It could alleviate rising real estate and office overcapacity bubbles in Kuala Lumpur, while relieving the need for expensive land reclamations in Singapore. The rail line would decrease congestion along the Johor Baru-Singapore Causeway.
Business meetings would amount to crossing gleaming new tracks to the other side of the same city. Hence, Chinese companies are wasting no time seizing opportunities.
A China High-Speed Railway Showcase was held in Kuala Lumpur to demonstrate the country's expertise in research, engineering, equipment manufacturing, construction, technology innovation, operations and maintenance, as well as personnel capacity building.
China's high-speed electric multiple units (EMU) and inter-city train systems were highlighted at the event.
Japan raises stakes; China lowers costs
China is facing stiff competition from Japan in the Asian HSR market. Fresh from bagging a $15 billion project in India, Tokyo is eyeing the Kuala Lumpur-Singapore HSR contract, backed by the technical prowess of Hitachi and Mitsubishi Heavy Industries.
The Japanese package however is not as generous. The Chinese HSR may cost half as much, and could be completed as early as 2020, if construction begins by 2016 as scheduled.
It took Chinese companies only three years to complete the 1,318km Beijing-Shanghai HSR line in 2010. Beijing's infrastructure projects worldwide are recognized for its common sense modes of financing.
When China agreed to fund the dual-track Bankok-Nong Khai, Bangkok-Map Ta Phut, and Kaeng Khoi-Map Ta Phut routes in Thailand, loan repayments were provisioned in the form of rice and rubber!
Such flexible financing schemes wean the region away from a dollar dependency, and ring-fences long-term projects against the vagaries of currency fluctuations.
Furthermore, China has been busy positioning itself in Malaysia and the region for some time. In 2013, its leading railway manufacturer, China South Locomotive and Rolling Stock Corporation, began erecting a manufacturing and maintenance center for the ASEAN market in Batu Gajah, Malaysia.
China is the main supplier of rolling stock in Malaysia, cornering 80 percent of the market. Accordingly, China enjoys an advantage over the KL-Singapore HSR link.
Completing the Iron Silk Road
The Kuala Lumpur-Singapore link is part of a wider Southeast Asian HSR blueprint, which stretches from Kunming, China to Singapore via Laos, Cambodia, Thailand and Malaysia. Nearly all regional HSR projects involve Chinese assistance.
The next phase of the Southeast Asian spur may entail a HSR line for the northern half of the existing Bangkok- Singapore rail link. The primary obstacle happens to be an Islamic secessionist movement in southern Thailand.
However, judging by China's track record in global infrastructure development, Beijing may temper geopolitical bumps in a way other entities could not!
Faster Chinese trains will mesh with Beijing's "Belt & Road" initiative that link infrastructure, trade and investment networks throughout Asia, Africa and Europe. The Iron Silk Road is a priority project for Asia.
According to the World Bank, emerging economies have only earmarked $400 billion on infrastructure projects. Yet, Asia needs $15.8 trillion in infrastructure funding over the next 15 years to maintain its growth trajectory.
So, it was prescient for Beijing to establish the Asian Infrastructure Investment Bank (AIIB).
