Right time for MRT

The economic benefits of a mass rapid transit (MRT) system are significant as it could raise the value of property, among other things, but the timing needs to be right as otherwise it could lose its effectiveness.


Outside of Kuala Lumpur, it has been proposed to have MRT stations in Sungai Buloh, Seri Kembangan and even Kajang, sources said.

Within the capital city, it would run under Kampung Baru, an area slated for redevelopment, and provide connections between the existing light rail transit lines.

"Any land that's underdeveloped, the value will be unlocked. It is a very comprehensive paper," one source said.

However, it is unclear when the project, estimated to cost more than RM30 billion, will start although it was mentioned under the 10th Malaysia Plan.



The proposal, which was seen by Business Times, also contains a provision for an MRT Act, which will help the project developer deal with land issues. This means that it will help lower the cost of the project as the government does not have to buy the land if it wants to build an underground tunnel beneath it.

The MRT project was pitched to the government by Gamuda Bhd and MMC Corp Bhd, which built the RM2 billion Storm-water Management and Road Tunnel to alleviate flooding in Kuala Lumpur.

The Gamuda-MMC tie-up is also building the RM12 billion double-tracking rail between Ipoh and Padang Besar in Perlis.

Apart from giving the much-needed connectivity for Kuala Lumpur's fragmented public transport system, proponents of the MRT project point to its multiplier effect.

The double-tracking project, for instance, will generate an estimated RM25 billion worth of downstream economic activities, or more than double its investment.

But work on the MRT needs to start soon for the economy to feel the full tangible benefits of the project.

Based on the Income-Population Normalised (IPN) Index, which measures when an MRT should open, Kuala Lumpur is ready for one.

The IPN Index was developed by Surya Raj Acharya, a senior research fellow at the Institute for Transport Policy Studies in Tokyo, Japan, and Shigeru Morichi, a professor at the National Graduate Institute for Policy Studies, also in Tokyo.

It takes into account the income per capita and the city's population.

This means that the impact of an MRT will not be so significant if the investment is made too late. In other words, if more of the city's population has more income, it will be tougher to get them to take the MRT as they will be too comfortable with their cars.

Kuala Lumpur's IPN Index is 0.88 based on the forecast gross domestic product per capita of US$7,547 (RM24,301) and a population of 1.8 million by this year.

If the index is below 0.77, it means that it is too early to have an MRT, while an index higher than 1.20 indicates that it is too late.

Hong Kong opened its MRT in 1979 after investing some HK$20 billion (RM8.6 billion). It carried some 3.76 million passengers in 2008 and is one of the leading models for MRT development.

Singapore, however, opened its MRT in 1987 after investing some S$40 billion (RM93 billion).



By Shahriman Johari
Business Times