Malaysia’s ambitious plans for an East Coast Rail Link (ECRL) might not be adding much to its freight network infrastructure, research by Asia Cargo News suggests.

What can’t be denied is the scale of the venture. The ECRL will be Malaysia’s longest rail project in history, with a total of 688 kilometres of rail lines, which first cut across Malaysia and then go up its less-developed East Coast. All-in this will cost RM55 billion (US$13.4 billion) to build.

Somewhat unexpectedly, the line does not run coast-to-coast as maps from ECRL’s parent company Malaysia Rail Link (MRL) show a different line from Gombak to Malaysia’s maritime gateway at Port Klang. (The MRL declined to comment until “when full-scale earthworks commence.”)

Some 85% of the money for the project is coming from China’s Export-Import Bank, lending at 3.25% with a seven-year moratorium. The remaining 15% will come from Islamic bonds – a sukuk – organized by Malaysian investment banks.

China’s involvement is controversial – as is the cost – especially as, without a feasibility study, the contract to build went without tender to one of China’s largest construction companies.

Against this, Malaysian Prime Minister Najib Razak, who is heavily-invested politically in the ECRL, notes that it, along with other plans such as a high-speed line to Singapore, means that by 2027, “rail mileage across the nation will come close to 3,000km, 65% more than the present rail network, which is a major infrastructure enhancement.”

In turn, this will significantly reduce travel time to and from Malaysia’s East Coast, with Razak himself saying that the journey from the integrated transport terminal (ITT) in Gombak to Kota Bharu was expected to be less than four hours compared to the average eight hours, and sometimes even twelve hours or more during holidays, using the current roads.

Plans are even more detailed than that, though officials involved declined to discuss them with Asia Cargo News. Luckily, the prime minister was fulsome at the launch ceremony.

The ECRL will link the key economic industrial areas with the East Coast Economic Region (ECER), such as the Malaysia-China Kuantan Industrial Park (MCKIP) and Gambang Halal Park in Pahang, the Kertih Biopolymer Park in Terengganu and the Tok Bali Integrated Fisheries Park in Kelantan, he said.

“The viability of the ECRL is undisputed as it is estimated that 5.4 million passengers and 53 million tonnes of cargo will use the service annually by year 2030 as the primary transport between the east coast and west coast,” Razak said.

“The revenue from the operation of the ECRL is projected to be obtained through a transportation ratio of 30% passengers and 70% freight,” he said.

Razak also described the development of the ECRL as timely with the ongoing expansion of Kuantan Port into a deepwater terminal that will soon be able to cater to vessels up to 200,000 DWT and 18,000 TEU container ships.

Not for nothing has Razak described the establishment of the ECRL as a “game changer” and “mindset changer” for Malaysia. It might, though, be no more than that – and, even then, there are some doubts.

One interesting, almost anomalous, fact is that so few official sources refer to the freight side of the equation, with the prime minister’s comments being some of the few available. However, those remarks don’t fit with other published figures of 37 million tons by 2030 and 53 million tons by 2040.

Even then it is a big, big leap from the current six million tons of cargo the loss-making national railway, KTMB, is known to carry.

Logistics industry sources are in many ways skeptical about the actual need for such a facility. They welcome it, but don’t see it as a major player for either the region or for the industry, pointing out that the numbers involved are dwarfed by the 67.63 million TEUs that moved through Singapore last year.

“In my view, it seems likely that the cargo impact (for the west coast) will be limited,” one regional port expert told Asia Cargo News.

“Most of the current exports from Kelantan, Terengganu (mainly minerals and petrochems) and Pahang are east-bound and are exported through the two ports at Kuantan and Kerteh. Where and when cargo is westbound, it would still be very much cheaper to carry this cargo by ship to the west coast than by train.”

Woven into this is the issue of how much it would cost to use the rail line, none of which is yet known, as well as what volumes would be moved and the time involved.

“Unless the total costs of the ship-plus-rail option can be managed, it might be cheaper to use the current methods of road or direct shipping. In terms of capacity, it would be difficult to match the shipping capacity, which only takes about 1.2 days to do a direct sailing around the Straits of Malacca,” Jason Chiang, director of Ocean Shipping Consultants, told Asia Cargo News.

Again, China’s role is criticized. Among the arguments deployed for ECRL is that it is necessary to develop Malaysia as a trading hub and the country’s East Coast. Not so according to long-time Malaysian journalist and analyst P. Gunasegaram.

“So far, there is no justification of this position through a feasibility study. There is no commitment from China to use the rail link to transport goods for transhipment between Port Klang and Kuantan,” he noted.

By Michael Mackey

Southeast Asia Correspondent | Bangkok