Malaysia’s unilateral decision to scrap the HSR project has disappointed businesses on both sides of the Causeway. How much economic spin-off was really at stake? Is Singapore saving itself some money instead? Does it mean there is no need to hike the GST?

SINGAPORE (June 11): The formerly lush greens and golf buggies at Jurong Country Club have given way to mud tracks and excavators as the club’s sprawling grounds were being prepped to be part of the iconic high-speed rail project linking Singapore and Kuala Lumpur. Plans for the HSR have since been scrapped, or at least put on hold, as the recently installed Malaysian government railed against how much it would have cost the country. For Singapore’s part, however, some are lamenting the loss of business expansion opportunities and projected benefits to the economy in the longer term.

Some analysts whom The Edge Singapore spoke to say the benefits that could come from the HSR rail link would outweigh the costs of the project, at least for Singapore. “I think we have seen some opportunity costs involved with the abolishment of this project,” says Irvin Seah, DBS Group senior economist. “It is not just about the link between Singapore and Kuala Lumpur. The bigger picture is the [Belt and Road Initiative that links the region]. In the bigger scale of things, the impact can be far-reaching. It could have been seen as part of Singapore’s regionalisation effort to help some of our [small and medium-sized enterprises] venture into the regional markets, tapping better suppliers in Malaysia, and the lead time could have been shortened significantly for some goods.”

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