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Malaysia Welcomes Japanese High-Speed Rail Bid

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TOKYO — Malaysian Prime Minister Najib Razak welcomed Japan’s bid to handle his country’s high-speed rail project in a Monday interview with the Nikkei Asian Review.

“Japanese shinkansen and rail technology is very competitive,” said Najib, in Japan on an official visit. “I believe Japanese companies can put in a competitive bid.”

He said funding, operation system technology and rolling stock will be key factors in deciding who wins the project. He expects companies that bid for the project to include financing structure plans that take into account initial and long-term operation costs. “It has to be a total package,” Najib explained.

Companies that want to bid for the high-speed rail project, which will link Kuala Lumpur and Singapore, need to include long-term financing assistance as well as the technology capability to build and operate the 300km line.

Leaders of Malaysia and Singapore have agreed to link their capitals through a high-speed rail that will reduce travelling time to 90 minutes.

Currently, it takes an hour by plane, 4 hours by car and nearly 7 hours by train. The rail system that links the two capitals today uses a single track built during the British colonial era.

A route for the train line, initially planned for completion in 2020, has been decided. Malaysia and Singapore are now discussing the structure of the project, including capital shares. Once these details are finalized, they will launch the pre-tender process before calling for international bidding.

Plans to finish the line by 2020 have been deemed unrealistic, and a new timeline is expected to be announced early next year. Construction alone will take at least 5 years, according to Najib.

Malaysia reckons the project will be a “game-changer” in developing rural towns along the route. With shorter traveling time, it may cut the cost of doing business, especially for Singapore-based companies, by attracting workers from Malaysia.

Both countries are finalizing a feasibility study on the project, estimated at 40 billion ringgit ($11 billion).

An efficient cross-border connection will also help facilitate regional integration. Malaysia, which is the rotating chairman of the Association of Southeast Asian Nations, has vowed to beef up the bloc ahead of the planned implementation of the ASEAN Economic Community by the end of 2015.

“Malaysia has been in the forefront in putting forward our strong case that we need to strengthen the [ASEAN] Secretariat,” said Najib. Under the economic community, the 10 member countries in the region want to be recognized as a single market for production and they have taken measures to reduce tax barriers and custom procedures to ease the movement of goods, services and human capital. To implement these in an effective way, the ASEAN Secretariat is considering increasing its workforce and annual budget.

On the territorial disputes in the South China Sea, Najib said the bloc will “foster discussions” with China to resolve the issues peacefully. “We hope the countries that have their interest with respect to the South China Sea will not raise tensions [or] do anything that will lead to instability,” he added.

Malaysia will continue to entice “high-impact” investments from Japanese and other foreign companies by giving out a variety of incentives, said Najib. In particular, incentives will be tailored for companies that invest in automation and high-technology projects that create jobs for the locals in designated economic development zones in Malaysia.

“I would prefer companies to tell us directly if there is any request they have in mind,” he said.

Malaysia is also supportive of Japan’s pledge to offer $110 billion to fund infrastructure projects in Asia over the next five years, as these projects will sustain growth and development of the local economies.

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