Malaysia to pay Singapore compensation as HSR contract terminated upon Dec 31 suspension expiration

Ida Lim
·5-min read
In a statement today, Singapore’s Ministry of Transport noted that both countries had signed the Kuala Lumpur-Singapore High Speed Rail (HSR) Bilateral Agreement (BA) in 2016. — Reuters pic
In a statement today, Singapore’s Ministry of Transport noted that both countries had signed the Kuala Lumpur-Singapore High Speed Rail (HSR) Bilateral Agreement (BA) in 2016. — Reuters pic

KUALA LUMPUR, Jan 1 — Malaysia will now have to compensate Singapore for the cost it had already incurred on an initial planned project for a high-speed train to link the two nations, even as an agreement between the two neighbouring countries was terminated.

In a statement today, Singapore’s Ministry of Transport noted that both countries had signed the Kuala Lumpur-Singapore High Speed Rail (HSR) Bilateral Agreement (BA) in 2016.

The ministry said that construction of the HSR project was later suspended from September 2018 to December 31, 2020 at Malaysia’s request, with the understanding that the extension of the suspension period until December 31, 2020 would be the “final extension”.

The ministry added that both Singapore’s prime minister Lee Hsien Loong and Malaysia’s prime minister Tan Sri Muhyiddin Yassin had on December 2, 2020 met via videoconference to review the project’s status, including changes proposed by Malaysia to the project.

“Malaysia has since allowed the HSR BA to be terminated, and has to compensate Singapore for costs already incurred by Singapore in fulfilling its obligations under the HSR BA in accordance with the Parties’ agreement,” the ministry said.

It did not however specify the amount that Malaysia will be paying to Singapore as compensation.

“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,” the ministry also said.

A joint press statement today by both Muhyiddin and Lee also did not state how much Malaysia will have to pay to Singapore over the terminated HSR project agreement.

In the same joint statement, it was stated that the Malaysian government had proposed several changes to the HSR project in light of the impact of the Covid-19 pandemic on the Malaysian economy, but that both governments had not been able to reach an agreement after several discussions on these proposed changes.

“Therefore, the HSR Agreement had lapsed on December 31, 2020. Both countries will abide by their respective obligations, and will now proceed with the necessary actions, resulting from this termination of the HSR Agreement,” the statement said, without detailing out the obligations to be fulfilled and necessary actions to be taken.

“Both countries remain committed to maintain good bilateral relations and cooperate closely in various fields, including strengthening the connectivity between the two countries,” the two prime ministers said in the joint statement.

The initial plan for the KL-Singapore HSR project was to have a game-changing 90-minute rail trip, with the railway having eight stations ― seven in Malaysia and one in Singapore. The seven stations in Malaysia are currently stated as Bandar Malaysia, Sepang-Putrajaya, Seremban, Melaka, Muar, Batu Pahat and Iskandar Puteri, while the Singapore station was stated as Jurong East.

It is however currently unclear what the final route will be now following the termination of the agreement between Malaysia and Singapore.

Previously, Malaysia’s Land Public Transport Commission (Spad, now rebranded as the Land Public Transport Agency (Apad)) had stated that the HSR link was expected to cost passengers just 2.5 hours to travel between KL and Singapore, inclusive of the actual 90 minutes train journey, and estimated 15 minutes’ immigration checks in each country, as well as 15 minutes’ transfer time between the city centres and HSR stations.

This would compare against estimated travel times inclusive of immigration checks using planes (4.2 hours), buses (6.5 hours), intercity rail service KTM (9.5 hours), Spad had previously said.

On September 5, 2018, both Malaysia and Singapore had agreed to suspend ― at Malaysia’s request ― the construction of the HSR project until May 31, 2020, with Malaysia agreeing to bear the cost of suspending the project and both countries to discuss on the best way forward for the project with the aim of reducing costs.

Malaysia was reported on January 31, 2019 to have confirmed to Singapore that it had remitted S$15 million (RM45.6 million) as compensation for costs incurred by Singapore due to the project’s postponement.

With the project’s suspension until May 31, 2020, the KL-Singapore HSR service which was initially expected to start on December 31, 2026 was instead estimated to start by January 1, 2031 instead.

On May 31, 2020, Singapore’s Ministry of Transport confirmed that the Malaysian government would like to propose changes to the HSR project and had requested a seven month extension to allow for both countries to discuss the proposed changes.

The Singapore ministry had said that Singapore had agreed to a “final extension” of the project’s suspension by seven months to December 31, 2020, while Malaysia’s Minister of International Trade and Industry Datuk Seri Mohamed Azmin Ali later said in June that no compensation has been paid to Singapore for the postponement of the project which both countries had mutually agreed to defer until end 2020.

On December 24, 2020, business news outlet The Edge cited a source as saying that Malaysia is expected to pay RM300 million in compensation to Singapore after deciding to terminate the agreement between the two countries and to carry on the project without having the railway stop in Singapore.

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