Japan lost a similar project last year, in Indonesia, to China which has won other similar rail construction projects in Laos and Thailand. If it makes its gauge and systems the de facto standard in southeast Asia, it could force Japan and other countries to watch from the sidelines.
Singapore set the tone for the bidding during the signing of a Memorandum of Understanding (MoU) with Malaysia on Tuesday in the city state. Putrajaya agreed that the tender process should be “fair, equal and transparent”. In short, don’t give in to China’s financial muscle. The Singaporeans want the best for the rail link.
A fair and transparent process may mean more than two bids. Alstom of France and Siemens in Germany may join the bidding too.
Japan and China have gone ahead with full preparations to enter the bidding for the project which was initially expected to be completed by 2020.
China, which announced a “One Belt, One Road” initiative under President Xi Jinping, sees a Singapore-Kuala Lumpur rail link as an important segment in its high speed railroad link from Kunming to Southeast Asia.
Bejing’s preparations to win the rail link project began in March when the giant China Railway Group pledged to invest USD2 billion to re-develop the area around a new central station in Kuala Lumpur.
China also came to Prime Minister Najib Abdul Razak’s “rescue” when it bought several assets from the state-owned 1Malaysian Development Berhad (1MDB). “China has the advantage at this point in time,” a diplomat told the website.
“The shinkansen bullet train serves as the foundation for conducting business efficiently in Japan,” said Japanese Transport Minister Keiichi Ishii at a symposium in Singapore on Friday.
Ishii pointed out that Japanese companies have a reputation for delivering projects on time. “They manage their projects efficiently.”
Leading the Japanese challenge is a consortium formed by East Japan Railway (EJ), Sumitomo Corp, Mitsubishi Corp, Hitachi, and Mitsubishi Heavy Industries.
Hitachi, boosted by a huge rolling stock order from the UK, wants to highlight Japan’s shinkansen technology.
Mitsubishi Heavy will handle electrical and mechanical systems.
Sumitomo and Mitsubishi will be responsible for financial and management assistance.
EJ opened an information gathering office in Singapore in 2013. The company prides itself on “punctual railway operations, safety measures and maintenance”.
Japanese bidders may be forced to weigh the benefits against cost considerations. The stations, for example, will be 20 to 30 minutes from the city centre. It remains to be seen whether the project costs can be recouped.
Putrajaya estimates the project will create 28,700 new jobs and boost gross national income by RM6.2 billion.
Among the plus points, Singaporeans could go for cheap shopping in Kuala Lumpur. Foreign tourists in the city state will also have a greater incentive to visit Malaysia.