On Monday Mar 29th, over S$102 million (~RM320,270,500) was paid by the Malaysian government in compensation to Singapore. According to ministers from both countries, the compensation was paid for terminating the Kuala Lumpur-Singapore High-Speed Rail (HSR) project.
The payment covers costs incurred for the development of the HSR project and costs in relation to the extension of suspension of the project. This adds up to the sum of S$102,815,576 (~RM320,270,500) which has been paid to Singapore. A joint statement from Singapore’s Transport Minister Ong Ye Kung and Malaysia’s Minister in the Prime Minister’s Department (Economy) Mustapa Mohamed covered this information.
The joint statement read “The two countries reached an amicable agreement on the amount following a verification process by the Government of Malaysia. This amount represents a full and final settlement in relation to the termination of the bilateral agreement.”
“Both countries remain committed to maintaining good relations and fostering close cooperation for the mutual benefit of the peoples of the two countries.”
Land acquisition cost included in the S$270 million
The Prime Ministers of both countries made a joint statement on Jan 1st. They announced the discontinuation of the HSR project, after the lapse of the agreement on Dec 31st, 2020.
Malaysia must compensate Singapore for costs already incurred by Singapore in fulfilling its obligations under the bilateral agreement according to Singapore’s Ministry of Transport. Both countries would “initiate the necessary” to determine the amount of compensation, and Malaysia would honour its obligations under the agreement according to Mr Mustapa.
On Jan 4th, Mr Ong reported in Parliament that Singapore had incurred more than S$270 million on the project. Abortive costs include costs for consultancy services, design infrastructure and manpower to deliver the project.
There is an obligation for Malaysia to pay termination compensation to Singapore according to the agreement. Mr Ong said the compensation includes various abortive costs. However, it excludes land acquisition costs as the value of the land is recoverable.
According the Singaporean Transport Minister, due to confidentiality obligations stated in the HSR bilateral agreement, Singapore is unable to reveal the “exact terms in relation to the compensation for the termination of the HSR project.“
Mr Ong explained that it is not possible to disclose the exact sum because of confidentiality obligations. However, it was a fixed amount specified in the agreements. The explanation was in reply to a query by MP Louis Chua (WP-Sengkang). Mr Chua asked if Singapore would be able to claim the full amount excluding land acquisition costs.
The sum of S$270 million includes land acquisition costs according to a Singapore Ministry of Transport spokesperson on Monday.
The spokesperson said “Because (the) Singapore Government can recover value from the land we acquired, we are not seeking compensation for it.“
“For example, one piece of land acquired will be used to develop the Integrated Train Testing Centre, which broke ground recently. For the final compensation amount of S$102 million, the bulk of it was computed and determined when we acceded to Malaysia’s request to suspend the project, and was stipulated in the HSR agreements.”
Good bilateral relations
On Monday, Mr Ong said in a Facebook post that he is glad the closing of this chapter was amicable. He also said the good bilateral relations between the two countries remains unchanged.
Singapore and Malaysia have many opportunities to cooperate on, according to Mr Ong. This includes various issues that Singapore’s Foreign Minister Vivian Balakrishnan and Malaysia’s leaders discussed just last week.
Mr Ong says two such issues include commuting via the Causeway along with the restoration of “some air travel.”
Estimated potential from the HSR Line project
Implementing the HSR line was with with three main benefits in mind. Firstly, travel between Singapore and Malaysia’ capital, Kuala Lumpur, would have been drastically cut short. The current time taken for this route is 11 hours by train. The HSR line would have slashed the 11 hours to just 90 minutes travelling time, had the proposed 350km HSR line materialized. The project would have created more than 100,000 jobs on both sides of the Causeway. It’s aim was to bring in approximately RM21 billion (S$6.7 billion) in gross domestic product (GDP) to both countries by 2060.
30th March 2021 23:00
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