Compensation expected to be paid to S’pore lower than S$270mil spent by city-state: Malaysian minister Mustapa Mohamed, on KL-S’pore HSR contract termination

The compensation amount expected to be paid by Malaysia to Singapore as a result of the terminated KL-Singapore High-Speed Rail (HSR) bilateral agreement is lower than the S$270mil spent by the city-state, said Malaysian minister Mustapa Mohamed.

The Minister in the Prime Minister’s Department (Economy), in an interview with Malaysian news outlet Astro AWANI on Monday (4 December), noted that Singapore’s Transport Minister Ong Ye Kung said in Parliament that Singapore has spent over S$270 million on the project.

“The transport minister [Mr Ong] also said that the compensation would not include land costs. We also are made to understand that the Singapore government has acquired several pieces of land to implement the project,” said Mr Mustapa.

Such is why the Malaysian government was “confident that the compensation cost will be much lower than S$270 million”, he said.

“Anyway, the matter has not been finalised and will be discussed soon,” Mr Mustapa added.

On 1 January, the leaders of both countries—Singapore Prime Minister Lee Hsien Loong and Malaysia Prime Minister Muhyiddin Yassin—said in a joint statement that the HSR project would be discontinued, following the lapse of an agreement on the project on 31 December.

According to the statement, the Malaysian government had proposed several amendments to the project, in light of the effect of the global pandemic on the country’s economy.

Both countries failed to reach an agreement despite holding several discussions regarding the changes.

Mr Ong noted that one of Malaysia’s suggestions — the “main concern” which led to the project termination — was to remove the assets company.

He explained in Parliament on Monday that a joint tender was called for an assets company for the project to ensure the interests of both nations were protected and to minimise possible future disputes.

Given that neither Singapore nor Malaysia has experience with running a high-speed rail line, it was agreed that a “best-in-class industry player” would be appointed to be the assets company through an “open and international tender”.

The company would be tasked with supplying the train system as well as operating the network, being accountable to both sides of the border.

However, Mr Ong described Malaysia’s proposal to remove the assets company as a “fundamental departure” from the bilateral agreement between the two countries which Singapore could not accept.

As such, Malaysia allowed the agreement to be terminated, he said.

Touching on the joint company AssetCo, Mr Mustapa said that the Malaysian government would be able to save 30 per cent if it did not use the services of the firm.

“The Malaysian government had given a 30-year guarantee to AssetCo amounting to RM60 billion (S$19.7 billion), or about RM2 billion annually,” he said.

“The guarantee would mean that if the payments to AssetCo were less than RM60 billion, the government must pay via other forms of revenue to cover the gap. This is also a form of savings,” said Mr Mustapa.

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