China Daily Global Edition (USA)
New rail line to boost eastern Malaysia
KUALA LUMPUR— Though rail infrastructure has always played an important role in the economic development, it’s been absent from the scenic east coast region of the Malaysian peninsula. But that’s about to change, thanks to the 688-km East Coast Rail Link (ECRL).
Residents of Malaysian states of Kelantan, Terengganu and Pahang on the east coast of the country will soon see the first train running from the nation’s northern border with Thailand to Malaysia’s busy Port Klang on the Strait of Malacca, connecting the east side of the peninsula to the more developed region centered on the capital of Kuala Lumpur.
Jointly launched by Malaysian Prime Minister Najib Razak and Chinese State Councilor Wang Yong earlier this month, the railway will be built by China Communications Construction Company Ltd, a leading transportation infrastructure group that also built a landmark bridge in the country’s northwestern state of Penang.
Analysts and business communities see the 55-billion ringgit ($13 billion) mega project as a new spur to the region’s economy.
“The immediate economic growth is fairly positive,” said Edward Lee, Standard Chartered Bank’s ASEAN economic research head.
In the short term, Chinese contractors may be a source of competition for Malaysia’s construction sector, but this may raise Malaysia’s overall productivity in the long run, he said.
Furthermore, Chinese companies have the technology and management knowhow on infrastructure projects as they have rich experience handling projects locally and overseas, he said.
The ECRL will be an electric railway line crossing Kelantan, Terengganu, Pahang and Selangor states. It will accommodate passenger trains at a maximum speed of 160 kph and goods trains at a maximum speed of 80 kph. Construction of the rail link is expected to be completed by 2024.
The Malaysian government has estimated that ECRL will contribute an additional 1.5 percent of gross domestic product (GDP) growth annually in the east coast region over the next 50 years.
Construction firms are the immediate beneficiary of the mega project, prompting anaongoing Loong Chee Wei, lysts to upgrade the outlook for the sector. Local contractors and engineering consulting firms are expected to benefit from the subcontracts totaling 16.5 billion ringgit.
“The construction of ECRL will spur construction GDP growth between 2018 and 2024. The multiplier effect will also support overall GDP growth,” Affin Hwang Capital Research analyst Loong Chee Wei told Xinhua, adding that building material suppliers will also be benefited.
Last week, BMI Research of Fitch Group upgraded its five-year forecast for Malaysia’s construction industry annual growth to 6.3 percent.
Currently, Malaysia has more than 83 ongoing construction projects worth a total of $100 billion. Rail projects account for 19 percent of the total value.
IJM Corp, one of Malaysia’s leading construction companies, sees the building of ECRL as timely with the expansion of Kuantan Port on the east coast.
The development of Malaysia-China Kuantan Industrial Park (MCKIP), a flagship project that will increase cooperation between Malaysia and China, will also be boosted.
“ECRL would link all the key economic and industrial areas with the East Coast Economic Region, such as the Malaysia-China Kuantan Industrial Park,” said IJM Corp’s Chief Executive Officer and Managing Director Soam Heng Choon in an email to Xinhua.
Currently, the group and its Chinese partner Guangxi Beibu Gulf Group aim to double the capacity of the Kuantan port in handling freight weight tons upon completion of its upgrading plan.
Soam said the railway can shorten the time and cost of shipping from the east coast region to ports in China.
The rail link is set to shorten the traveling time between east and west from seven to 12 hours to less than four hours.
Meanwhile, WZ Satu’s Executive Chairman and Chief Executive Officer Uzir Bin Ubaidullah said that the improvement of transport infrastructure will spur economic activities in the area, and eventually enhance property values in the region.
“Inter-connectivity is the greatest advantage provided by ECRL,” the Kuantan-born entrepreneur told Xinhua over the phone.
The construction of ECRL will spur construction GDP growth between 2018 and 2024.” an analyst with Affin Hwang Capital Research