While it might be disappointing that the Kuala Lumpur-Singapore High-Speed Rail (HSR) project has been deferred for about two years, the agreement to do so takes the interests of both Malaysia and Singapore into account. In the former's case, the national debt has made the new political leadership take a hard-headed look at mega projects that would have drained the exchequer further. As a neighbour, Singapore cannot be immune to Malaysian exigencies. The win-win relationship which Singapore envisages with its northern neighbour cannot work if Malaysia loses in the process. However, Singapore, too, has its interests to uphold, not least in the area of how it invests public funds in joint projects.
The deal signed this week upholds that irreplaceable bilateral relationship. The two-year deferment allows Malaysia time to revitalise its finances so that the project can, perhaps, proceed. In the meantime, it has agreed to pay Singapore $15 million for abortive costs incurred by the deferment. Legally, it also remains liable for full compensation if the project does not resume. The project would be deemed terminated if there is no resumption of HSR construction by May 31, 2020. This timeframe is important because no commercial project can be open-ended. Its partners need deadlines confirmed by both sides so that they can focus seriously on the nitty-gritty of getting work done on the ground. Moreover, fiscal projections become increasingly uncertain as they move further into the future. Hence the importance of deciding on a cut-off date to determine whether the HSR is on or off.