TRANSIT comments on the proposed MRT plans (Update #3)

• Updated with a fantasy map of KL’s railway network!
• Updated with additional articles!

TRANSIT noted with great interest the recent proposals for as many as 3 MRT lines in the Klang Valley as well as the return of the proposal for a high-speed rail link between KL and Singapore.

The proposals are timely given the upcoming 10th Malaysia Plan and the recent power shift and attempts to consolidate political power in a certain BN-component party. Not to mention, a construction & engineering sector that is frustrated by the lack of megaprojects (including the delays to the LRT extension projects).

Unfortunately, there is a lot of information to go through, so TRANSIT will only be able to give a quick, short-term analysis of the various stories that have been published in such a short time. We will go into the longer-term implications soon.

Key Details:

• Cost of more than RM36 billion (possibly RM50 billion);
• Approximately 156km long, covering a radius of 20km from the city centre;
• At least 2 or 3 “MRT” lines – Sg. Buloh to Kajang, Sg. Buloh to Serdang, and a loop line serving the KL Central Business District;
• Capacity of 2 million passengers per day initially with a possibility of 4 million (no mention of Passengers per Direction per Hour – ppdph – on a line by line basis)
• No mention of expected numbers of potential passengers in the proposed corridors
• The proposal, coming from the MMC-Gamuda joint venture, is unsolicited – other companies may be invited to bid for the project if it is approved using a so-called “Swiss Challenge” mechanism;
• The Prime Minister is “positive” on the proposal.

Articles:

• Cost of rail projects may top RM50bil (The Star)
• Klang Valley’s MRT (The Edge + CIMB Research);
• Cabinet yet to study MRT proposal from Gamuda, MMC (The Star);
• 10MP: Malaysia plans MRT system (Business Times);
• KL to get landmark MRT in world-class city bid (Malaysian Insider)

You may also wish to read the original articles below and refer to our comments. You can find our analysis at the bottom of the post.

The first set of articles is from the Edge Financial Daily, which published the story on 7 June 2010.

KL to have MRT system, say sources (The Edge)
By Au Foong Yee
Monday, 07 June 2010

The city’s infrastructure, a subject of increasing criticism, is likely to be boosted by a new mass rapid transit (MRT) system that could be put into place soon to complement the role of the monorail and LRT systems.

Sources said the government was in the final stage of considering the MRT project, believed to be planned for within the confines of the city which was experiencing growing traffic congestion.

The names of at least two industry players have been bandied about for the MRT project — Gamuda Bhd and MMC Corporation Bhd.

Sources said the two were being considered to jointly undertake the MRT job, or a section of it, due to their expertise and track record for the design and construction of the multiple awards-winning SMART Tunnel.

Lending credence to the possibility of a new MRT system for KL is that at least one developer in KL city, sources said, had been told to redesign its upcoming billion ringgit mixed-development project to incorporate an MRT station.

Meanwhile, it is not immediately known if the earlier proposed extensions to the LRT lines would unfold as intended.

The KL monorail has been designed to complement and interface with KL’s existing and planned urban transportation systems. The LRT, meanwhile, radiates into the suburbs.

Introducing an MRT would not only alleviate KL’s traffic congestion, rendering the city attractive to work and live in, but also enhances real estate values in areas that will stand to benefit, both directly and indirectly.

LRT, MRT, what’s next? Bullet Train? (The Edge)
By OSK Research
Monday, 07 June 2010

THE BUZZ
The Edge reported today that Kuala Lumpur could have its own Mass Rapid Transit (MRT) system, which would serve to complement the monorail and Light Rail Transit (LRT). Sources claimed that the Govt is in the final stages of evaluating the project. At least 2 industry players have been indentified for the job, namely Gamuda and MMC Corp.

OUR TAKE
Less talk and more action, please. We find this piece of news rather surprising considering that the much talked about RM7bn LRT extension has yet to kick off. How is the proposed MRT going to complement the LRT when plans for its extension have yet to be finalized? For example, we understand that the Ampang line’s alignment may be altered as some “well connected” developers have been lobbying for the route to pass through their developments.

Also, the proposed new Kota D’sara-Cheras line, which is supposedly to pass through Kuala Lumpur city centre, has not even been concluded. We do not expect the proposed MRT job to kick off anytime soon, if at all.

The “what if” question. Should the proposed MRT be implemented, we think that it is likely to be an underground circle line within Kuala Lumpur city centre. The existing LRT lines will serve as feeders into the circle line. Players such as Gamuda and MMC stand a good participating chance here if this proposal is implemented. Recall that the Gamuda-MMC JV constructed the underground 4km SMART Tunnel. Also, Gamuda was previously involved in the construction of the Kaohsiung MRT in Taiwan.

Turning cautious. We are turning cautious on the sector. In our view, the bulls of there being more positive news flow could be offset by the bears in the form of tightening Government coffers, implementation delays and spiraling material costs. As such, we are altering our sector rating from Overweight to UNDER REVIEW, with a downside bias. There are no changes to our estimates and calls for Gamuda (NEUTRAL, TP: RM2.75) and MMC (TRADING BUY, TP: RM2.54).

The second article is from the Malaysian Insider, which responded to the proposed MRT as well as a high-speed rail link proposal between KL and Singapore.

Putrajaya mulls multi-billion rail deals (The Malaysian Insider)
June 08, 2010

KUALA LUMPUR, June 8 — The Najib administration is considering proposals costing nearly RM50 billion on two rail projects to improve public transportation in the Klang Valley and for a high-speed rail link to Singapore, say government officials familiar with the deals.

On the table is a proposal from a MMC Corporation Bhd and Gamuda Bhd joint venture to construct a new mass rapid transit (MRT) system with a price tag of at least RM35 billion.

The other proposal for a high-speed rail link connecting KL and Singapore is from a Barisan Nasional (BN) component party to form a special purpose vehicle with capital from some of its other partners in the ruling coalition.

The Malaysian Insider understands that Prime Minister Datuk Seri Najib Razak is “positive” on the proposals.

[TRANSIT: Of course he would be ‘positive’ given the enormous potential for economic gain from these projects.]

“But no final decision has been made yet,” a source said.

The KL-Singapore link proposal could cost between RM8 billion and RM10 billion, similar to a 2006 bid by YTL Corporation Berhad which owns a 50 per cent stake of the Express Rail Link between KL Sentral and KL International Airport.

But the lion’s share would be for the MRT project which could take up to ten years to complete. It remains unclear if the new MRT line would replace or be in addition to the proposed Kota Damansara-Cheras line.

It is understood that MMC-Gamuda had made an unsolicited offer to build and design the MRT system. The Edge Daily yesterday reported both firms are bidding separately but government officials say both made a joint bid.

As a result the government is considering the use of a “Swiss Challenge” philosophy to tender the project out with MMC-Gamuda maintaining an advantage in being awarded the contract.

A Swiss Challenge is a form of public procurement in usually less-developed countries whereby public authorities receiving an unsolicited bid for a project invites third parties to match or exceed it.

The public authority would also usually give the original proponent an advantage in a competitive bidding process.

Using this principle, competitive bids would have to substantially lower or more cost effective to defeat any proposal from MMC-Gamuda.

A source familiar with the MMC-Gamuda proposal told The Malaysian Insider that MMC-Gamuda appeared to have gained an unusual advantage with its unsolicited bid because of the Swiss Challenge philosophy.

This was because the joint venture would only be involved in the “design-build” phase as contractors and would undertake almost no risk. Syarikat Prasarana Negara Berhad, the national infrastructure company, would ultimately own and operate the MRT line.

[TRANSIT: Sounds like a risk for the National Infrastructure Company instead – a company that may ultimately have to be bailed out by taxpayers in the event of a significant loss on the MRT project.]

The huge price tag of “at least RM35 billion” for the MRT system could also rise further because it is understood that a major portion of the system would be underground.

Some underground sections of the new line being proposed would be constructed near or parallel to the existing underground sections of the Kelana Jaya Light Rail Transit (LRT) line.

But the new line would be underneath the LRT subway, escalating cost further.

[TRANSIT: Eeek]

The Malaysian Insider also understands that a BN component party that put forward its proposal to Najib to revive the KL-Singapore high-speed project had received favourable response.

Under the proposal, the BN party’s investment arm would set up a new joint venture with capital contributions from a number of other BN parties to undertake the construction of the bullet-train type service.

YTL Corporation had been an original proponent of a bullet-train service which it said it would build for RM8 billion. It had then proposed cutting down travelling time to 90 minutes between KL and the island state.

But the YTL proposal, mooted soon after it had completed the KLIA Express Rail Link (ERL), had been put off by the government in 2008 due to the high costs involved.

It is understood that the new proposal by the BN component party is being looked at positively because of improved bilateral ties with Singapore and the possibility of a third bridge being built across the Causeway.

The third set of articles is from the NST, which published the story & feedback today (09 June 2010)

RM30b MRT plan

2010/06/08
By Kang Siew Li and Jeeva Arulampalam
news@nst.com.my

KUALA LUMPUR: A special task force has been set up within the Cabinet Committee on Public Transport to study a proposal for a new three-line mass rapid transit (MRT) system costing more than RM30 billion.

Sources told the New Straits Times that Gamuda Bhd and MMC Corp Bhd had submitted a joint proposal to the government for a new MRT system to improve public transport in the Klang Valley.

While it aims to integrate the monorail and light rail transit (LRT) systems, the MRT lines will also connect the northwest and southeast of the Klang Valley.

The committee is chaired by Prime Minister Datuk Seri Najib Razak.

It is understood that one of the lines will run through Sungai Buloh, Kota Damansara, Kuala Lumpur and Cheras until Kajang. Another line will connect Sungai Buloh, Kepong, Kuala Lumpur and Serdang. The third line will loop around Kuala Lumpur’s central business district, providing a link between the monorail and LRT services.

[TRANSIT: We have not seen the ‘official’ proposal but we think we know what they are talking about. See the proposal from Fikir Runding, posted below.]

It is believed that Malaysian Resources Corp Bhd may have to redesign an upcoming development to facilitate this MRT line.
[TRANSIT: This may be the NU Sentral project at KL Sentral – or it may not be.]

“The MRT lines will be mostly underground with stops every 500m to 1km in high-traffic areas like the Golden Triangle in Kuala Lumpur. The concept is similar to the MRT systems in Hong Kong and Singapore,” said a source.

Although the original proposal was submitted by Gamuda and MMC Corp, the project will be open to bidding.

“Instead of direct negotiations, what is being suggested is a variant of competitive bidding. This means the project is open to competitive bidding by third parties but Gamuda and MMC Corp have the option to outbid the best bid,” sources said. Because of the project size, it may take as long as 10 years to be completed.

When contacted yesterday, Gamuda, which was involved in the construction of the Kaohsiung Metropolitan MRT in Taiwan, declined to comment. The local MRT project will not be the first collaboration between MMC Corp and Gamuda.

Both are working on the electrified double-tracking project between Ipoh and Padang Besar. They also built the underground SMART tunnel here.

Research houses do not expect the MRT project to kick off soon even if it gets the go-ahead as the LRT extension project has not been awarded yet.

“In addition, there has been no news on the new LRT line as the focus is on getting the extension line project underway quickly,” said Kenanga Research in a report issued yesterday.

This refers to the proposed new LRT line from Kota Damansara to Cheras.

The NST also published a quick set of comments on the LRT from various sources. Please note that some of the information provided was a bit inaccurate – but we include the articles for information purposes:

• Project likely to be govt-funded;
• It can transport more people at greater speed;
• Proposed system gets thumbs up.

TRANSIT Says

We “heard it all before, heard it all before, heard it all before….”

It has also been discussed before – check out this discussion forum (for example)

See a larger version of the above image here.

Update: TRANSIT has obtained a lovely fantasy map designed by forum contributor @Bukhrin, which combines a bit of the Fikir Runding proposal above with the proposed new LRT extensions from Prasarana.

Click here for a larger version of the image above. Remember, the above is a fantasy map. TRANSIT will share the real proposal as soon as we get it and analyze it.

Commentary:

The proposals for an MRT system and KL-Singapore high speed rail link came as a minor surprise to us – but we at TRANSIT were expecting some big news to be made.

Anytime there is a political shift or a megaproject to be announced, you can expect the media and the construction industry to jump up and take as many chances as possible to get attention.

Unfortunately, the reality is that these projects are quite far down the list of “realistic possibilities” with the exception (perhaps) of the Kota Damansara – Cheras LRT line.

Before any investment is made in public transport, there must be projected numbers of passengers that justify the cost of construction & operations.

Has anyone seen or heard of any such numbers that justify the construction of an MRT? Do all the people cheering for public transport realize that an MRT station needs 40,000 passengers passing through per day in order to be financially viable – otherwise it will lose money.

Despite all the announcements and the promises, we have not even seen any inkling of improvements in the capacity of the mass-transit network in the Klang Valley.

The LRT extensions are seeing strong objections because Prasarana seems to have decided that they can ‘railroad’ the LRT through the objections rather than planning in a careful & cost-effective manner. They may underestimate the strength of these people, who are frustrated by a lack of communications & consultations during the early stages of planning.

At the same time, the plans are also facing delays because developers are trying to get the LRT to come to their areas, without intending to cover any of the extension costs. A good example of this is Sunway, which is trying hard to get an LRT extension to the area.

Overall, the same problems will continue to befall public transport – a lack of honest & open consultation, unclear and incomplete planning, too much ‘contribution’ by the private sector, and too much of “NATO” (or “No Action, Talk Only”).

Will we see these lines in our future? It is possible, but not in the manner proposed. The LRT from Kota Damansara – Cheras will likely be built, but hopefully it will pass through Jalan Parlimen rather than Brickfields. The Sg. Buloh-Serdang line may be built in another form, and the circle line may end up as a monorail serving the west side of KL between KL Sentral and Titiwangsa.

TRANSIT invites your feedback on the proposed MRT lines and the KL-Singapore High Speed Rail project. Please comment in the space below or email us at klangvalley.transit@gmail.com.

Thank you!