HSR agreement with S'pore terminated, Malaysia to pay compensation

·3-min read
HSR agreement with S'pore terminated, Malaysia to pay compensation
HSR agreement with S'pore terminated, Malaysia to pay compensation
  • UPDATED 9.50AM | Added comments from joint statement by Muhyiddin and Lee Hsien Loong.

The Singapore government has confirmed that the Kuala Lumpur-Singapore High Speed Rail (HSR) bilateral agreement with Malaysia has been terminated.

Singapore's Transport Ministry said Malaysia had wanted to make changes to the rail line and this was discussed between the governments of the two countries that ultimately led to the decision to terminate.

Singapore Prime Minister Lee Hsien Loong and Malaysia Prime Minister Muhyiddin Yassin met via video conference on Dec 2, 2020, to review the status of the HSR project, including changes proposed by Malaysia.

"Malaysia has since allowed the HSR bilateral agreement to be terminated, and has to compensate Singapore for costs already incurred by Singapore in fulfilling its obligations under the HSR bilateral agreement, in accordance with the parties' agreement," said the Singapore Transport Ministry in a statement.

The transport ministry did not disclose the amount of compensation Malaysia has to pay.

The Edge Markets previously reported that a termination could cost Malaysian taxpayers about RM300 million.

The transport ministry said it hoped to maintain good relations with Malaysia despite the termination.

"Our relationship with Malaysia is deep and multi-faceted, and we look forward to continued good relations and close cooperation with Malaysia for the mutual benefit of the people of both countries," it said.

In a separate joint-statement later, Muhyiddin and Lee said Malaysia and Singapore were unable to reach an agreement over the proposed changes to the HSR.

Malaysian economy prompted changes

They said the changes proposed by Putrajaya were in view of the state of Malaysia's economy.

Malaysia's deficit this year is expected to skyrocket to six percent from an initial target of 3.2 percent.

"In light of the impact of the Covid-19 pandemic on the Malaysian economy, the government of Malaysia had proposed several changes to the HSR project.

"Both governments had conducted several discussions with regard to these changes and had not been able to reach an agreement.

"Therefore, the HSR agreement had lapsed on Dec 31, 2020," they said.

The two leaders said both countries would abide by their respective obligations and proceed with the "necessary actions" resulting from the agreement's termination.

However, they made no mention concerning the quantum of compensation.

Muhyiddin and Lee also said they remain committed to maintaining good bilateral ties.

The KL-Singapore HSR bilateral agreement was signed in 2016, but construction was suspended in September 2018.

The previous Pakatan Harapan government had estimated the project to cost up to RM100 billion.

Malaysia requested multiple extensions following the suspension which lapsed on Dec 31 last year.

Putrajaya had reportedly wanted to link the HSR to the Kuala Lumpur International Airport, a change which was rejected by Singapore.

Under the original plan, the HSR was to have stops at Bandar Malaysia, Sepang-Putrajaya, Seremban, Ayer Keroh, Muar, Batu Pahat, and Iskandar Puteri in Malaysia as well as Jurong East in Singapore.