The rail agreement was a "major breakthrough," said Chua Hak Bin, Southeast Asian economist at Bank of America Merrill Lynch. But he noted the potential for bureaucratic delays when such mega-projects are undertaken.
"It's technologically possible. We've seen how fast China builds these things," Chua said. "It makes a lot of sense. There is a huge amount of business, trade and investment between the countries. There are also a large number of Malaysians working in Singapore."
A new customs, immigration and quarantine facilities at Puteri Harbour in Malaysia's Iskandar zone will likely be set up this year, the two governments said.
Iskandar, three times the size of Singapore, has seen a surge in investment from the city-state after the two governments signed a broad agreement in 2010 to address longstanding issues.
In October, Singapore government-linked firm Ascendas, whose projects include the Singapore Science Park and the International Tech Park in Bangalore, said it will help build a $1.2 billion industrial park in Iskandar.
Also on Tuesday, Najib and Singapore Prime Minister Lee Hsien Loong were officiating at joint venture projects involving their sovereign investors Khazanah Nasional Bhd KHAZA.UL and Temasek Holdings TEM.UL in Singapore and Iskandar.
The two leaders will also be at the unveiling of a project by Singapore's CapitaLand Ltd (CATL.SI) in Iskandar, the first in the zone by Southeast Asia's biggest developer.
($1 = 3.0940 Malaysian ringgit)
