By Kevin Lim
SINGAPORE | Tue Feb 19, 2013 3:40am EST
(Reuters) – Singapore and Malaysia moved to strengthen growing economic ties on Tuesday with plans to build a high-speed rail link by 2020 that will cut travel time between the wealthy city-state and Kuala Lumpur to 90 minutes.
The neighboring Southeast Asian countries also said they would look for ways to intensify cooperation in developing the Iskandar Malaysia economic zone that’s across a narrow strip of water from Singapore.
The rail link announcement, after a meeting between the prime ministers of the two nations, reflects improved relations in recent years. Singapore was once part of Malaysia but they separated acrimoniously in 1965, clouding diplomatic and economic dealings for decades.
The high-speed train “is a strategic development that will dramatically improve the connectivity between Malaysia and Singapore,” the two governments said in a joint statement.
“It will facilitate seamless travel between Kuala Lumpur and Singapore, enhance business linkages and bring the people of Malaysia and Singapore closer together,” they said. “Ultimately, this project will give both countries greater stake in each other’s prosperity and success,” it added.
No cost estimate was given for the rail link, which will be built by private companies with strong support from the two governments. The official statement said a committee of ministers from both countries will look into the details.
Malaysian Prime Minister Najib Razak conceded the 2020 target was ambitious but said it was one both countries were working towards.
It now takes around four hours to drive from Singapore to Kuala Lumpur, which are about 300 km (186 miles) apart. A flight takes around 50 minutes but travelers must spend time checking in and out of airports, as well as taking a one-hour bus ride from Kuala Lumpur International Airport to the city centre.
The rail agreement was a “major breakthrough,” said Chua Hak Bin, Southeast Asian economist at Bank of America Merrill Lynch.
But he noted the potential for bureaucratic delays when such mega-projects are undertaken.
“It’s technologically possible. We’ve seen how fast China builds these things,” Chua said. “It makes a lot of sense. There is a huge amount of business, trade and investment between the countries. There are also a large number of Malaysians working in Singapore.”
A new customs, immigration and quarantine facilities at Puteri Harbour in Malaysia’s Iskandar zone will likely be set up this year, the two governments said.
Iskandar, three times the size of Singapore, has seen a surge in investment from the city-state after the two governments signed a broad agreement in 2010 to address longstanding issues.
In October, Singapore government-linked firm Ascendas, whose projects include the Singapore Science Park and the International Tech Park in Bangalore, said it will help build a $1.2 billion industrial park in Iskandar.
Also on Tuesday, Najib and Singapore Prime Minister Lee Hsien Loong were officiating at joint venture projects involving their sovereign investors Khazanah Nasional Bhd KHAZA.UL and Temasek Holdings TEM.UL in Singapore and Iskandar.
The two leaders will also be at the unveiling of a project by Singapore’s CapitaLand Ltd (CATL.SI) in Iskandar, the first in the zone by Southeast Asia’s biggest developer.
($1 = 3.0940 Malaysian ringgit)
(Editing by John O’Callaghan and Richard Borsuk)