Saturday, 2 January 2021

Kuala Lumpur-Singapore High Speed Rail project terminated; Malaysia has to compensate Singapore for costs incurred

They fail to agree on Malaysia's proposed changes; both countries commit to maintaining ties
By Tham Yuen-C, Senior Political Correspondent, The Straits Times, 2 Jan 2021

The twice-delayed high-speed rail (HSR) project between Singapore and Malaysia will no longer go ahead, after both countries were unable to reach an agreement on changes proposed by Malaysia.

The termination of the agreement was announced by Prime Minister Lee Hsien Loong and his Malaysian counterpart, Tan Sri Muhyiddin Yassin, yesterday, and came amid recent rumours that Malaysia had decided to build the line alone.

Negotiations hit an impasse after Malaysia proposed changes due to the economic impact of the Covid-19 pandemic.

In their joint statement, the prime ministers, who had spoken via videoconference on Dec 2, said: "Both governments had conducted several discussions with regard to these changes and had not been able to reach an agreement. Therefore, the HSR agreement had lapsed on Dec 31."


Malaysian Minister in the Prime Minister's Department Mustapa Mohamed said yesterday that his government had wanted to bring forward the construction phase and also proposed a new project structure which would have provided more financing options.

He added that Malaysia will honour its obligations and both countries will initiate the necessary procedures to determine the amount of compensation.

PM Lee and Mr Muhyiddin also said: "Both countries remain committed to maintain good bilateral relations, and cooperate closely in various fields, including strengthening the connectivity between the two countries."


The writing was on the wall after Malaysian news reports in recent months suggested that the Malaysian Cabinet was planning to continue on its own and end the line in Johor instead of Jurong.

Yesterday's statements did not detail the compensation amount that Malaysia has to pay Singapore.

Singapore's Transport Ministry said that as Malaysia allowed the agreement to lapse, it will have to compensate Singapore for costs already incurred.

Based on earlier estimates, Singapore had already spent more than $250 million for design, manpower and land acquisitions by the end of May 2018, then Transport Minister Khaw Boon Wan told Parliament in July that year.

He also said Singapore would continue to incur costs - over $6 million each month in June and July, and at least $40 million from August to the end of 2018.


When Singapore agreed to Malaysia's request for a suspension in August that year, more costs were incurred to compensate contractors for breaking contracts, and to fill back sites already excavated, for instance. Malaysia had agreed to reimburse Singapore $15 million for these abortive costs.

The 350km rail line, which Malaysia mooted and both sides agreed to build in 2013, was to have run from Bandar Malaysia in downtown Kuala Lumpur to Jurong East.

It would have had seven stations, and would have cut travel time between Kuala Lumpur and Singapore, one of the busiest air routes.

The trip would have taken 90 minutes on the HSR, compared with over four hours by car and about five hours end to end by air.


Singapore commenced work on the project, appointing a firm to design infrastructure and calling an international joint tender with Malaysia for an assets company, after both countries signed a legally-binding bilateral agreement in December 2016.

The project was put on hold following a change in the Malaysian government in May 2018. The two-year suspension was set to expire in May last year and extended for a second and final time till Dec 31.

The latest development has come under criticism by some in Malaysia, among them former prime minister Najib Razak, who said yesterday that a domestic line was not economically viable.

Meanwhile, observers do not expect a significant impact on bilateral ties, saying that the joint statement indicates a mutual agreement was reached on the termination.
















KL-Singapore High Speed Rail cancellation will have little impact on other plans for Jurong: Experts
Area's status as social and economic centre in the west will be maintained, they say
By Justin Ong, The Straits Times, 2 Jan 2021

The axing of the Kuala Lumpur-Singapore High Speed Rail (HSR) will have no immediate bearing on development plans for the Jurong region, which was slated to host the project's southernmost terminus, experts said yesterday.

Jurong's status as the economic and social centre in the west predated the HSR and will survive it, said Singapore University of Social Sciences' associate professor of economics Walter Theseira.

He said: "I believe our plans to continue developing the Jurong region remain unchanged; they were not contingent on the HSR being built."

The 350km line would have run from a terminal station in Bandar Malaysia, downtown Kuala Lumpur, to a terminal in Singapore's western Jurong area.

The surrounding Jurong Lake District was positioned, in 2017, as Singapore's future second Central Business District (CBD), with an ambitious 20-year blueprint for commercial, housing, nature and transport developments, along with the potential for creating some 100,000 new jobs.

Two years later, the Government announced that the district would include a new 7ha integrated tourism development from 2026.

Flexibility was worked into plans for the district, to cater for changing circumstances such as this, said the National University of Singapore's Assistant Professor Raymond Ong, who researches transport infrastructure.

"So the land that was acquired for the HSR can easily be reconfigured or redeployed to align with the long-term vision of the region."


Prof Theseira said that Singapore could wait and see how Malaysia progresses with reported plans to continue with a domestic, "downgraded" version of the HSR connecting KL to Johor Baru.

"(If) there is a realistic prospect that the system could be extended to Singapore and provide the same quality of service between Singapore and KL as originally planned... then we could always hold the land in reserve, or lease it out on a short-term basis," he said. "(Otherwise) we should just proceed with longer-term redevelopment with the land."

Mr Harrison Cheng, associate director of consultancy Control Risks, said the silver lining was that the JB-Singapore Rapid Transit System (RTS) Link rail shuttle service remains on track.

The first civil contract for its construction was awarded in November last year, with the second due in the first quarter of this year. The RTS Link should be operational by end-2026.

"There is much stronger consensus in Putrajaya, Johor and Singapore to implement this in time… HSR, by comparison, was far more contentious a proposition since Najib fell," said Mr Cheng.



















Timeline of events for terminated KL-Singapore HSR project
The Straits Times, 2 Jan 2021

In 2013, Singapore and Malaysia agreed to build a 350km high-speed rail (HSR) line between Kuala Lumpur and Singapore that would have cut travelling time to 90 minutes, compared with more than four hours by car.

Both countries announced yesterday in a joint statement that the HSR has been terminated, after an agreement could not be reached on changes proposed by Malaysia by the deadline of Dec 31.

Here is a timeline of key milestones in the now-defunct project.

FEB 19, 2013

Prime Minister Lee Hsien Loong and then Malaysian PM Najib Razak agree to build a high-speed rail link between Kuala Lumpur and Singapore after meeting at the Singapore-Malaysia Leaders' Retreat in Singapore.

OCT 9, 2015

Singapore and Malaysia jointly launch a request for information for the high-speed rail project.

JULY 19, 2016

PM Lee and Najib witness the signing of a memorandum of understanding for the HSR.

DEC 13, 2016

Singapore and Malaysia sign a legally binding bilateral agreement to build the new rail line, with a target to have trains running by Dec 31, 2026. The HSR is hailed as a "marquee project".


DEC 20, 2017

Singapore and Malaysia call an international joint tender for an assets company that will be responsible for designing, building, financing and maintaining all rolling stock as well as rail assets for the HSR.

MAY 28, 2018

New Malaysian Prime Minister Mahathir Mohamad, whose coalition defeated Najib's in the May election, says the country has made "a final decision" to drop plans for the HSR.

He says the project would cost Malaysia RM110 billion (S$36 billion) and will not earn it a single cent.

JUNE 11, 2018

Tun Dr Mahathir backtracks on his earlier comments, and says the HSR is temporarily shelved due to its high costs.

SEPT 5, 2018

Malaysia and Singapore sign an agreement to postpone work on the HSR for about two years, up to May 31, 2020. The HSR is now expected to commence by Jan 1, 2031.

Under the deal, Malaysia agrees to reimburse Singapore $15 million by end-January 2019 for abortive costs incurred by the deferment of the mega project.

The deferment also sees both sides call off the ongoing international joint tender for the assets company.

MAY 31, 2020

Singapore agrees to further suspend the HSR project for seven more months till the end of the year. Then Transport Minister Khaw Boon Wan says the Republic agreed to Malaysia's request in the spirit of bilateral cooperation.

NOV 26, 2020

The Ministry of Transport says Malaysia has proposed changes to the HSR, and Singapore has been discussing them in good faith.

DEC 2, 2020

PM Lee and new Malaysian Prime Minister Muhyiddin Yassin discuss the project via videoconference.

JAN 1, 2021

The HSR project is terminated, after both countries fail to reach an agreement on changes proposed by Malaysia by the deadline of Dec 31.













Majority of 80 staff affected will remain in roles at LTA
By Justin Ong, The Straits Times, 2 Jan 2021

Out of 80 staff affected by the termination of the Kuala Lumpur-Singapore High Speed Rail (HSR) project, the majority will remain in roles at the Land Transport Authority (LTA), where they were deployed when the project was suspended in 2018.

The 80 employees worked for SG HSR, an infrastructure company under LTA which will assist the rest of the officers in transitioning to other suitable roles within either the authority or the wider public service, said LTA yesterday.

It also confirmed that no new tenders have been called since the suspension of the project in September 2018.


In July 2018, then Transport Minister Khaw Boon Wan told Parliament that SG HSR had formed a team of more than 100 specialists to build, own, fund and maintain the HSR civil infrastructure in Singapore. SG HSR had called five tenders to construct civil infrastructure within Singapore.

A few months later in September, a two-year delay was agreed on. SG HSR then said that its staff of more than 100 would be offered alternative jobs in LTA, with the company's work to be scaled down until the project resumed.

Under the terms of the deferment in 2018, both sides called off the ongoing international joint tender for a company to oversee rolling stock and rail assets for the HSR.

In agreeing to the suspension, Singapore also incurred more costs in compensation to contractors for breaking contracts, Mr Khaw told Parliament.

Malaysia had agreed to reimburse Singapore $15 million for these abortive costs.

In May 2018, Mr Khaw noted that Singapore had already racked up an estimated bill of more than $250 million for work on the project, and would continue to incur costs of more than $6 million in June, more than $6 million in July, and at least $40 million from August to the end of 2018.













How COVID-19 killed the Kuala Lumpur-Singapore HSR project
By Shannon Teoh, Malaysia Bureau Chief, The Straits Times, 2 Jan 2021

Malaysia's decision on Friday (Jan 1) to cancel the High-Speed Rail (HSR) project with Singapore was a painful one, say analysts, but a necessary move to shore up its domestic economy against the more immediate onslaught of the coronavirus pandemic.

The 350km link between Kuala Lumpur and Singapore costing an estimated RM60 to RM80 billion (S$19.8 billion to S$26.3 billion) would have slashed travel times between the countries, ramped up trade and boosted tourism when completed in 2031. Towns situated at key stops along the line in Malaysia had been expecting to welcome millions of ringgit in development and investment.

"The decision to terminate must have been a painful one at least on the Malaysian side, given that expeditious transport linkage with Singapore was viewed as transformational for the economy. But the slump brought about by the pandemic makes other domestic socio-economic priorities more urgent, leaving Malaysia in no position to proceed with the HSR at the moment," Singapore Institute of International Affairs' senior fellow Oh Ei Sun told The Straits Times.

The project, agreed to in 2013 and signed on in 2016, was temporarily shelved in 2018 by then prime minister Mahathir Mohamad, citing the high debt - over RM1 trillion - left behind by the previous administration of Najib Razak, which had initially pursued the rail link with Singapore.

The deadline to proceed was shunted further from May 2020 to December 2020, as both countries reeled from the coronavirus outbreak. But while Singapore could dip into its reserves to weather the downturn, Malaysia has had to borrow to fund stimulus packages that are expected to push the fiscal deficit to 6.0 per cent in 2020 and 5.4 per cent in 2021.

The recession from shutdowns to curb the spread of the coronavirus is set to cause Malaysia's economy to contract by 3.5 to 5.5 per cent in 2020. Kuala Lumpur had hoped to achieve a fiscal balance by 2023, a goal it has since abandoned.

Moreover, the sudden collapse of international travel during the pandemic would have given policymakers pause in investing to increase such capacity.

"It's a setback to medium-term aspirations of deeper Asean integration, but also a nod perhaps to the realisation that borders can be shut with startling speed and as seen with the aviation industry, result in dire circumstances for such transnational links," said Barclays' regional economist Brian Tan.


On Friday Minister in the Prime Minister's Department Mustapa Mohamed said the project was terminated after both countries failed to agree on changes proposed by Malaysia in light of the global outbreak.

He said "a number of alternatives to reduce the cost" explored since late-2018 had "become more urgent with the onset of the Covid-19 pandemic" that "adversely affected Malaysia's fiscal position".

"More importantly, the proposed changes to the project structure would have allowed us to leverage on the HSR project to accelerate Malaysia's economic recovery post the Covid-19 pandemic, by bringing forward the start of the construction phase by almost two years. This would have provided a much-needed boost to our construction sector and its supporting ecosystem," said Datuk Seri Mustapa, who is in charge of the Economic Planning Unit that oversees megaprojects like the HSR.

Official sources told The Straits Times that Malaysia's wish to accelerate the project's construction phase by two years implied removing the need for international tenders, and ensuring the RM60 billion or more it was ploughing in from public coffers would be mostly reaped by local contractors.

Firms from China, Japan and France had shown interest in bidding for HSR contracts but should a domestic tender be called, they would likely have to form JVs with Malaysian partners.

Mr Mustapa had said "a detailed study to explore all possible options" would now be conducted and explained "the new project structure" that could not be agreed with Singapore would have provided "the government the flexibility in financing options, such as deferred payments, public-private partnerships and the possibility of accessing financing at favourable rates". He did not provide further details.

However, Malaysian news reports have quoted unnamed sources as saying the Cabinet is looking at implementing the HSR without Singapore's involvement and terminating the line in Johor, just across the border with Singapore. Sources with knowledge of the matter have confirmed this option, telling The Straits Times that the existing Express Rail Link (ERL) that connects Kuala Lumpur to its international airport in Sepang some 57km away, could be extended with a potential station at Senai Airport, which serves Johor.


Former prime minister Najib slammed the decision to derail the HSR - a marquee project of his administration - saying "the dream of joining two of the largest economies and capitals in Asean will not be achieved" and "economic benefits for Malaysia from this project will shrink by trillions of ringgit".

Claiming the estimated tourism spend of Singaporeans in Malaysia was RM25 billion annually, Najib said "if the HSR can increase tourists from Singapore by just 50 per cent, the amount spent by Singaporeans could increase by RM12.5 billion per year". This would more than pay back the cost of the project within a decade, he concluded.

The former premier, who has been convicted of graft relating to the 1MDB scandal, also implied that cancelling the HSR and investing in a domestic alternative gave the current government free rein to award construction contracts.

"One of the benefits for the Malaysian government is that it can make all procurement decisions to hand contracts to any party compared to the JV model previously where all procurement and vendor selection must be evaluated, executed and supervised by both countries," he said in a Facebook post on Friday.



















*  Parliament: Singapore could not accept Malaysia's proposal to remove assets company from HSR project, says Transport Minister Ong Ye Kung
Project has cost Singapore more than S$270 million
By Toh Ting Wei, The Straits Times, 5 Jan 2021

Singapore could not accept Malaysia's proposal to remove the systems supplier and network operator of the high-speed rail (HSR) project as it constituted a "fundamental departure" from the original agreement, said Transport Minister Ong Ye Kung yesterday.

This "particularly significant change" to remove the Assets Company (AssetsCo) - which was necessary to protect the interests of both countries - had led to the termination of the Kuala Lumpur-Singapore HSR project, he said.


Malaysia had allowed the bilateral agreement to lapse on the deadline of Dec 31 last year, after both countries could not agree to changes it had proposed.

Responding to Workers' Party's Mr Louis Chua (Sengkang GRC) on the substantive differences that both sides could not agree on, Mr Ong noted that the cross-border HSR service, had it gone ahead, would have been a single train system operating between Singapore and KL.

"Because neither country has the expertise and experience in operating the HSR, we agreed under the HSR bilateral agreement to appoint a best-in-class industry player through an open and transparent international tender to assume the role of the AssetsCo," he said.


To Singapore, the AssetsCo is the "centrepiece" of the HSR project and is necessary to ensure that the interests of both Singapore and Malaysia are protected, he added.

"This will minimise the possibility of future disagreements and disputes over the long duration of the project, lasting decades," he said.

"Singapore, therefore, informed Malaysia that the removal of the AssetsCo constituted a fundamental departure from the HSR bilateral agreement, and could not be accepted."


With the project's termination, Malaysia has to compensate Singapore in accordance with the HSR agreements, Mr Ong noted.


Asked by WP's Mr Dennis Tan (Hougang) for the reasoning behind Malaysia's change in position on the AssetsCo, Mr Ong said he could not speak for the Malaysian government.

In response to Mr Melvin Yong (Radin Mas), Mr Ong said another proposed change by Malaysia - to connect the HSR to the Kuala Lumpur International Airport (KLIA) - would have led to the high-speed line sharing tracks with an existing rail line to the airport.

"The Express Rail Link is an existing train system model (that) runs at half the full speed of HSR, so should we have proceeded, there would have been many technical issues to resolve," he said.

"But having said that, the main concern for us was the removal of the AssetsCo."

He noted that some media reports had suggested Singapore was concerned that the proposal to reroute the HSR to KLIA would impact its air hub.

The issue has not been the key consideration during discussions, he said.

He added that the heavy air traffic between the two cities - which amounts to almost five million passengers a year - was why Singapore believed the HSR was "viable, mutually beneficial and strategic for the long term".

Both countries had inked the legally binding bilateral agreement in 2016 after three years of negotiations. At Malaysia's request, both sides signed a supplemental agreement in May 2018 to suspend construction of the project.

A second agreement was signed to extend the suspension to Dec 31, 2020, "with the explicit understanding that it would be the final extension", Mr Ong said.


The $270 million spent on the HSR is lower than an earlier estimate of about $300 million provided by previous transport minister Khaw Boon Wan in 2018, as Singapore had managed to wind down contracts and maintain activity at a low level, he said.

The compensation to be paid by Malaysia will include various abortive costs such as for consultancy services, design of infrastructure, and manpower to deliver the HSR project.

It will not include land acquisition costs, as the value of the land can be recovered, Mr Ong added.

Singapore is also verifying a "small component" of miscellaneous abortive costs" for the suspension of the project requested by Malaysia, he said.

The amount and schedule of payment is specified in the agreements, Mr Ong said, adding that he could not disclose the figure due to confidentiality reasons.

Malaysia's Minister in the Prime Minister's Department Mustapa Mohamed has said that Malaysia will honour its obligations, and both countries will initiate the necessary procedures to determine the amount of compensation.

Malaysia had in 2019 remitted $15 million to Singapore as payment for abortive costs the Republic incurred as a result of the initial suspension of the HSR project. This amount covered costs linked to the suspension, such as contract breakage and manpower, and is not part of the compensation.

In response to Mr Saktiandi Supaat (Bishan-Toa Payoh GRC), Mr Ong said Singapore remains willing to discuss any new proposal on the KL-Singapore HSR or similar projects in the future.

"Whether we are open to future discussions - of course, we are. But it should be on a clean slate after we settle the current HSR bilateral agreement," he said.













HSR termination will not affect overall plans for Jurong: Transport Minister Ong Ye Kung
By Toh Ting Wei, The Straits Times, 5 Jan 2021

The termination of the proposed high-speed rail project will not affect overall plans for the Jurong Lake District (JLD), said Transport Minister Ong Ye Kung yesterday.

He told Parliament that the Ministry of National Development had started planning to transform Jurong as early as 2008, as part of a broader effort to develop urban centres outside the Central Business District.

The plans for the JLD were therefore developed well before Malaysia proposed the current HSR project, Mr Ong said.

"It was only much later, in 2015, that we decided to locate the Singapore terminus of the HSR in Jurong," he noted in response to Mr Ang Wei Neng (West Coast GRC).

"The termination of the HSR project, therefore, does not affect the overall impetus and vision for JLD, although some details may need to be adjusted along the way."


Malaysia had allowed the HSR bilateral agreement to lapse on the deadline of Dec 31 last year, after both sides could not agree to changes it had proposed.

Had the project gone through, it would have cut travel time between Kuala Lumpur and Singapore to 90 minutes, down from about four to five hours by car.

The terminus station in Singapore was to be constructed in Jurong East, and would have been accessible by four MRT lines.

The surrounding JLD was positioned, in 2017, as Singapore's future second Central Business District, with an ambitious 20-year blueprint for commercial, housing, nature and transport developments, along with the potential for creating some 100,000 new jobs.

Mr Ong said yesterday that when completed, the JLD will be the largest commercial and regional centre outside of Singapore's city centre.

This would also bring businesses and recreation opportunities to the area, he added.

He said the land parcels that the Government has acquired are still needed to realise these plans.

"We will be able to realise the full potential of the land to benefit Singaporeans," he added.

For example, the Jurong Country Club site will provide for new mixed-use developments and community facilities, he said.

In May 2015, the Government had gazetted the acquisition of the 67ha plot of land, which is located beside Jurong Lake.

It had planned to use close to 20 per cent of the land for the HSR terminus.

The remainder of the land was earmarked to be transformed into a mixed-use development comprising offices, hotels, retail and residences.

Meanwhile, the Raffles Country Club site - which spans about 143ha - is still needed for the Cross Island Line's western depot and the integrated train-testing centre, said Mr Ong.

The Government had gazetted the acquisition of the land, located near Tuas, in January 2017.

It said then that the site was the most suitable location to run HSR tracks immediately after the bridge crossing from Johor, among other uses.







Parliament: Singapore-Johor RTS Link project progressing well, says Ong Ye Kung
By Toh Ting Wei, The Straits Times, 5 Jan 2021

The cross-border rail line between Singapore and Johor is progressing well, said Transport Minister Ong Ye Kung on Monday (Jan 4).

"The Johor Baru side has broken ground. On our side, we will break ground soon and we hope the project and the service can commence in 2026 as scheduled," he added.

Mr Ong was responding to Mr Ang Wei Neng (West Coast GRC), on whether the cancellation of the High-Speed Rail project has any impact on the RTS Link.

The project was first announced in 2010, and was initially set to be completed in end-2024. But it was suspended in 2019 at Malaysia's request for a review, before officially resuming in July last year.


When completed, the 4km link will connect passengers between Johor's Bukit Chagar terminus station and the Singapore terminus in Woodlands North. The trip between both stations should take five minutes.

The RTS Link will carry up to 10,000 passengers per hour in each direction.

It should ease congestion on the Causeway and make the Singapore-Malaysia border more easily accessible, both countries have said.

The Land Transport Authority had awarded the first RTS civil contract - worth $932.8 million - in November last year to Penta-Ocean Construction, to build the RTS Link Woodlands North Station, tunnels and the Customs, Immigration and Quarantine building in Singapore.

The second contract for the project will be awarded in the first quarter of this year, the LTA said then.










Strong reactions in Malaysia to termination of KL-Singapore HSR project
By Nadirah H. Rodzi, Malaysia Correspondent, The Straits Times, 5 Jan 2021

KUALA LUMPUR - The termination of the Kuala Lumpur-Singapore high-speed rail (HSR) project has drawn strong reactions in Malaysia, with two state governments urging the government to continue with the project, while members of the public clamour for more details on what went wrong.

Some said that while Covid-19 was partly to blame for the termination as the government needed to divert funds to fight the pandemic, the multibillion-dollar project would have helped local economies rebound faster from the deep slump.

Several asked the Malaysian government to respond to Singapore Transport Minister Ong Ye Kung’s explanation in Parliament on Monday (Jan 4) that the Republic could not accept Malaysia’s proposal to remove Assets Company (AssetsCo), the project’s systems supplier and network operator, as it constituted a “fundamental departure” from the original agreement.


In Melaka state, where an HSR station was to be built, Chief Minister Sulaiman Md Ali said the project’s cancellation has slightly affected a planned economic corridor to join the planned Ayer Keroh station to an economic zone by the Strait of Malacca.

“Before this we were confident that if the HSR has its station in Melaka, it will definitely be a hub that can provide abundant benefits to all,” Datuk Seri Sulaiman told reporters on Sunday.

The KL-Singapore HSR project was terminated after Malaysia allowed the bilateral agreement to lapse on the deadline of Dec 31, 2020.

Johor, which could have had three HSR stations under the plan, hopes that the government will continue with the HSR, with the line from Kuala Lumpur ending in Johor Baru, said Menteri Besar Hasni Mohammad.

“Among the things we in Johor hope for is that the HSR project would proceed even if it does not include Singapore,” he told reporters last Saturday.

There has been media speculation of a revised alignment of the HSR line, with the Johor Baru terminal ending near the JB-Singapore Rapid Transit System (RTS) station. The 4km RTS Link is expected to be completed by 2026, linking Johor Baru’s Bukit Chagar station to Singapore’s Woodlands North MRT station.


Datuk Seri Mustapa Mohamed, Minister in the Prime Minister’s Department, who was involved in the HSR discussions, said that among the changes Malaysia was seeking was a new structure that would allow the government to avoid giving a RM60 billion (S$19.7 billion) guarantee for the project, for a 30-year period.

With the Covid-19 pandemic, the government is forced to find ways to reduce the cost of several mega projects while ensuring economic recovery, he wrote in a Facebook post on Monday. “These developments resulted in the original terms, which were signed under bilateral agreements in 2016, no longer being viable for Malaysia,” he said.

Several people left comments on the post asking Mr Mustapa to respond to Mr Ong’s explanation about AssetsCo.


Meanwhile former Malaysian prime minister Najib Razak also took to Facebook on Monday to weigh in on the issue.

He said: “In the past when I worked on this project, I deliberately wanted both countries to be responsible for the success of the project so that irregularities could be reduced or avoided.

“But the PN (Perikatan Nasional) government’s approach is quite different. They want to select project contractors and vendors directly without the intervention of Singapore.”





Malaysian minister expects HSR compensation to be less than $270 million
The Straits Times, 6 Jan 2021

Malaysia expects to pay less than $270 million to Singapore for the termination of the high-speed rail (HSR) project, said a Cabinet minister who was deeply involved in discussions on the project.

Datuk Seri Mustapa Mohamed, Minister in the Prime Minister's Department (Economy), was referring to remarks in the Singapore Parliament on Monday by Transport Minister Ong Ye Kung that the Republic has spent about $270 million on the project.

"The Transport Minister also said the compensation would not include land costs and we are made to understand that the Singapore Government has acquired several pieces of land to implement the project.

"Therefore, we are confident that the compensation cost will be much lower than $270 million. Anyway, the matter has not been finalised and will be discussed soon," Mr Mustapa said in an interview on Astro Awani TV station on Monday evening, as quoted by Bernama news agency.

Malaysia had allowed the bilateral agreement to lapse on the deadline of Dec 31, 2020, after both sides could not agree to changes it had proposed.

Mr Ong said in Parliament that costs incurred so far included abortive costs for consultancy services, design of infrastructure and manpower required.

Singapore received some $15 million from Malaysia in 2019, arising from the latter's request to suspend the project in 2018.


The compensation amount and the schedule for payment are both specified in the legal agreements, said Mr Ong. But due to confidentiality obligations, Singapore cannot reveal the exact terms of compensation for the termination of the HSR project, he said.

Mr Ong said the compensation will not include land acquisition costs, since the value of the land can be recovered. There is also a small component of miscellaneous abortive costs that Singapore is currently verifying, he said.

Mr Mustapa said Malaysia will honour its obligations on the compensation, and both countries will initiate the necessary procedures to determine the amount.

Mr Mustapa wrote on Facebook on Monday that the compensation amount cannot be disclosed as both countries are bound by a confidentiality clause in the agreement. But he said in the TV interview that the government would announce the compensation amount as soon as it is finalised, Bernama reported.


REMOVING ASSETSCO

Explaining why the Malaysian government wanted to remove the services of Assets Company (AssetsCo) during the HSR discussions, Mr Mustapa said the government would have saved 30 per cent of costs by not using its services.

Mr Ong said on Monday that Singapore could not accept Malaysia's proposal to remove AssetsCo, the systems supplier and network operator of the HSR project, as it constituted a "fundamental departure" from the original agreement.

Mr Ong said this "particularly significant change" to remove AssetsCo - which was necessary to protect the interests of both countries - had led to the termination of the Kuala Lumpur-Singapore HSR project.

Said Mr Mustapa on the TV programme: "The Malaysian government had given a 30-year guarantee to AssetsCo amounting to RM60 billion (S$19.7 billion), or about RM2 billion annually.

"The guarantee would mean that if the payments to AssetsCo were less than RM60 billion, the government must pay by using other revenue to cover the gap. This is also a form of savings," he said, as quoted by Bernama.

Mr Mustapa was further quoted as saying that taking into account the design, stations and other things with the approach without AssetsCo, the overall estimated cost savings was 30 per cent.


Malaysia, the Cabinet minister said, is still interested to continue the HSR project but the Covid-19 pandemic has forced the government to review the implementation model.

"According to a study, the benefits to the economy over 50 years would total about RM300 billion. The benefits are great, which is why we are still keen to implement the project.

"It's only the model, or method, that we felt may not be appropriate amid the Covid-19 situation," he said, as quoted by the news agency.



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