Malaysia inks deal to defer HSR to 2020, to pay Singapore RM45m

Ida Nadirah Ibrahim
Minister of Economic Affairs Datuk Seri Mohamed Azmin Ali (centre) shakes hands with Singapore Transport Minister Khaw Boon Wan during a news conference in Putrajaya September 5, 2018. ― Picture by Hari Anggara

PUTRAJAYA, Sept 5 ― The Malaysian government signed today a supplementary agreement to defer the construction of the proposed High-Speed Rail (HSR) until May 31, 2020.

Putrajaya will have to bear the cost of RM45.1 million (S$15 million) to Singapore as part of the deal, which must be paid by end of January next year.

This is despite Azmin earlier this week having said that the Pakatan Harapan government would not need to pay any penalty over the deferment.

The supplementary agreement was signed by Economic Affairs Minister Datuk Seri Mohamed Azmin Ali on behalf of the Malaysian government and Singapore’s Transport Minister and Coordinating Infrastructure Minister Khaw Boon Wan.

“When I met with minister Khaw on August 27 and 28 in Singapore, we discussed in detail every single item presented,” Azmin said, after the Singapore government explained the cost involved to defer the project.

“Both had agreed that the abortive cost paid by Malaysia government will amount to S$15 million, which must be paid before end of January 2019.”

He then thanked the Singaporean minister for the agreement.

While Azmin said the possibility of discontinuing the project entirely was discussed, he declined to state what the compensation to do so would have been.

Khaw said his country agreed to defer the project due to Malaysia’s finances and explained that the compensation was needed as the postponement affected various parties.

“This decision to suspend will impact a number of stakeholders, existing contractors and potential bidders. They have been concerned about the future of the project.  

“By end of May 2020, we hope to see resumption of HSR. If not, the project will be deemed to be terminated and Malaysia will reimburse Singapore for the wasted cost we have incurred in fulfilling our HSR obligation until now,” he said.

Also present to witness the signing ceremony were Prime Minister Tun Dr Mahathir Mohamad, Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail, and Singaporean Deputy Prime Minister Teo Chee Hean.

Yesterday, Azmin said the estimated RM110 billion rail project was deferred indefinitely and no compensation must be paid for this.

Following a series of negotiations with the Singaporean development, Azmin said it was “a positive development” as both countries had reached a consensus on how to resolve the issues surrounding the HSR project.

In the legally binding agreement between the two nations for the project that was signed in 2016, there was no provision for a postponement.

Dr Mahathir announced shortly after Pakatan Harapan won the general election that the new government would terminate costly infrastructure projects that he said the country could not presently afford.

Aside from the HSR, the Malaysian government has secured the deferral of others such as the East Coast Rail Link and two gas pipeline projects previously awarded to Chinese firms.

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