Malaysia to negotiate deferment of high-speed rail link with Singapore, says Mahathir

KUALA LUMPUR - Malaysia will negotiate a deferment with Singapore on the Singapore-Kuala Lumpur high-speed rail (HSR) project as it looks to avoid paying compensation, Prime Minister Mahathir Mohamad said on Thursday (July 19).

“The problem is that if we just unilaterally discard the agreement, we have to pay a high compensation,” Tun Dr Mahathir told reporters in Parliament.

“We cannot say that we will never build this HSR but at this moment, we don’t have the funds,” he said. “We need to delay”.

Dr Mahathir said discussions will be carried out when Malaysian Economic Affairs Minister Azmin Ali visits Singapore by the end of the month.

Datuk Seri Azmin said “everything” in the agreement needs to be relooked. 

“The entire project needs to be reviewed,” he told reporters, adding that the government would consider if a supplementary agreement is needed. 

“The priority is quite clear. We want to reduce the debt that we are facing now,” he said on the sidelines of Parliament proceedings. “Maybe if the project is viable at a later stage, then we can discuss. But our priority now is to cut cost and reduce government debt.”

Malaysia’s new government has revealed that the country’s debt has soared to over RM1 trillion (S$337 billion), and it intends to cut the debt by renegotiating or holding off mega projects.

The Pakatan Harapan (PH) administration has already issued a stop-work order for the East Coast Rail Link (ECRL) while it reviews the project and pushed down the LRT3 rail cost.

In May, Dr Mahathir said the Cabinet had agreed to scrap the HSR. But he backtracked in June, saying the rail project will be postponed instead.

“In a way, it's postponed. At this moment, we need to restudy and, if we are short of funds, we can delay the implementation of the project or reduce the scope of project,” he said during a trip to Tokyo.

 
 

The HSR, inked during former premier Najib Razak’s tenure in office, will cut travel time between Singapore and Kuala Lumpur to 90 minutes, compared with more than four hours by car.

But PH says the price tag for the project, estimated at RM110 billion, is too high.

Najib said the HSR cost estimate was RM72 billion but the new government alleged there were hidden costs and interests, which would inflate prices beyond the initial price tag.

Singapore Transport Minister Khaw Boon Wan said earlier this month that Singapore has already spent $250 million on the project and is likely to pour in another $40 million by year end.

“This is actual money that has already been spent,” he said. "We can recover value for some of the expenditure... But a significant amount which has been spent will be completely wasted expenditure if the project does not proceed.”