain range. It will have several spur lines connecting the main line to nearby ports such as Kemaman port and Kuantan port.

It is expected to take between seven years for completion of all phases of this project.

Abdul Rahman clarified,  the cost of up to RM55 billion was not solely for the cost of construction for the railway track alone.

He said, in a green-field rail project of this nature, other costs such as engineering studies for design speed, topography, geological conditions will be required.

According to Abdul Rahman, as part of the arrangement, CCCC will be required to engage local companies where possible to deliver the project and will include technology transfer to local partners and to the rail operations company and his will be incorproated in the final agreement.

“It is important to know that the ownership, management and operations of the ECRL will be fully in Malaysian hands. Hence, the allegation of Malaysia losing its sovereignty does not arise at all.

Every rail project has its own unique cost structure due to differing geographical conditions and infrastructure requirements. Therefore, rail projects are not easily comparable and can differ considerably across projects,” he said.

For example, the Bremmer rail project in Switzerland cost USD11.9b for 57km length, which means cost per kilometre of USD209 million.

The rail line in Madrid-Volladoid, Spain cost USD5.48b for 177km which worked out to about USD30 million per kilometre.

Another rail project in Barcelona, Spain costs about USD8.12 billion for 48km or USD170 million per kilometre.

ECRL will cost RM55 billion for 688km long or RM80 million or USD19 million per kilometre.

According to Abdul Rahman, sue to Malaysia’s topology and the optimum line alignment, the construction of the ECRL has its own unique and complex challenges including hard rock tunneling and the building of bridges that span the Tititwangsa mountain range and across dense jungle regions.

Such challenges will also include building 110km in total length in multiple bridges and a total length of 50km of multiple tunnels across the Titiwangsa range.

It is expected that this project would rank as among the most challenging engineering and construction projects in Malaysia to date.

“We also note that the Land Public Transport Commission (SPAD) had conducted a market sensing exercise through an open Request for Information (RFI) in March of this year which received responses from 27 groups from 5 different countries including from Korea, China, Australia, USA and Europe. Through this exercise, the technical specifications and the indicative costs were determined,” he said.

The ECRL project will act as stimulus for the construction sector and when completed, it will form part of the Pan-Asia railway network that will boost connectivity with ASEAN, Asian and European countries that will greatly boost international trade for Malaysia.

“Our studies show that this ECRL project will contribute as much as an additional 1.5% GDP annual growth on average to the East Coast Region over the next 50 years where the main beneficiaries would be the rural and semi-rural rakyat of the East coast states.

Due to its many economic and development benefits, the government will ensure that this project will be successfully implemented as one of the key initiatives by the Prime Minister towards a balanced, developed, and high-income Malaysia,” he said.