Mr Schroeder hopes to send a "very important political signal'

German telecoms and engineering giant Siemens has more than doubled its stake in a huge railway project in Malaysia.

Siemens made the announcement as German Chancellor Gerhard Schroeder opened the firm's new regional headquarters in the Malaysian capital, Kuala Lumpur.

The German Chancellor is visiting Malaysia at the start of a four-nation tour of South East Asia, which will also take in Singapore, Indonesia and Vietnam.

Siemens said it was taking over systems engineering work on a north-south railroad in Malaysia from Canadian firm Bombardier, Reuters news agency reported.

Hoping for more

"The takeover raises the value of the order for Siemens by an additional 100m euros ($116m; �72m)," Siemens said in a statement.

"Up until now, Siemens' stake in the project was 71m euros," the firm added.

Siemens is thought to be competing for a large slice of the contracts to build a trans-Asia rail line linking Singapore with Kunming in South China.

Malaysia is building three sections of the trans-Asia rail route, which will run through China, Vietnam, Laos, Thailand, Malaysia and Singapore, Reuters reported.

Construction of the rail link from Thailand to Singapore is costing about $2bn.

Chancellor Schroeder is being accompanied on his regional tour by Germany's Economics Minister, Wolfgang Clement.

His visit is the first-ever by a German chancellor to Malaysia and sends a "very important political signal", Germany's ambassador Jurgen Staks told BBC Radio.

However, worries about the regional outbreak of Sars have whittled down Mr Schroeder's entourage from a planned party of 120 business leaders to just 30.