This is a very good news for everyone.

While the project is technologically feasible, I think it would be commercially and politically challenging. I think round trip would be priced at high hundreds. 150 definitely can't make it unless it is being subsidized. We have enough subsidies in this country already.

How much it should cost to commute?
It is close to what I have in mind. The unique proposition for this project is that it is the fastest way to go to Singapore. It will probably take 2 hours 15 minutes in total (travel time: 90 minutes, passport check: 30 minutes, taxi: 15 minutes) which is faster than by air (estimated total of 3 hours). As such, as a planner, I would have the flexibility to charge it almost similar, if not slightly more expensive than to that of airfare, but still make it as an attractive mode of transport.

Taking KLIA Ekspress as an example, the cost to travel with its high speed rail is RM0.61 per km:
Distance from KL Sentral to KLIA: 57km
Cost per trip: RM35
By using this cost and estimating the distance between KL to Singapore to be as 350km, a round trip (700km) would cost me around RM430. (However, do take not that this is probably not a good comparison as the technology and cost between the two rail systems are different.)

I did a quick check on what it would cost me to travel between KL and Singapore (date chosen is next week 26/2) by air:
Airasia (Roundtrip): RM139
MAS (Economy, Roundtrip): RM564

As a planner I would have a headache. I can't compete with Airasia on pricing but probably not a problem with MAS.

As for the train, it would cost me RM217 (KL-Singapore RM62, Singapore-KL SGD62). But then it take up to a good 7 hours for each trip, which is not what a high-speed rail competing with.

By car, it would cost me around RM100 (RM50 * 2) for toll while fuel would probably cost me RM200 (ESTIMATE only). That's total up to RM300.

In the end, I would price it between RM350 - RM400 to make it competitive and attractive. And here comes the commercial challenge.

Commercial Risk
The construction cost varies between different parties from a low of RM8bil to a high of RM30 bil. By taking an estimate of RM20bil for the total cost, how much money the high-speed rail need to generate annually to make it a profitable business proposition?

Assuming we price it at RM400 for round trip and attempted to get 3,000 daily passenger, our return would be:
Revenue = RM400 * 3,000 * 365 = RM438 mil.

Will you be satisfied with a 2.19% return per annum?

Political Risk
With subsidies and budget deficit, Najib is putting his head on the chopping board with this plan. If he is not able to secure 2/3 majority in the next GE, he might as well scrap this unprofitable plan.


Note: My assumptions above could be wrong but hopefully this could serve as a beginning of interesting discussions.

Generally, broad increase in price is not a problem to real estate investors as long as rents move up in tandem.

What is happening now is that the rents does not move up vis-a-vis the prices, hence reducing the attractiveness of this investment vehicle.

Source: EPP 3: High Speed Rail