Singapore says high-speed rail link with Malaysia tripped up by disagreement over ‘assets company’, seeks further compensation
- Transport Minister Ong Ye Kung said Malaysia did not want to appoint a firm that would operate the network and be accountable to both countries
- Ong had previously said that the assets company was the ‘centrepiece’ of the project and was needed to ensure the interests of both countries were met
Transport Minister Ong Ye Kung said during the first parliamentary sitting of the year that a “particularly significant change” – that Singapore could not agree with – was to remove from the project a so-called assets company that would construct, run and finance the 350km rail network and its systems. This company would be accountable to both sides.
Reuters had previously reported, quoting people close to the bidding process, that companies from China, Japan, South Korea and Europe had expressed interest in winning an international tender to supply the train system and manage the network‘s assets.
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Although the two sides had agreed on a joint tender for the project, they ultimately never awarded a contract.
Ong said that to Singapore, the assets company was to be the “centrepiece” of the high-speed rail project, and that it was necessary “to ensure that the interests of both countries” would be protected and minimise “the possibility of future disagreements and disputes over the long duration of the project, lasting decades”.
Malaysian authorities did not officially comment on why they wanted the removal of the assets company from the project.
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Mustapa Mohamed, Malaysia’s minister in the Prime Minister’s Department who is in charge of economic matters, also wrote in a Facebook post on Monday that the coronavirus pandemic had forced the government to re-evaluate the high-speed rail project.
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He did not specifically mention issues pertaining to the assets company, but said that the 2016 agreement was no longer viable for Malaysia. He added that the government had studied the business model for such a venture and had proposed a new project structure to Singapore – one that is widely used around the world and which could reduce spending by around 30 per cent.
Following the termination of the project, Ong said Malaysia was obliged to pay compensation according to the terms of the 2016 agreement, and this would include “various abortive costs but not land acquisition costs, since the value of the land can be recovered”.
The Singapore government has in the past few years acquired at least two plots of land that were previously country clubs to make way for the depot and terminus for the high-speed rail.
In addition to the amount already received from Malaysia, Singapore’s government is currently verifying a “small component of miscellaneous abortive costs” that it says are still owed. Ong said he was unable to disclose this amount due to confidentiality obligations, but did add that Singapore had spent just over S$270 million in total on the project.
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The termination of the agreement in no way means that Singapore has ruled out future discussions on the project, but such negotiations “should be on a clean slate”, Ong said.
He noted that there are about 5 million passengers that fly the Singapore-Kuala Lumpur corridor – the world’s busiest route, with 46 flights a day – every year, and the rail project was seen as a way to reduce the travel time from downtown Kuala Lumpur to Singapore’s central business district to 90 minutes from an average of more than four hours.
Still, Ong said Singapore looked forward to continuing building good relations with Malaysia, echoing comments made by leaders of both countries last week when they announced the termination of the project.
Meanwhile, media reports have emerged in the past month that Malaysia would proceed with its own high-speed rail project but would exclude Singapore, ending the track in Johor, which shares a maritime border with Singapore.
