The high-speed rail (HSR) linking Singapore and Malaysia could potentially offer a combined US$1.12 billion (S$1.6 billion) a year in economic benefit to both countries once it is completed by late 2026.

The estimate by research body Institute of Developing Economies, Japan External Trade Organisation (IDE-JETRO)found that a lion's share of the upside will be enjoyed by Malaysia, given that a larger section of the track will lie there.

It found that the "economic impact" on Singapore could amount to US$114 million a year, while Malaysia may stand to gain just over US$1 billion.

This is based on the three services being developed - an express train between Jurong East here and the upcoming Bandar Malaysia development in Kuala Lumpur, a shuttle connecting Singapore and Iskandar Puteri in Johor and a domestic line from KL to Iskandar Puteri.

"For Malaysia, the economic impact is mostly from the HSR domestic service," noted Mr Satoru Kumagai, director at IDE-JETRO, which conducted the research.

The domestic service in Malaysia will have five stops between Kuala Lumpur and Iskandar Puteri - Batu Pahat, Muar, Ayer Keroh, Seremban and Putrajaya. Mr Kumagai, who was speaking at a seminar organised by the ISEAS-Yusof Ishak Institute yesterday, added that the services sector in Malaysia is likely get a big boost from the HSR. Interestingly, its study showed that Singapore's manufacturing sector could be a potential beneficiary.

"Some capital and labour may be diverted from the manufacturing to the services sector in Malaysia, so the manufacturing side may be weakened," he said, adding that Singapore firms could then pick up the slack in manufacturing across the Causeway.

The research was done using the geographical simulation model developed by IDE-JETRO based on spatial economics - a study of how space or distance affects economic behaviour. Although IDE-JETRO is a Japanese government-related institute, Mr Kumagai said the study is an academic one. It does not represent the views of Japan's policymakers.

Assumptions in the study included average train speed of 200 to 300 kmh, waiting time of 15 minutes for trains at stations and a smiliar duration for customs, immigration and quarantine clearance. The HSR is expected to cut travel time between Singapore and Kuala Lumpur to 90 minutes, compared with more than four hours by car now.