Reuters International

KUALA LUMPUR (Reuters) - Singapore and Malaysia are to build a high-speed rail link that will cut the travel time between the city-state and Kuala Lumpur to 90 minutes by 2026, their prime ministers said on Tuesday.

The rail link, announced in February 2013, was initially expected to be operational by 2020 but the neighbours have cited complexities for the delay.

"One can have breakfast in Kuala Lumpur, lunch in Singapore and be back in time for dinner in Kuala Lumpur. This is the shape of things to come," Malaysian Prime Minister Najib Razak told reporters after the signing ceremony, also attended by his Singapore counterpart, Lee Hsien Loong.

The two countries signed a memorandum of understanding for the link with a bilateral agreement to be finalised by the end of the year, both sides said.

It takes about four hours to drive the more than 300 km (190 miles) from Singapore to the Malaysian capital.

The announcement reflected a recent improvement in ties between the neighbours.

Singapore was part of Malaysia after the end of British colonial rule but they separated acrimoniously in 1965, clouding diplomatic and economic dealings for decades.

Relations have grown stronger in recent years despite an investigation by Singapore's financial authorities into a multi-billion dollar scandal involving Malaysian state fund 1Malaysia Development Berhad (1MDB).

The rail link would have six stations in addition to its terminals in Singapore and Bandar Malaysia, about 7 km (4.5 miles) from Kuala Lumpur city centre, the two countries' transport authorities said in a statement.

Work on tenders for the project will start next year, Najib said. No estimate has been given for the cost but Malaysian media has reported that it could be more than $10 billion.

Rail companies from China, Japan, South Korea and Europe have expressed interest in the project.

But China is expected to have an edge after a generous winning bid from a state-owned Chinese firm for 1MDB's power assets, which was seen helping Beijing find favour in Malaysia.

(Reporting by Rozanna Latiff; Writing by A. Ananthalakshmi; Editing by Robert Birsel)

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