JB-Singapore RTS relaunch will bode well for High-Speed Rail project

PETALING JAYA: The anticipated conclusion of the Johor Baru-Singapore rail transit system (RTS) bilateral agreement may be a prelude to a likely favourable outcome at the KL-Singapore high speed rail (HSR) end-2020 review deadline, according to CGS-CIMB Research.

It noted that the RTS project was approved and launched in 2018 but was reviewed by the previous government, which led to its deferment, similar to the HSR project.

Final negotiations for the RTS have been ongoing this week, and could lead to the finalisation of the agreement by end-July.

The relaunch of the RTS (targeted in November) would have positive implications for the sector’s job outlook post-movement control order, adding up to the RM4 billion total construction stimulus measures.

The CGS-CIMB highlighted that among the terms that needs to be bilaterally resolved by end-July are – the appointment of the operating company potentially between Singapore’s SMRT Corporation and Prasarana Malaysia to jointly operate the RTS, the terms of the previously agreed 30-year concession period for the operating company, along with the establishment of two infrastructure companies in Malaysia and Singapore.

However, it noted that the funding structure for the project is unclear at this juncture.

The research house stated that despite an alignment of a mere 4.2km stretch, the main rationale for the RTS is to ease traffic congestion at both the Causeway and the Second Link.

It said the RM3.2 billion revised project cost for the cross-border rail transit line, against its original cost of RM4.9 billion, is miniscule compared to urban rail systems like LRT 3 (RM16.6 billon) and MRT 2 (RM31 billion).

“Our recent checks with various industry players led us to conclude that the civil works tender phase of the RM3.2 billion project is likely to be broken down into only a few packages compared to the LRT 3 and MRT 2 tenders,” said CGS-CIMB.

With regards to the project structure, the research house opined that in order to maximise the benefit of the RTS project to smaller unlisted contractors, it would not rule out that the civil works tender submissions may require experienced rail contractors to form joint ventures with smaller players.

Under this assumption, it reckoned that rail contractors under its coverage that may be keen to participate include IJM Corp, WCT, Sunway (via Sunway Construction), Muhibbah Engineering, MRCB, and YTL Corp.

The research house stated that YTL Corp and MRCB remain its preferred picks for the HSR, as both were previous winners of two sizeable HSR scopes in 2018 prior to cancellation.

With that it has reiterated its neutral call on the construction sector.

source https://www.thesundaily.my/business/jb-singapore-rts-relaunch-will-bode-well-for-high-speed-rail-project-KG2901378