KUALA LUMPUR -- Malaysian government signed an agreement with China's leading railways manufacturer, China South Locomotive and Rolling Stock Co Ltd on Monday, in a bid to encourage and promote technical cooperation in railway engineering and technology.

The Memorandum of Arrangement between CSR's subsidiary, CSR Zhuzhou Electric Locomotive Co Ltd and Ministry of Transport of Malaysia covers areas including railway engineering and technology, industrial resources on railway infrastructure, human resource development in railway engineering.

CSR has committed to invest up to 400 million ringgit ($128 million) to set up a "ASEAN Rail Center" in Batu Gajah of Malaysia's Perak state, which would cover full scope of work of production, assembly, testing, overhaul and refurbishment.

Fu Jianguo, Vice-President of CSR group, expected the plant to build 100 to 150 new train cars each year and refurbish around 150 upon its completion by 2014.

"It will help to boost economic growth, create jobs and greatly enhance the capacity of high-end rail equipment manufacturing in Malaysia."

Malaysian Prime Minister Najib Razak said CSR's cooperation with Malaysian government is a fine example of further enhancement of bilateral relations between Malaysia and China.

"Today, China is Malaysia's biggest trading partner globally and we in turn are China's biggest trading partner in ASEAN," Najib said.

"This is a good sign but we can do even better if our nations are able to further enhance the relationship."

CSR, based in Beijing and listed on Hong Kong as well as Shanghai Stock Exchange, has been developed into one of the major players in global railway transport industry and is one of the biggest by global sales revenue.

CSR ZELC has provided 38 sets of 6-car locomotives to Malaysia's train services. It has also been awarded the bid for 20 sets of light rail vehicles for Malaysia's AMPANG Line Extension Project.