By Charles F. Moreira, Editor
Less than month after we reported on several Chinese associations and societies on the east coast of Peninsular Malaysia welcoming the East Coast Rail Link (ECRL) for the business and economic benefits it will bring, The Malaysian Insight of 11 October 2017 reports that both Chinese and Malay commerce guilds welcome the ECRL for the same benefits it will bring to Kelantan state.
Both Kelantan’s Chinese and Malay commerce guilds said that the north western state’s economic potential has remained untapped due to the lack of highways and rail links and that the ECRL will greatly help small to medium businesses in the state by addressing a major lack of logistic facilities which has so far limited Kelantan’s ability to attract much-needed business investment.
According to Kelantan state’s financial statements, inward investments decline from RM18.52 million in 2014 to RM15.56 million in 2015.
Whilst tabling Kelantan’s 2017 state budget, Kelantan Chief Minister (Menteri Besar) Ahmad Yacob said that the state was dependent on revenue generated from forest products, which totalled RM172.96 million in 2016.
RM70 million of this revenue came from forestry premiums, RM30 from timber production, RM22 million in payments to the Forestry Department and RM1.5 million from forestry licence fees.
Statistics Department figures show that Kelantan’s residents had amongst the lowest per capita incomes in April 2017 and despite Kelantan’s gross domestic product (GDP) having doubled between 2005 and 2015, Kelantan’s GDP per capita remains at one-third Malaysia’s national average.
Meanwhile, according to Wan Zulkifli Wan Abdullah of the Malay Chamber of Commerce and Industry, sustainable businesses in Kelantan are cosmetics & beauty products, as well as food.
“These two sectors are more stable and there is high demand for them compared with other sectors that have been affected by a weak economy”, Wan Zulkifli said.
So Kelantan’s economy needs a facility which can enable Kelantanese get out of their low-income trap.
No ECRL, little investment
“When there are no good infrastructure links between Kelantan and Terengganu, it is risky to invest in the state because of the time needed to transport goods”, said Chinese Chamber of Commerce and Industry president Yap Heng Orr.
“With the ECRL, there definitely will be more outside investment at it is more profitable to open factories here due to the low cost of land and labour”, Yap added.
Yap is also confident that incoming investments thanks to the ECRL and the lower cost to open a factory in Kelantan compared to neighbouring states of Peninsular Malaysia, will create more jobs which will lead to higher incomes and rising standards of living for the Kelantanese.
As their incomes rise, so will their purchasing power, which will attract more retailers to set up shop in Kelantan and in turn, create even more income opportunities.
Fear of high transport costs
On the other hand, whilst optimistic about the benefits which the ECRL can bring to Kelantan, Wan Zulkifli of the Malay Chamber of Commerce and Industry is concerned that the fares and transport rates charged will be high.
“The ECRL will bring change and attract more investment. But we can’t really imagine how big of an impact it will have because we hear that its transport rates will be high”, said Wan Zulkifli.
Detractors and observers both have argued that due to its supposedly ‘high’ construction cost, ticket prices will also have to be high for the link to be profitable.
For instance, opposition members of parliament, such as Tony Pua, have criticised the project’s bloated cost, arguing that at its current price, it would cost 120% and 143% more than the northern and southern double-tracking projects.
Unfortunately, such detractors only look at the profitability of building and operating such key national transportation infrastructure and services such as the ECRL but apparently fail to realise that even if the government has to subsidise the passenger fares and fees for transport of goods from taxpayers’ money, the additional tax revenue collected from new businesses, increased investments and economic activity which will result due to the new facility can more than make up for the cost of subsidies.
The 688 km long ECRL will connect Pengkalan Kubur in Kelantan to Port Klang in Selangor, as well as 21 other stations in major cities and towns along its route, including Kuala Lumpur, Kuantan, Kuala Terengganu and Kota Bharu, with branch lines to ports on the east coast.
Work on the the ECRL’s first phase of the Kelantan section has already begun. It involves a 46km route from the Terengganu-Kelantan border passing through three stations in Tok Bali, Jelawat and Tunjong.
The second phase involves a 24km line from Kota Baru to Tumpat near the Thai border and a transport hub at the end of Malayan Railway’s (KTM’s) current East Coast Line.
With electric trains travelling at 200 kmph, the ECRL is expected to cut travel time between Pengkalan Kubur and Port Klang from the current 12 hours by road to four hours by rail.
It will also enable connectivity to the Kuala Lumpur – Singapore High-Speed Rail which is expected to cut journey time between these two capital cities down to 90 minutes from over five hours by road, and also to current and future rail links from Kuala Lumpur to Penang.
In December 2014, the Thai and China governments signed an MoU on joint collaboration on building Thailand’s high-speed rail network and in June 2017, Thai Prime Minister, General Prayut Chan-o-cha invoked a special law to push through the Sino-Thai railway project.
Once the China-Laos rail link is completed, it will enable high-speed rail travel from Singapore to Kunming, including from the east coast to Port Klang, Singapore, Thailand, Laos and Kunming as part of the overall One Belt, One Road initiatives in South-East Asia.
This will no doubt spur increased business, economic activity and job opportunities not only for Kelantanese but for people all along its route.