KUALA LUMPUR (April 18): The RM55 billion East Coast Railway Link (ECRL) project can improve household income and youth unemployment for the people of the east coast, said MIDF Amanah Investment bank Bhd Research.

In a special report on the ECRL released this morning, the research firm highlighted that the railway project is expected to improve household income in these states, which is below national level.

In 2016, the median household income for Kelantan, Terengganu and Pahang were registered at RM3,079, RM4,694 and RM3,979 respectively.

This is below the national level of RM5,228, and far lower than RM9,073 and RM7,225 recorded in Kuala Lumpur and Selangor.

MIDF Research added that various sectors at these three states, especially the real estate and petrochemicals sectors, are predicted to benefit from the ECRL project.

ECRL, with its 30% allocation for passengers, could form a new latent passenger demand as travelling hours are reduced on top of declining cost.

MIDF Research said "slow travellers" could afford to take the train to shop for speciality products in the region, therefore reinforcing the tourism industry there.

Meanwhile, as 70% of the transportation is mainly for freight, improvement in industrial and external trade activities will eventually generate jobs, uplift in household income and reduce inequality gap.

Also, apart from the railway itself, developments along the route will create more jobs for these states, particularly Kelantan and Terengganu whose unemployment rate was above the national level of 3.5% in 2016.

Among the east coast states, the highest graduate unemployment rate is in Kelantan at 13.9%, followed by Terengganu of 10.4%, and Pahang of 7.7%.

"Looking ahead, the multiplier effects of ECRL will help (in) tapering down the unemployment crisis in those states and overall Malaysia.

"An RM1 investment in railway will generate RM1.87 of output to the total economic activity," it said.

However, for every RM1 spent on the railway sector, it will only reward the Malaysian economy in terms of value-added by less than 0.50.

"Nevertheless, we opine the investment in railway (ECRL) will spur economic growth and development in Malaysia amid of the strong output multiplier effects," it added.

The research house cautioned of undesirable side effects, such as land exploitation, over production and existing boom towns which could bust, and calls for proper guidelines and policies to ensure stability and sustainability. — theedgemarkets.com

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