MFA: Malaysia lost the right to review the price of water under the 1962 Water Agreement

Singapore has been clear and consistent that its position is that Malaysia has lost the right to review the price of water under the 1962 Water Agreement (62WA).

This was stressed by Ministry of Foreign Affairs in a response to media queries on Wednesday (13 March) that no review of the price of water has taken place in light of the disputes between the two countries.

The ministry stated that during the meeting between Prime Minister Lee Hsien Loong and Prime Minister Mahathir Mohamad on 12 November 2018, both sides expressed their differing views on the right to review the price of water under the 62WA.

They expressed their willingness for officials to have further discussions to better understand each other’s positions on the right to review the price of water under the 62WA, it noted.

The Attorneys-General of Singapore and Malaysia also met once in December 2018 for this purpose. However, their discussions did not make progress as they were overshadowed by the issues that had arisen over the Johor Bahru Port Limits and the Seletar Instrument Landing System (ILS) procedures.

There was certainly no agreement between the Attorneys-General on any matter related to the 62WA during their meeting, stated the ministry, noting that the Attorneys-General will meet again to continue their discussions.

Singapore also noted that Malaysian Foreign Minister Saifuddin Abdullah’s comments in the Malaysian Parliament on 12 March 2019 that “if they (Singapore) do not want to negotiate, we (Malaysia) should bring this to international arbitration”.

“Prime Minister Mahathir had also said earlier on 3 March 2019 that Singapore does not want to go to the “world court”, ostensibly because we would lose,” wrote the ministry.

The ministry then stressed that Singapore has always been prepared to settle disputes by recourse to appropriate international third-party dispute settlement procedures, on terms mutually agreed to by the parties.

The ministry said that as far back as 2003, then-Minister for Foreign Affairs S Jayakumar said that Singapore was prepared to agree to refer this matter to international arbitration by the Permanent Court of Arbitration in the interest of resolving the dispute.

Earlier this morning, current Malaysia’s Foreign Minister Saifuddin Abdullah responded to Singapore Foreign Minister Vivian Balakrishnan’s recent remarks against Malaysia in relation to the 1962 bilateral Water Supply Agreement, saying that it was reckless and unbridled.

The 1962 Water Agreement

Cited from Singapore National Library Board, the Johor River Water Agreement was signed on 29 September 1962 between the city council of the state of  Singapore and the government of the state of Johor.

Valid for 99 years till 2061, the agreement gave Singapore the right to draw 250 million gallons of water per day (1.14 million cubic metres) from the Johor River. In return, Johor was entitled to a daily supply of treated water from Singapore up to two percent of the raw water it supplied.

Singapore had to pay rent for the land it used “at the standard rate applicable to building lots on town land”. The water prices remained the same as in the previous agreement – 3 sen per 1,000 gallons of raw water supplied to Singapore and 50 sen per 1,000 gallons of treated water sold to Johor.

After Singapore and Malaysia stopped using a common currency in 1973, the prices became denominated in Malaysian ringgit.

The 1961 and 1962 agreements provided for a price review after 25 years, with arbitration being the agreed course of action if bilateral price negotiations failed. However, the Johor government chose not to revise the prices at both opportunities, in 1986 and 1987.

The Independence of Singapore Agreement (also known as the Separation Agreement) signed between the governments of Singapore and Malaysia on 9 August 1965 guaranteed the 1961 and 1962 water agreements.

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