National

Japan makes shinkansen safety pitch in bid for Malaysia-Singapore rail contract

Kyodo

Japan pitched its safety record to Malaysia at a high-speed rail symposium Friday as it plays catch-up with China in chasing a lucrative project to link Kuala Lumpur with Singapore by train.

The symposium, hosted for the second year in a row by the Japanese government, was attended by Malaysian Transport Minister Liow Tiong Lai and Japan’s Junzo Yamamoto, a senior vice minister in the transport ministry.

“Safety is the biggest characteristic of the shinkansen,” Yamamoto said in his speech at the symposium, “It has maintained an impeccable record with zero fatalities in its 50 years of operation.”

In a news conference later, he said Japan has agreed to collaborate with Malaysia’s regulator, the Land Public Transport Commission of Malaysia, better known by its Malay acronym SPAD, to develop the railway sector.

“We will be enhancing in terms of capacity-building, sharing of best practices and other areas of cooperation through collaboration between universities and research institutes, training in Japan as well as dispatch of experts to Malaysia,” he said.

After the symposium, Yamamoto held talks with Malaysian officials led by SPAD Chairman Syed Hamid Albar and MyHSR Corp Sdn. Bhd. Chief Executive Mohd Nur Ismal Mohamed Kamal.

MyHSR is the developer and asset owner of the ambitious project that was first announced by Malaysian Prime Minister Najib Abdul Razak and Singaporean counterpart Lee Hsieng Loong in February 2013.

The rail line would stretch about 350 km along the west coast of the Malay Peninsula from Kuala Lumpur to Singapore and have an estimated travel time of about 90 minutes.

A memorandum of understanding between the two governments is expected to be inked by middle of this year, to be followed by a more binding bilateral agreement later, before a tender can be called, which some news reports said could be in the first quarter of 2017.

While the governments are ironing out the kinks, competition is heating up among the favorites, China and Japan, for a contract unofficially estimated to be worth between $10 billion and $18 billion.

On the surface, China appears to be leading the race.

If in the 1980s and ’90s, Japan stamped its mark on every major project in Malaysia under former Prime Minister Mahathir Mohamad’s “Look East” policy, today it’s China.

Some of its high-profile projects include the $1.1 billion Second Penang Bridge and the $2 billion Gemas-Johor Baru electric double-track rail.

In the rail sector, some 80 percent of Malaysia’s rolling stock is supplied by China Railway Rolling Stock Corp., which opened a $97 million manufacturing plant in northern Perak state last year.

But what many felt would tip the scale in China’s favor was when another state-owned company, China Railway Group Ltd., which is eyeing the HSR project, together with its local partner Iskandar Waterfront Holdings, acquired a 60 percent stake in Bandar Malaysia, a new 486-acre commercial and residential development in the city center where the proposed HSR terminal will be located on the Malaysia end.

They bought it last December from debt-laden state-investment fund 1Malaysia Development Berhad for 7.41 billion ringgit ($1.82 billion).

Three months later, China Railway Group Ltd. announced plans to invest $2 billion for a regional center in Bandar Malaysia that it hoped would give it an edge over rivals bidding for the HSR project.

“Our regional center is here, not our competitors. We find resources together with our local developer in infrastructure . . . I cannot find (anyone) who can match us,” General Manager Cai Zemin told reporters after a grand ceremony to unveil their investment plan that was attended by Najib.

The China Railway deal with 1MDB came after another Chinese state-owned firm, China General Nuclear Corp., paid over $2.3 billion for 1MDB’s power assets.

The sales of the power assets and Bandar Malaysia were part of 1MDB’s strategy to pare down a massive debt estimated at 50 billion ringgit as of this January.

1MDB is under investigation at home and abroad for possible fraud and money laundering. A parliamentary inquiry had found questionable dealings and unexplained outflows of funds ranging in the billions of dollars.

The scandal has become a millstone around the neck of Najib, who chairs the 1MDB advisory board. He is under pressure to resign.

Transportation consultant Goh Bok Yen believed Najib may feel indebted to China for bailing out 1MDB.

“China saves 1MDB, China saves Najib,” he told Kyodo News, “Today they come in, they throw in money. Stage one, they are in the forerun . . . China is hitting the nail at the right places.”

But he cautioned that since the project also involves Singapore, the sentiment there may not necessarily be pro-China.

MyHSR’s Nur Ismal brushed away talk about China being the front-runner as mere speculation. He said all bids will be evaluated fairly.

Besides Japan and China, others who have expressed interest in the high-speed rail project are from South Korea and Europe.

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