KUALA LUMPUR (March 4) — The main contractor for the Light Rail Transit 3 (LRT3) project could be liable for penalties exceeding RM475 million due to ongoing delays, according to Transport Minister Anthony Loke.
Speaking during the Dewan Rakyat session, Loke said the LRT3 line — also known as the Shah Alam Line — has yet to begin operations despite an earlier extension granted on July 10, 2025. The revised target for commencement is now set for June this year.
Daily liquidated ascertained damages (LAD) imposed on the project’s main contractor, Setia Utama LRT3 Sdn Bhd, amount to RM2,729,280 per day, equivalent to 0.024% of the total contract value. As delays accumulate, total penalties could surpass RM475 million.
Technical Issues Behind Postponements
The 37km rail line stretches from Bandar Utama to Johan Setia, enhancing connectivity across key growth corridors in Selangor.
However, the project has faced multiple deferments, largely attributed to technical complications during trial operations. Among the key issues cited was the delay in software delivery by signalling system supplier Siemens. Additional setbacks involved slower-than-expected completion of critical system testing and integration processes.
Loke emphasised that contractors would be held accountable and that claims will be enforced in accordance with contractual provisions once the project is finalised. He added that the experience should serve as a reminder to ensure future infrastructure projects adhere strictly to agreed timelines and performance standards.
Future Transport Contracts to Include Maintenance Framework
Beyond addressing current delays, the government plans to adopt a more comprehensive procurement structure for upcoming public transport projects. This includes embedding long-term service and maintenance agreements into overall project costs — a model commonly practised internationally.
Under this approach, original equipment manufacturers would not only supply train systems but also undertake extended maintenance responsibilities, ensuring stronger lifecycle management. Loke stressed that while public transport operators in Malaysia require government support, maintenance budgets will not be compromised, as underfunding upkeep could result in greater disruptions for commuters.
Impact on KL and Selangor Property Markets
Major transport infrastructure projects such as LRT3 play a crucial role in shaping real estate demand patterns across Kuala Lumpur and Selangor.
Improved rail connectivity enhances the appeal of commercial property in KL and decentralised business hubs, including office space in Bukit Jalil, by reducing travel times and expanding workforce catchment areas.
For the industrial segment, infrastructure reliability directly influences logistics efficiency. Businesses operating on industrial land in Selangor — including those managing a factory in Puchong or facilities within industrial property in Subang area — depend heavily on seamless transport networks for employee mobility and supply chain coordination.
While project delays may temporarily affect market sentiment, the eventual completion of LRT3 is expected to unlock long-term value across multiple corridors in the Klang Valley. For investors focused on office and industrial assets in KL and Selangor, transport connectivity remains a fundamental driver of capital appreciation and tenant demand.
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