20 December 2016

The Singapore-Kuala Lumpur High Speed Rail project is an all-encompassing opportunity for Singapore

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By Guy Harvey-Samuel

Group General Manager and CEO, HSBC Singapore

The 13 December 2016 signing of the bilateral agreement between Singapore and Malaysia for the implementation of the Singapore–Kuala Lumpur High–Speed Rail (HSR) is the sounding gun for the project to begin in earnest.

The project presents an all–encompassing opportunity for Singapore.

It will further strengthen the close people–to–people, trade and investment links that already exist between Singapore and Malaysia.

In addition to the services trade, in particular tourism, the HSR could also enhance bilateral investment flows in the long run, and the improved connectivity could also attract foreign investors.

Even in the shorter term, SG–KL HSR will generate some immediate commercial benefits for Singaporean entities across the three project areas.

First, there is the actual construction of the infrastructure: the clearing and tunneling of the line, the building of bridges and the laying of tracks. Second, there is the construction, maintenance and ongoing re–supply of the trains and the overall railway system, and ultimately its operational management including fare collection, utility provision, employment of drivers and rail staff.

While the wide ranging initial construction works will likely attract interest from large multi–nationals located in Singapore, Singapore corporates will be expected to take the lead in their area of expertise across a broad spectrum of fields ranging from civil engineering, construction, heavy machinery importers, logistics and business services.

Amongst the Japanese, Chinese, Korean and potentially other private consortia who are bidding for the design, construction, financing, operations and maintenance of the rail assets, there will be extensive supply chain needs that will be a boon for Singapore companies including electrical engineering services to maintain the signaling, component manufacturers and maintenance.

With the agreement now being solidified and a 4Q17 tender time period set, bidders are beginning the process of formulating their tenders which will involve engaging both the Singapore and Malaysian governments and bringing together their financial partners.

Similarly, Singaporean corporates should also begin to align themselves to potential bidders to ensure they’re well positioned for when the tender process formally begins.

The Singapore–Kuala Lumpur High–Speed Rail HSR was first announced in December 2013.

Singapore’s infrastructure needs, openness to foreign investment and proven track record in getting projects off the ground has made it an attractive destination.

In the 2015/2016 budget, the Singapore government committed to doubling its infrastructure spending over the next five years to SGD30 billion in 2020[1]. The HSR signing further reinforces Singapore’s continued prominence as an infrastructure hub.

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