Japanese firms have decided to drop their plans to get involved in a high-speed rail project connecting Kuala Lumpur and Singapore, government and company sources said Thursday.
The companies, including East Japan Railway Co., had hoped to utilize Japan's shinkansen bullet train system in the project but they have decided it will be too risky without the Malaysian government's financial support, said the sources, including those at the Japanese and Malaysian governments.
The development could allow rival Chinese businesses to further solidify their footprint in infrastructure building in East Asia after they completed a high-speed railway in 2023 in Indonesia and are currently building another in Thailand.
Next Monday is the deadline for submitting a bid. The Malaysian government started soliciting bids in July 2023.
The project is expected to cost 100 billion ringgit ($21 billion) but the Malaysian government intends to promote it through private financing rather than by government spending or extending debt guarantees.
While Japanese firms are dropping out, several local companies plan to join hands with Chinese and European firms to make bids, the sources said.
The Malaysian government is set to narrow down candidates within several months and will start full-fledged negotiations with the Singaporean government later this year at the earliest.
The Malaysian and Singaporean governments initially reached a basic agreement in 2013 on the project, which called for building a 350-kilometer-long high-speed rail link that would cut travel time between Kuala Lumpur and the city-state to just 90 minutes, compared with over four hours by car.
From Japan, East Japan Railway and major trading house Sumitomo Corp. showed interest in joining the project. In 2015, then Japanese transport minister Keiichi Ishii pitched the shinkansen system to Malaysian government officials during a visit to Kuala Lumpur.
But in 2021 then Malaysian Prime Minister Muhyiddin Yassin canceled the project due to concern over financial burdens before the current administration of Prime Minister Anwar Ibrahim officially revived the project.