Singapore will seek compensation for all costs incurred if Malaysia cancels the planned high-speed railway link with Kuala Lumpur, as relations sour under new Prime Minister Mahathir Mohamad.
Singapore Transport Minister Khaw Boon Wan told MPs that compensation would be sought under the terms of the 2016 bilateral rail deal signed by the former prime minister, Najib Razak.
“We will deal with the question of compensation from Malaysia for costs incurred by Singapore in accordance with the bilateral agreement and international law,” Khaw said. The minister added that the city-state expected to incur costs of around US$220 million by the end of 2018.
Foreign Minister Vivian Balakrishnan appeared irritated that Mahathir’s administration had not made diplomatic contact on the issue as work continued on the Singaporean side. An official note sent to the Malaysian government had gone unanswered, he complained.
“Singapore is continuing to incur costs on this project as we continue to meet our obligations under the [agreement] while awaiting Malaysia’s clarification,” Balakrishnan said.
Soon after taking office in May, Mahathir told the media he would cancel the rail link to Singapore as he addressed a budgetary crisis.
The decision is a setback to Chinese and Japanese construction and rail companies in Asia that were hoping to win contracts. The 350km line, with trains exceeding 300kmh, was hoped to begin operating in 2026, cutting the journey from five hours to 90 minutes.
On the issue of the untreated water supplied to Singapore from Malaysia, that Mahathir recently raised, Balakrishnan said Malaysia took a “conscious decision” not to revisit the price it was charging Singapore in 1987 when the 1962 water agreement was reviewed.
He told parliament the Malaysian border state of Johor bought treated water from Singapore at 17 Singaporean cents per thousand gallons under the 1962 agreement. He said that was “a fraction of the true cost of treating the water”.
He said Mahathir acknowledged this in 2002 towards the end of his lengthy first term as prime minister.
Balakrishnan said: “Malaysia has previously acknowledged that they themselves chose not to ask for a review in 1987 because they benefited from the pricing arrangement under the 1962 water agreement…Malaysia lost its right to revise the price of water.
“The core issue is not how much we pay but how any price revision is decided upon…Neither Malaysia nor Singapore can unilaterally change the terms of the agreement between our two countries.”
In June, Mahathir told Bloomberg he hoped to review the 1962 agreement as the price of water sold to Singapore was “manifestly ridiculous”.
Under the deal, Malaysia charges the Lion City a negligible 3 sen per thousand gallons and supplies Singapore with 250 million gallons per day.
Again he chose to speak to the media, rather than using diplomatic channels.
The land route between Kuala Lumpur and Singapore can be frustrating. Picture credit: Wikimedia