Will Genting Singapore be the major victim of the the Malaysian Government’s decision to scrap the high-speed rail project between Singapore and Kuala Lumpur? The Prime Minister of Malaysia, Dr Mahathir Muhammad had yesterday in no uncertain terms confirmed that his Government will drop the High-Speed Rail (HSR) project.

“We need to do away with some of the unnecessary projects, for example the high-speed rail, which is going to cost us RM110bn (S$37bn) and will not earn us a single cent. That will be dropped,” Mahathir told the Financial Times.

“It’s not beneficial. It’s going to cost us a huge sum of money, we’ll make no money at all from this operation,” he added.

Dr Mahathir acknowledged that his Government has an agreement with Singapore and that he has to to talk with his counterparts here about dropping that project. Singapore’s Transport Ministry said that it has not received official notification from Malaysia about its decision on the HSR.

The decision by the Malaysian Government is expected to have a huge negative impact on Genting Hotel Jurong, a facility built by Genting Singapore Plc to support its operations at casino venue Resorts World Sentosa.

Genting Singapore had the first-phase opening in April 2015, more than 2 years before the official signing of the Memorandum of Understanding for the HSR project. When the hotel first opened, several commentators questioned the decision to build the 557-room hotel so far from its resort in Sentosa and to bring those guests in by bus. Their questions were answered when Singapore and Malaysia inked the bilateral agreement for the HSR project on 13 December 2016.

An analyst at Maybank IB Holdings however, has poo-pooed suggestions that Genting Singapore will suffer as a result of the Malaysian Government’s decision to pull back from the project.

Maybank analyst Samuel Yin Shao Yang said that he was “not overly concerned that it (Genting Hotel Jurong) will be a white elephant.”

He said: “Genting Hotel Jurong is located in between the second link bridge [to Malaysia] and Resorts World Sentosa. Many tour buses from Malaysia would pass Genting Hotel Jurong anyway. In short, I think the hotel will still be viable in the long run.”

Genting Group’s 2017 Annual Report listed a subsidiary of Maybank (Maybank Nominees (Tempatan) Sdn Bhd) as being among its ‘thirty largest security account holders as per record of depositors as at 14 March 2018’.

The Genting Group is implicated in ongoing international investigations into 1MDB, which has been described as “the world’s largest-ever financial swindles”. The Wall Street Journal described the links between 1MDB and Genting Group as such:

“Since Mr. Najib was forced out of office in an election upset, succeeded by veteran premier Mahathir Mohamad, the extent of the alleged theft from 1MDB has faced renewed scrutiny. If Mr. Mahathir follows through on election promises to fully investigate the scandal, he will need to step into some of Malaysia’s most important boardrooms. Among the companies exemplifying the links to 1MDB are two large conglomerates, Tanjong PLC and Genting Group . According to a person familiar with the fund’s interactions and an examination of public documents, they enjoyed a quid-pro-quo relationship with 1MDB and Mr. Najib’s political dynasty.”

It is hard to imagine how Genting Hotel Jurong and Genting Singapore will not suffer from the pullout of the HSR considering that it is but a stone-throw away from the canned project (perhaps built with the sole idea of benefiting from the project) and the lack of human traffic without the project.

Besides the unpredictable fortunes of Genting Hotel Jurong, those that have bought properties in the area (or are looking to buy one there soon), need not be overly concerned that prices of their properties will plummet when the plug is officially pulled from the HSR project.

International Property Advisor’s chief executive officer, Mr Ku Swee Yong, noted that “Those who bought property in the Jurong area with the purpose of investment would be disappointed as their investments might only bear them good gains many years later,” and that “Developers will be a lot more careful and less aggressive with their bid price going forward.”

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