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Singapore, Malaysia to Boost Road, Rail Links as Tensions Thaw

Jan. 5 (Bloomberg) -- Singapore and Malaysia said they may construct a road tunnel and begin water taxis to boost transport links, signaling a further easing in political strains between the two Southeast Asian nations.

The neighbors, previously united as one nation, agreed last year to jointly embark on $9.8 billion of property projects and build a mass railway link to Malaysia’s southern Johor state which should begin operations by 2018, their leaders said today. They may now work together in other areas such as aviation, with Singapore’s Changi airport potentially cooperating with Malaysia’s nearby Senai, their governments said in a statement.

“There are many more areas for potential cooperation,” Malaysian Prime Minister Najib Razak told reporters today in Putrajaya, near Kuala Lumpur, after talks with his Singapore counterpart Lee Hsien Loong. “All the current agreements that both countries have managed to reach will pave the way for stronger bilateral ties.”

Relations between the two nations, joined as one federation between 1963 and 1965, improved last year when Malaysia agreed to move its railway station in Singapore’s central business district to a more northern site close to a bridge that connects the two countries, ending a decades-old dispute over land usage. Their governments have previously bickered over other issues such as the price Singapore pays for water from Malaysia.

Power Sales

“There should be more new initiatives that should be taken between both countries,” Singapore Prime Minister Lee told reporters in Putrajaya.

Malaysian companies are prepared to sell electricity to Singapore, said Najib. The countries are considering road tunnel and may start water taxis, he said. They may also align radio frequency spectrum for digital broadcast and mobile broadband, according to joint statement.

Khazanah Nasional Bhd. and Temasek Holdings Pte, the state-owned investment companies of Malaysia and Singapore, announced plans last year to cooperate on property projects in southern Malaysia and downtown Singapore.

This included S$11 billion ($8.5 billion) of Singapore developments comprising hotels, apartments, offices and shops in 501,020 square meters (5.4 million square feet) of space in two main areas of the city’s downtown, incorporating Malaysia’s former train station site.

Funding Sought

The state investment companies are in talks with banks to provide financing for the project, Khazanah and Temasek said in a separate e-mailed statement.

They also plan to jointly construct 3 billion ringgit ($955 million) of projects in Malaysia’s southern Iskandar economic development zone, including homes, retail space and “wellness-related offerings,” the companies said.

“The development of Iskandar and its success is very important for Singapore as it will benefit both sides in many ways,” Lee said.

To contact the reporter on this story: Manirajan Ramasamy in Kuala Lumpur at rmanirajan@bloomberg.net

To contact the editor responsible for this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net.

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