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Malaysia-Singapore water deal: Singapore adamant on sticking to 1962 agreement

Singapore has expressed its reluctance to review the price of water originally stipulated under the 1962 Water Agreement, according to a statement by the Ministry of Foreign Affairs yesterday on 31 July.

In a meeting between Singapore’s Minister for Foreign Affairs Dr Vivian Balakrishnan and Malaysia’s Foreign Minister Saifuddin Abdullah in Singapore during the latter’s introductory visit on 30 July, Singapore has reaffirmed its “clear and consistent” stance, declaring that “Malaysia lost its right to review the price of water” under the agreement “in 1987”.

Earlier this month, Dr Balakrishnan brought up the issue of the water agreement in response to a question on bilateral relations between Malaysia and Singapore by Member of Parliament for Holland-Bukit Timah GRC, Christopher de Souza:

Let me reiterate Singapore’s clear and consistent position. We have stated this publicly many times before, including in this very Chamber, and our position is well-known to everyone, including to Malaysia.

The 62WA is not an ordinary agreement. The 62WA was guaranteed by both Malaysia and Singapore. This guarantee is in the 1965 Separation Agreement, which was in turn registered with the UN. Any breach of the 62WA would call into question the Separation Agreement, and Members would remember that the Separation Agreement is the basis for Singapore’s very existence as an independent sovereign state. Singapore will fully honour the terms of the 62WA, including the price of water stipulated in that agreement, and we expect Malaysia to do so.

Members will recall that then-Foreign Minister Professor S Jayakumar and then-Foreign Minister K Shanmugam had stated our position on this issue comprehensively on 25 January 2003 and 6 March 2014, respectively. Their key points remain as valid today as when they were first articulated. As was stated then, 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 agreement between our two countries.

Malaysia lost its right to review the price of water under the 62WA in 1987. Again, this is not a new point. We have made this point publicly on multiple occasions. In fact, Malaysia has previously acknowledged that they themselves chose not to ask for a review in 1987 because they benefitted. They benefitted from the pricing arrangement under the 62WA. Johor currently buys treated water from Singapore at 50 Malaysian sen per 1,000 gallons.

This price, and in fact even the volume, is provided for under the 62WA. Members of this House will know that 50 Malaysian sen per 1,000 gallons is a fraction of the true cost of treating the water. Hence, in 2002, then-Prime Minister Dr Mahathir said that Malaysia did not ask for a review when it was due as Malaysia knew that any revision would also affect the price of treated water sold by Singapore to Malaysia.

The then-Johor State Assembly Speaker Zainalabidin Mohd Zain also said, and let me quote what he said: “There was no point in [pressing for a review of the water price in 1986] because Johor was dependent on Singapore for its treated water supply, and Singapore would have also increased its price of treated water sold to Johor”.

The reason why I’m taking pains to recite all these to you is to make the point that Malaysia took a conscious decision not to review the price when they had an opportunity to do so and this is why, in fact, even to this day, Johor buys more treated water than it is entitled to strictly under the 62WA. These additional supplies of treated water that we have been selling to Johor, at Johor’s request, are sold at the same rate stipulated in the 62WA. This sale is made on a goodwill basis, and without prejudice to our rights under the 62WA.

In addition, if in 1987 Malaysia had exercised the right to review the price of water, Singapore might have made quite different investment decisions on developing the Johor River and its water catchment areas.

One example is the Linggiu Reservoir. In 1990, PUB and Johor signed an agreement to construct the Linggiu Dam to increase the yield of the Johor River in order to enable reliable abstraction of PUB’s full entitlement of 250 mgd. Johor owns the Linggiu Dam, but Singapore paid for its construction and continues to pay for its operation. These sums incurred are on top of the RM320 million (S$208 million at 1990 rates) that we paid to Johor in 1990 as compensation for the land used for the Linggiu Reservoir project and for the potential loss of revenue from logging activities, and as a one-time payment for the lease of that land for the remaining tenure of the 62WA.

Speaking to Bernama on 30 July, Saifuddin highlighted that the possibility of a review was certainly not out of reach after 1987, contrary to Singapore’s position.

“There is a clause about a review that surely we can look at,” said the Malaysian Foreign Minister, while acknowledging that Singapore had its own viewpoint regarding the matter.

Saifuddin said: “Surely we can continue the discussion. The agreement says the content of the agreement can be reviewed after 25 years. It doesn’t mean at 25 years . . . So, we can continue talking.”

Malaysian Prime Minister Dr Mahathir Mohamad has expressed his desire for a renegotiation of the water agreement, as he believed that it is disadvantageous to Malaysia, saying that it is “too costly” and “manifestly ridiculous.”