Malaysia and Singapore signed an agreement Tuesday to build an ambitious high-speed rail link touted as a first for Southeast Asia that will knit the historically fractious neighbours more closely together.

The 350-kilometre (217-mile) bullet-train line from the regional financial hub of Singapore to Malaysia's capital Kuala Lumpur is expected to slash travel times to 90 minutes from the five or more hours by road today.

Authorities have yet to provide cost projections, but analyst estimates have been as high as $15 billion, a potential bonanza for foreign railway contractors as well as other businesses expected to feed off ancillary developments related to the project.

At a meeting in Malaysia's administrative capital Putrajaya, officials from each side signed a memorandum to pursue the project, which is expected to pave the way for detailed talks and a call for international tenders.

Authorities hope to get trains rolling by 2026.

The signing was overseen by Malaysian Prime Minister Najib Razak and his Singapore counterpart Lee Hsien Loong, who proposed the idea together in 2013.

"One can have breakfast in Kuala Lumpur, lunch in Singapore, and be back in time for dinner in Kuala Lumpur," Najib said in a joint news appearance.

Singapore was booted from the Malaysian Federation in 1965 over ethnic issues, and relations in subsequent decades were punctuated by occasional bickering.

But they have remained important economic partners and relations have warmed significantly in recent years under Najib and Lee.

The rail proposal already has sparked interest among major Chinese, Japanese, and Korean rail firms, who have sought to tout their credentials.

But speculation has mounted that Chinese national rail operator China Railway Corp has the inside track, which would be the latest sign of rapidly growing economic and trade ties between China and Malaysia.

China's chances of landing a chunk of the high-speed rail project are widely seen as having been boosted after its largest nuclear energy producer last year came to the rescue of a scandal-tainted Malaysian state fund.

The fund, 1Malaysia Development Berhad, or 1MDB -- which was launched by Najib -- faces allegations that billions were pilfered from it by politically connected Malaysian and Middle Eastern figures. Multiple investigations are under way overseas.

But last year 1MDB sold its power assets to China General Nuclear Power Corporation for $2.3 billion.

That gave 1MDB a lifeline in its struggle to stay solvent after running up debts of nearly $12 billion and missing previous debt repayment deadlines.