Kuala Lumpur-Singapore High-Speed Rail: How both sides reached deal to defer for two years

Ministers who led the talks disclose details of the give and take from S'pore and Malaysia

Coordinating Minister for Infrastructure and Minister for Transport Khaw Boon Wan (left) and Malaysian Economic Affairs Minister Azmin Ali inked the agreement at the Prime Minister's Office in Putrajaya, on Sept 5, 2018. PHOTO: REUTERS

When Malaysian Economic Affairs Minister Mohamed Azmin Ali first met minister Khaw Boon Wan in Singapore on Aug 11, he conveyed the Malaysian Cabinet's position that it would like the Kuala Lumpur-Singapore High-Speed Rail (HSR) project to be postponed for at least three to four years.

Mr Khaw, who is Coordinating Minister for Infrastructure and Minister for Transport, then met Mr Azmin in KL a week later and said Singapore was willing to consider a delay of one year, Mr Azmin recounted on Wednesday (Sept 5).

"Again, I went back to Singapore to appeal to our friends to consider for a longer period," Mr Azmin told a press conference in Putrajaya after both ministers signed a deal to defer the HSR for two years.

"I agree with minister Khaw that if the deferment period is beyond two years, the business model will certainly change and the cost will continue to escalate," he added, in reply to a question on the deal.

As both countries formally announced the deal to defer construction of the 350km line up to May 31, 2020, the two ministers who led the negotiations yesterday disclosed details of the give and take involved in talks between the two sides over the past few weeks to review the project as Malaysia's new government sought to cut costs.

Mr Khaw noted that although the HSR Bilateral Agreement has no provision for a project suspension, Singapore gave Malaysia's request serious consideration "in the spirit of bilateral cooperation".

  • Twists and turns in high-speed rail project

  • Feb 19, 2013: Prime Minister Lee Hsien Loong and then Malaysian Prime Minister Najib Razak announce at their Annual Leaders' Retreat that they have agreed to have a high-speed rail (HSR) link that will slash travel time between Kuala Lumpur and Singapore to just 90 minutes by 2020.

    Dec 7, 2013: A high-speed rail work group is formed to discuss and jointly recommend requirements for the project.

    April 7, 2014: Malaysia says the HSR terminal in Kuala Lumpur will be in Bandar Malaysia, an upcoming development about 5km from the Petronas Twin Towers, while Singapore names three possible locations for Singapore's terminal: Tuas West, Jurong East and the city centre.

    Oct 22, 2014: Malaysia confirms the HSR will have seven stops on its side: Kuala Lumpur, Putrajaya, Seremban, Ayer Keroh, Muar, Batu Pahat and Nusajaya.

    May 5, 2015: PM Lee announces that the Singapore terminus will be in Jurong East. He also says the project will not be completed by the 2020 target year, as it is unrealistic, given the complexity of the 350km route.

    Oct 21, 2015: Pakatan Harapan says that if it wins federal power, it will scrap the project.

    July 19, 2016: Mr Lee and Datuk Seri Najib witness the signing of a memorandum of understanding on the HSR. It is not legally binding, but indicates firm commitment on both sides and that major issues have been ironed out. The agreement sets 2026 as the target year for the HSR to start running.

    Dec 13, 2016: Mr Lee and Mr Najib witness the signing of a legally binding agreement on the HSR. It marks the formal start of the implementation stage for the project and includes key details such as how it will be funded and how joint tenders will be decided. It also specifies a target date for trains to start running: Dec 31, 2026.

    May 12, 2018: Newly elected Prime Minister Mahathir Mohamad says his government will review all foreign contracts and projects, including the HSR.

    May 26, 2018: Tun Dr Mahathir says his government may drop the project, and is looking at how it may reduce the compensation to Singapore if it does do so.

    May 28, 2018: Dr Mahathir tells reporters that Malaysia wants to scrap the HSR to slash its federal debt. Cancelling it could incur a penalty of $500 million, but he says he is unsure if this is in ringgit or Singapore dollars.

    June 12, 2018: Dr Mahathir says the project has been postponed, not scrapped.

    July 9, 2018: Transport Minister Khaw Boon Wan tells Parliament that Singapore has spent more than $250 million on the project, and is likely to expend another $40 million or so by year-end as it waits for Malaysia to clarify its position.

    July 19, 2018: Dr Mahathir says Malaysia, to avoid paying compensation, will negotiate to defer the project.

    July 20, 2018: Singapore's Transport Ministry asks Malaysia to give a written response by July 31 clarifying its position on the project.

    Sept 5, 2018: Singapore and Malaysia ink an agreement to delay the HSR by two years, with Malaysia paying Singapore $15 million for suspending work on it.

"After several rounds of discussions with minister Azmin, we have reached a fair arrangement on the way going forward," he said.

There is a limit to how far the project can be postponed, said Mr Khaw, as fiscal projections become increasingly uncertain going further into the future.

A joint statement issued by both countries said Malaysia and Singapore will continue to discuss the best way forward for the HSR project during the suspension, "with the aim of reducing costs".

The decision to suspend the project will impact a number of stakeholders, from existing contractors to potential bidders for the HSR, Mr Khaw noted.

"They have been concerned about the future of the project and are continuing to incur costs. So today's announcement will help to clarify the situation," he said.

In response to queries, a Ministry of Transport spokesman said registered bidders have been informed that the HSR Assets Company tender will be aborted "with immediate effect". As for ongoing contracts, the spokesman said infrastructure company SG HSR and the Land Transport Authority (LTA) have informed affected contractors of the suspension and will be engaging them directly.

SG HSR said over 100 of its affected staff will be offered alternative jobs in LTA, and SG HSR's work is expected to be scaled down until the project resumes.

The Government acquired Jurong Country Club in 2016 to make way for the HSR terminus station. A Singapore Land Authority spokesman yesterday said the acquired land will continue to be used for the HSR when work resumes. "We do not foresee any major impact on the overall development plans for the Jurong Lake District."

Former chairman of the Government Parliamentary Committee for Transport Cedric Foo described the deferment as an "excellent outcome", given the earlier uncertainty. He noted the new legally binding agreement and the clarity provided. It would have been ideal if the project could proceed based on the original agreement, Mr Foo said. "But if doing so comes with a deterioration of ties, that is a very high price to pay."

On whether he was confident the project would proceed after May 2020, he said: "I don't think we should speculate... Given the fact that both parties signed, one must assume they are serious about the dates."

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A version of this article appeared in the print edition of The Straits Times on September 06, 2018, with the headline Kuala Lumpur-Singapore High-Speed Rail: How both sides reached deal to defer for two years. Subscribe