THE KOREA TIMES : Korea’s bidding for KL-S’pore rail deal hits snag
Gov’t urged to play bigger role in tender preparations
By Kim Jae-kyoung
SINGAPORE ― South Korea’s bidding for the Malaysia-Singapore high-speed rail (HSR) deal hit a major snag as its consortium lost a couple of key participants amid the government’s lukewarm attitude toward the multi-billion-dollar project.
The setback comes after the governments of the two Southeast Asian nations began a bidding process in December for the railway project that Japan, China and France are also eagerly jostling for.
The project, which will develop a 350km-rail link to cut travel time between Kuala Lumpur and Singapore to 90 minutes, is estimated to cost around $10 billion.
“We are looking for some new key players to join our consortium, as some, including LSIS, have left,” Sohn Myung-soo, director general for the Railway Bureau at the Ministry of Land, Infrastructure and Transport, told The Korea Times.
“I don’t know the details about why they left. It was their decision.”
According to industry sources, along with LSIS in charge of “signaling,” KT and Sampyo E&C, which were supposed to take charge, respectively, of “telecommunications” and “trackwork,” decided to leave. Also, Hyosung and Hyundai Electric are considering an exit.
On Jan. 23, Malaysia’s MyHSR Corp. and Singapore’s SG HSR jointly held the briefing for the assets company (AssetsCo) tender for the HSR project in Kuala Lumpur. The project is scheduled to be completed by 2026.
On Dec. 20, they announced they would start accepting bids for AssetsCo, which will be responsible for designing, building, financing and maintaining all rolling stock and rail assets.
While the government has disagreed, it is believed the key culprit behind the ongoing trouble was a lack of leadership and of government willpower.
The exits by some key players came after the heads of the Korea Rail Network Authority (KRNA) and Korea Railroad Corp. (KORAIL) ― the two state-run organizations that have led the consortium ― resigned after President Moon Jae-in took office.
The top posts have remained vacant for the past several months, so many Korean private firms, which showed keen interest under the previous administration, are reconsidering their participation.
The ministry’s three key officials who initiated the nation’s efforts to win the rail deal from the beginning in 2016 ― vice minister, director general for the railway bureau and director for the railway policy division ― were all replaced around the same time in September and October, which many believe is hampering the consortium’s bidding preparation.
This has raised speculation that the Moon administration has pushed the HSR project down on its priority list.
It is comparable to the governments of Japan and China that are taking the initiative to win the mega deal. It is also a major shift from the previous Park Geun-hye administration that took it as one of the top priorities.
The Moon administration has no plans to take a lead in the bidding process, leaving it totally up to the consortium and the private sector.
“Since bidding requirements have been introduced, it is now all up to the consortium and private sector,” said Son of the land ministry.
“Private firms now can make their decisions according to their own interests. We will provide support if necessary but won’t get involved in the bidding preparation and will not do any lobbying.”
Regarding concerns of the government’s lukewarm attitude, a ranking official from the KRNA said on condition of anonymity, “It is not proper to share details of the consortium and the government’s attitude.”
He added, “All I can say is we are doing our best to prepare for the bidding,” declining to comment on how supportive the Moon administration has been.
In contrast, the Japanese government is closely cooperating with the private sector for the deal.
According to a report by the Nikkei Asian Review, the Japanese government, through its public-private fund Japan Overseas Infrastructure Investment Corp. for Transport and Urban Development, will provide financial backing for the country’s consortium.
Japanese diplomats have also joined the government-initiated lobbying activities.
“The setting up of a railway such as the HSR will open a window for massive local participation, especially in the construction of large-scale infrastructure. We welcome cooperation with local companies in Malaysia and Singapore,” Malaysia’s national news agency Bernama recently quoted Japan’s ambassador to Malaysia, Mr. Makio Miyagawa, as saying.
Experts say the Korean government should play a more active role in the bidding process.
“It is true Korea is behind China and Japan in the bidding race but that does not necessarily mean we should give up,” said a Singapore-based executive at a Korean builder, asking not to be named.
“In this kind of mega project deal, the government’s support and lobbying ability is crucial.”