Malaysia hopes Singapore will agree to negotiate further over Water Agreement price

At the 9th Malaysia-Singapore Leaders’ Retreat in Putrajaya last week (9 April), Malaysia and Singapore came to an agreement to consider arbitration as a resolution to the water agreement issue.

In a joint statement, Prime Minister Lee Hsien Loong and his Malaysian counterpart Mahathir Mohamad said they noted their differing opinions on the right to review the price of water under the 1962 Johore River Water Agreement (1962 Agreement).

“Both leaders agreed for the Attorneys-General of both sides to discuss these differing positions. Both sides will seek amicable solutions, including the possibility of dispute resolution through arbitration on a mutually-agreed basis,” as written in the statement.

Malaysia’s foreign minister Saifuddin Abdullah told reporters from Malaysian national news agency Bernama on Tuesday (16 April) that Malaysia is hopeful that the Republic will concede to a “second phase of negotiations” over the 1962 Agreement which involves “price modality”.

“Arbitration means both sides have to agree, you cannot do arbitration unilaterally,” Mr Saifuddin reportedly said when questioned by Bernama on how arbitration would work between both countries to resolve the long-standing water issue.

“To be fair to my colleague from Singapore, I think they have not changed position,” added Mr Saifuddin, after officiating at the International Seminar on Global Issues at Universiti Teknologi Malaysia in Skudai, Johor.

He added: “So, I am very hopeful that even though this (water agreement) is a very delicate (issue), I am still hopeful that our Singaporean counterpart will agree that we should start talking about price but I know it is quite difficult for them.”

On the other hand, Singapore’s foreign minister Vivian Balakrishnan adamantly stated that Malaysia had lost its right to review the price of water under the 1962 Agreement when it chose not to do so in 1967, thus acknowledging that the pricing arrangement was favourable.

To recap, the agreement, which will expire in 2061, states that Singapore may draw 250 million gallons of raw water from Sungai Johor daily for three sen (S$0.01) per 1,000 gallons. In return, Johor will receive a daily supply of up to five million gallons of treated water, or two per cent of what was supplied to Singapore, for 50 sen (S$0.16) per 1,000 gallons.

Due to this inequity, Dr Mahathir then mooted that Malaysia should raise the price of the water sold to Singapore.