Malaysia, Singapore to call joint tender on high-speed rail link in Q4 2017

KUALA LUMPUR (Reuters) - Malaysia and Singapore will call a joint tender to build a high-speed rail system linking the neighbours in the final quarter of next year, their prime ministers said on Tuesday.

Firms from China, Japan, South Korea and Europe are among those to have expressed interest in the project, planned to cut travel time between Singapore and the Malaysian capital of Kuala Lumpur to 90 minutes by 2026, versus four hours by road now.

No cost estimates were given, but Malaysian Prime Minister Najib Razak said he did not foresee problems with financing.

"This is a commercially viable project," Najib told a news conference, after he and Singapore counterpart Lee Hsien Loong witnessed the signing of a deal to build the rail link.

"In fact, those who want to participate in the project can make available certain financial arrangements for us to consider, as part of their package."

The rail link, announced in February 2013, was initially expected to be operational by 2020, but the neighbours have cited complexities for the delay.

Singapore was briefly part of Malaysia following British colonial rule, but separated acrimoniously in 1965, clouding diplomatic and economic dealings for decades.

Ties have improved in recent years, despite investigations by Singapore's financial authorities into a multi-billion dollar scandal at Malaysian state fund 1Malaysia Development Berhad (1MDB).

Tuesday's deal will see the appointment of a privately-financed asset management company to provide, and maintain, the trains and rail systems, while two other companies will handle service operations.

Construction of the 350-km (218-mile) rail link is expected to start in 2018, a year after the tender is called. Malaysia and Singapore will build the infrastructure and operate the stations within their own territories.

China is expected to have an advantage among prospective bidders, after Beijing invested heavily in several large Malaysian government projects, including a 55-billion-ringgit ($12-billion) East Coast Rail Line.

Ties between Malaysia and China reached an all-time high after a Chinese state-owned firm put in a generous bid to take over 1MDB's power assets in 2015, helping to ease mounting debts.

But the speculation that China holds an advantage over other bidders in the competition for the rail line project was dismissed by Mohamad Azharuddin Mat Sah, the chief executive of Malaysia's Land Public Transport Commission.

"Together with Singapore, we're looking at various parameters, not just costing but also reliability, sustainability, safety and value," he told a news briefing last week.

($1=4.4220 ringgit)

(Reporting by Rozanna Latiff; Editing by Clarence Fernandez)