M’sia Compensates S’pore S$102.8m for Incurred Costs in Abandoned HSR Project; Both Reached An “Amicable Agreement”

Looks like our hopes for travel to resume soon have been dashed yet again.

If you’re still confused as to why the High-Speed Rail (HSR) agreement was cancelled, basically, Malaysia had proposed some amendments to the agreement in view of the economic impact of COVID-19.

Both countries had worked hard to negotiate on the proposed changes but failed to reach an agreement by 31 December 2020, leading to it lapsing.

Transport Minister Ong Ye Kung revealed that the “main concern” that led to the cancellation was Malaysia’s suggestion to remove the assets company.

M’sia and S’pore to Close This Chapter Amicably

Malaysia has paid Singapore S$102,815,576 as compensation for the costs incurred for the development of the HSR project and a further extension of the initial two-year suspension, according to The Straits Times.

This comes after the joint statement between Singapore’s Transport Ministry and Malaysia’s Economic Planning Unit under its Prime Minister’s Department on Monday (29 Mar) announcing that both countries had reached an amicable agreement on the compensation amount.

Minister Ong also mentioned in a Facebook post on the same day that he was glad that Singapore and Malaysia “were able to close this chapter amicably, without affecting the good bilateral relations between our two countries.”

A spokesman from the Ministry of Transport (MOT) also responded to queries on why Singapore was compensated S$102.8 million when it had spent S$270 million on the development of the HSR project.

They explained that the S$270 million included land acquisition costs, which the Singapore government is not seeking compensation for as the value can be recovered.

“For example, one piece of land acquired will be used to develop the Integrated Train Testing Centre, which broke ground recently,” they noted.

The bulk of the final compensation was determined when Singapore accepted Malaysia’s request to suspend the project and was stipulated in the HSR agreements.

Timeline of Events

Back in 2016, both countries had signed an agreement witnessed by Prime Minister Lee Hsien Loong and then–Malaysian Prime Minister Najib Razak.

However, it was suspended in 2018 when the Malaysian General Elections led to a change in government. Then–Prime Minister Mahathir Mohamad expressed that he wanted to drop the project in order to control the country’s debt, reported TODAYonline.

The first suspension requested by Malaysia was in September 2018 and was to last for about 2 years. They had compensated Singapore S$15 million for the costs incurred.

On 31 May 2020, Malaysia requested one more extension till 31 December. That was to be the final deadline.

Discussions about the changes Malaysia proposed in November were, unfortunately, unable to be resolved by the end of 2020 which leads us to where we are today.

Despite the upset, Minister Ong notes that there are still many opportunities present for Malaysia and Singapore to work together.

“These include the issues Minister Vivian Balakrishnan discussed with leaders in Malaysia last week, such as the restoration of some air travel, which Ministry of Transport, Singapore will be very involved in, and also commuting via the Causeway.”

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