Image credits - CNN
Japanese companies, including East Japan Railway Co, have opted out of participating in the high-speed rail project connecting Kuala Lumpur and Singapore. Concerns about financial risks without Malaysian government support have led to this decision, potentially paving the way for Chinese businesses to strengthen their presence in East Asian infrastructure projects.
The withdrawal of Japanese firms provides an opportunity for Chinese companies to enhance their influence in East Asian infrastructure development. Having recently completed a high-speed railway in Indonesia and ongoing projects in Thailand, Chinese companies may seize this chance to solidify their footprint in the region.
With the bidding deadline set for next Monday, the Malaysian government began soliciting bids in July 2023 for the high-speed rail project. While Japanese companies are stepping back, local firms, along with Chinese and European partners, are preparing bids.
The project, estimated to cost $21 billion, aims to secure funding through private financing rather than government spending or debt guarantees. Japanese companies’ withdrawal highlights the challenges of pursuing such major infrastructure ventures without strong government support.
Chinese and European companies partnering with local firms could position themselves as frontrunners for the project. The Malaysian government intends to finalize candidates in the coming months, with negotiations expected to commence with the Singaporean government later this year.
The Malaysia-Singapore high-speed rail project, conceptualized in 2013, aimed to create a 350-kilometer-long rail link, significantly reducing travel time between Kuala Lumpur and Singapore. Japanese firms, including East Japan Railway and Sumitomo Corp., expressed early interest in the venture.
In 2021, concerns over financial burdens led to the project’s cancellation by then-Malaysian Prime Minister Muhyiddin Yassin. However, the current administration, led by Prime Minister Anwar Ibrahim, officially revived the project, initiating the bidding process in 2023.