Singapore, Malaysia Set 2020 Target for High-Speed Rail Link

A high-speed rail link between Singapore and the Malaysian capital of Kuala Lumpur may be completed by 2020, leaders of the two countries said today.

The rail network will be a “huge game changer” and transform the way the two countries do business, Malaysian Prime Minister Najib Razak told reporters in Singapore today at a joint press conference with his counterpart. Prime Minister Lee Hsien Loong said the journey may take 90 minutes.

“If it’s really going to happen it’ll be a major breakthrough,” said Chua Hak Bin, a Singapore-based economist at Bank of America Corp. “There’s a huge amount of trade and investment between the two countries, so any kind of major transport infrastructure that can speed up and shorten travel time will bring great benefits.”

Relations between the two neighbors have reached the warmest in decades in recent years as the countries ended years of bickering over issues from territorial disputes to the use of Malaysian-owned railway land on the island. Today’s announcement marks the first definitive agreement to proceed with the rail project since Malaysia’s YTL Corp. said in 2006 it was in talks with the government on a proposal.

Najib, who took office in 2009, didn’t say which companies would build the rail-line. He also said it’s too early to reveal the costs of the link, which would have a similar distance as New York to Washington.

Francis Yeoh, managing director of construction and utilities group YTL, said in 2006 he would take the rail unit public to raise as much as 8 billion ringgit ($2.6 billion) to fund the project if he won the contract. He declined to comment on the announcement today.

Bilateral Spats

“We’ve done the initial study and the numbers look quite encouraging,” Najib said. “As a business model, it is doable. It’s going to be implemented on a basis of a private-public partnership, in which the private sector will run the project. We will provide infrastructure support and very strong government participation.”

These initial plans will be subjected to further discussion, the Malaysian leader said.

Other joint projects announced today include a venture by CapitaLand Ltd., Southeast Asia’s biggest developer, to build a S$3.2 billion ($2.6 billion) township project in Malaysia’s Iskandar region with a company partly owned by the Johor state government, and Temasek Holdings Pte.

Serviced Residence

CapitaLand will hold a 51 percent stake in the venture, while Iskandar Waterfront Sdn. will own 40 percent. Temasek, Singapore’s state-owned investment company, will hold the remainder. CapitaLand’s serviced residence unit was awarded a contract today to manage a property in the Iskandar development region when it opens in 2015.

Singapore was part of Malaysia for two years from 1963 to 1965, before it was kicked out from the federation amid ideological differences. In the years following that, the two nations disagreed over issues including a new bridge linking the nations, the price the city-state pays for water and the ownership of an uninhabited island near both countries.

The two nations settled a dispute over Singapore’s reclamation work in the Straits of Johor in 2005. In May 2008, the International Court of Justice ruled in favor of Singapore in a 29-year dispute with Malaysia over ownership of the island of Pedra Branca. As part of the ruling, Malaysia won ownership of another rocky outcrop known as Middle Rocks and both sides agreed to abide by the court’s decision.

Land Dispute

The neighbors agreed in 2010 to relocate the operations of a train station owned by the Malaysian government near Singapore’s business district, ending a decades-old dispute over land usage. Subsequently, Khazanah Nasional Bhd. and Temasek Holdings Pte, the state-owned investment companies of Malaysia and Singapore, agreed to jointly develop $9.8 billion of property projects in southern Malaysia and downtown Singapore.

The warming in relations began with Najib’s predecessor, Abdullah Ahmad Badawi, who took office in late 2003. About three months before Abdullah became Malaysia’s leader, both countries placed advertisements in regional newspapers highlighting their case in a water dispute. That same year, Malaysia’s then premier Mahathir Mohamad vowed to build a bridge to replace its part of the causeway, even without Singapore’s cooperation.

Since November 2003, Malaysia and Singapore’s stock exchanges have agreed to an alliance while the Singapore government’s investment units have bought stakes in Malaysian companies including its telecommunications and car companies, while Khazanah has bought stakes in Singapore-listed companies including Parkway Holdings Ltd. and MobileOne Ltd.

Twin Cities

“It’s a strategic project for both countries,” Lee said today of the rail link. “It will change the way we see each other. It’s the way people in London and Paris are able to think of it, really as twin cities where you can commute, go up there, do business, meet friends, have a meal and come back all within maybe two-thirds of the day.”

The two countries follow efforts to boost high-speed rail links in Asian nations from Thailand to China. Thailand has invited China to invest in a high-speed train network, Prime Minister Yingluck Shinawatra said in November. China in December started its 2,298-kilometer (1,428-mile) high-speed train line, the longest in the world.

Najib, who must call for national elections in coming weeks, said Malaysia needs “continuity and stability” for projects with Singapore to work out. He needs to dissolve parliament by April 28 for polls to be held within 60 days.

“We will certainly do our level best to meet the 2020 deadline, it may go slightly beyond that but those are details in implementation,” he said. “The modalities will be offered to Singapore. Basically we would like Singapore to participate in this project based on the different kind of options that we’ll offer to the Singapore government.”

The two leaders also agreed to strengthen other forms of connectivity between Singapore and Malaysia, such as through the Rapid Transit System Link, for which the first phase of a joint engineering study is nearing completion, according to a joint statement.

To contact the reporter on this story: Sharon Chen in Singapore at schen462@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.