COMMENT | At a cost of RM55 billion, with a mere seven-year grace period in which no interest needs to be paid before the repayment kicks in for the next twenty years or 240 months, Malaysia is in for a tough ride with the East Coast Rail Link (ECRL) between now and 2045.

Assuming the periods mentioned above are right, given the east coast passenger load and at an interest rate of 3 percent per annum, the break even unsubsidized ticket price between Kuala Lumpur and Kota Bahru will be about RM3,586, a return economy class air ticket to Siberia, Russia.

Surely the ticket price cannot be at that level, hence subsidies will kick in. So much of doing away with subsidies!

That's practically what Malaysia gets for agreeing to the ECRL that snakes its way from Port Klang through the mountain range of Titiwangsa to Pahang, Terengganu and onwards to Kelantan.

Malaysia does not need such projects because the projected contribution to national growth is merely one percent to 1.5 percent. Prime Minister Najib Abdul Razak himself admitted this recently.

Malaysia's gross domestic product is less than US$300 billion. Theoretically, that's a per capita income of US$10,000 per person. But the average debt of a Malaysian is US$5,000 and counting, due to the inability of the Federal government to manage the national debt. 

Between 2002 and 2016, Malaysia's per capita income remained at US$5000. In other words, under the premierships of Abdullah Ahmad Badawi and Najib, Malaysia has remained sordidly stagnant.

Thus, what is the value of a railway project that traverses Peninsular Malaysia, when the economies of the east coast remain mired in poverty, oil and gas, and local agricultural produce?

Just as the Padang Besar and Pasir Gudang double-track railway economy has been a grotesque failure, wasting close to RM36 billion, the ECRL looks likely to satisfy the supply chain of China alone.

Besides, one cannot deny that the Kra Canal project would be built by the Chinese and Thais. If they did, by cutting through 126km of the two points separating the Indian Ocean and the Andaman Sea from the Gulf of Thailand, the profits and returns of ECRL are not guaranteed.

A game changer is when an economic project is plugged into the global economy.

Take, for example, economic projects that contribute to the digitisation of the global economy. Apps, algorithm and artificial intelligence would drive the global economy through a technological revolution. The ECRL fails to qualify as a strategic concept. 

We have merely borrowed a template from the US, which believes that where the railway goes, gold will follow. But the US laid the tracks in the 19th century with several agreements.

In an age of telegraph poles and electrification, both lend their strength to the US economy. But a train system that meanders through the mountain range of Malaysia with no supporting industries in between the various points?

Malaysia is piling up debt for unwanted projects yet again.

With no plan to develop the townships, the railway systems will cut through the kampung and villages with zero commercial impact, except to add one more route of commerce to China, while neglecting the fact that China has more arteries of trade on land and at sea already. 

By signing on to the ECRL, Malaysia is becoming a willing supplier to China if and when they need us, not as and when we need them.

This project has crony capitalism written all over it, which is why the only winner is Umno and PAS, which have chosen cohabitation to reap the spoils of state-sanctioned projects.

RAIS HUSSIN is a member of Bersatu’s supreme council and its policy and strategy bureau head.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.