by SHAHEERA AZNAM SHAH / pic by BERNAMA
MALAYSIA’S suggestion to remove the assets company (AssetsCo) to manage the Kuala Lumpur (KL)-Singapore high-speed rail (HSR) was the primary concern that led to the project’s termination.
Singapore Transport Minister Ong Ye Kung told the country’s Parliament yesterday that Singapore could not accept Malaysia’s proposal to remove the systems supplier and network operator of the HSR project as it constituted a “fundamental departure” from the original agreement.
Singapore’s The Straits Times quoted Ong as saying that both countries had agreed under the HSR bilateral agreement to appoint a best-in-class industry player through an open international tender to assume the role of the AssetsCo as neither country had the expertise to operate the HSR.
Ong described AssetsCo as the “centrepiece” of the rail project to ensure that both countries’ interests are protected.
“This will minimise the possibility of future disagreements and disputes over the long duration of the project, lasting decades,” Ong said.
“Singapore, therefore, informed Malaysia that the removal of AssetsCo constituted a fundamental departure from the HSR bilateral agreement, and could not be accepted,” he added.
Both countries had inked the bilateral agreement in 2016 after three years of negotiations. In May 2018, both sides signed a supplemental agreement to suspend construction of the project at Malaysia’s request with a second agreement signed in June last year to extend the suspension to Dec 31, 2020.
However, the two parties could not iron out their disagreements over changes proposed by Malaysia before the suspension period lapsed on Dec 31, which led to the project’s termination.
Ong also told the Parliament that the country had spent an estimated S$270 million (RM821.73 million) on the HSR project.
The figure is lower than the S$300 million initially estimated as Singapore had managed to wind down contracts and maintain activity at a low level, Ong said.
He said the compensation will include various abortive costs, but not land acquisition costs, as the land’s value can be recovered.
Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed said in a Facebook posting yesterday Malaysia has yet to be notified on the compensation amount of cancelling the HSR project.
“The compensation is among the aspects that have been raised by various parties. Although I want to share the details, the amount has not been finalised yet.
“We are waiting for the cost details from Singapore, and once received, it will be reviewed before it is confirmed.
“However, the amount of compensation cannot be disclosed because it is under the bilateral agreement, and both countries are bound by the confidentiality clause,” he said.
Mustapa iterated that the compensation to the project cancellation is not punitive, but to cover specific costs spent by Singapore.
“The types of claims allowed have already been agreed. Therefore, any figures on compensation mentioned by any party are mere speculation,” he said.
Mustapa added that the Covid-19 pandemic has forced the government to revisit the project negotiation, which led to the cancellation, as an HSR between Singapore and Malaysia is no longer competitive.
“As a result of the review, we have proposed a new structure that in Malaysia’s view is not only neater, but also widely used by other countries including in Europe, the UK, Japan and South Korea,” he said.
The Malaysian government also proposed for the project’s construction to start two years earlier to accelerate the Malaysian economy’s recovery, particularly the construction sector, Mustapa said.
“The government is also proposing changes that will enable the HSR to be connected and integrated with Malaysia’s existing transport network more effectively. The proposed new project structure also prevents the government from guaranteeing RM60 billion for 30 years,” he said.
Mustapa said the government will conduct a detailed study to determine the next course of action and described plans for a KL-Johor Baru HSR as mere speculation.