Malaysia took a “conscious decision” not to revisit the price of raw water that it was selling to Singapore when it had the opportunity to do so in 1987, when the 1962 water agreement was up for review, said Foreign Minister Vivian Balakrishnan.
Speaking in Parliament on Monday (9 July), Dr Balakrishnan noted that the Malaysian state of Johor currently buys treated water from Singapore at 50 sen (17 cents) per thousand gallons as provided under the 1962 agreement. The minister told the House that this is “a fraction of the true cost of treating the water”.
Noting that Mahathir Mohamad had acknowledged this in 2002 during his first spell as Malaysian Prime Minister, Dr Balakrishnan added, “Malaysia has previously acknowledged that they themselves chose not to ask for a review in 1987 because they benefited from the pricing arrangement under the 1962 water agreement…Malaysia lost its right to revise the price of water…in 1987.”
“The core issue is not how much we pay but how any price revision is decided upon…Neither Malaysia nor Singapore can unilaterally change the terms of agreement between our two countries.”
Last month, Dr Mahathir said in an interview with Bloomberg Television that he hoped to review the 1962 agreement as the price of water sold to Singapore was “manifestly ridiculous”. Under the agreement, Malaysia charges the Republic three sen per thousand gallons, and supplies Singapore with 250 million gallons per day.
But Dr Balakrishnan pointed out that Johor buys more treated water than it is strictly entitled to under the 1962 agreement, a sale made by Singapore on a goodwill basis. In addition, if Malaysia had indeed exercised the right to review the price of water in 1987, Singapore would have made “quite different investment decisions” on developing the Johor river and its water catchment areas.
For example, in 1990, the Public Utilities Board and Johor signed an agreement to construct the Linggiu dam to increase the yield of the Johor river, in order to enable reliable extraction of PUB’s full entitlement of 250 million gallons per day. “Singapore paid for its construction and continues to pay for its operation,” said the minister, who noted that 320 million ringgit was also paid to Johor in 1990 as compensation for the land that was used to develop the Linggiu reservoir project, and for the potential loss of revenue from logging activities.
He added, “Singapore will fully honour the terms of the 1962 water agreement, including the price of water that is stipulated in the agreement, and we expect Malaysia to do so.”
“We are committed to engaging and cooperating with the new Malaysian government, but we must work with each other on the basis that both sides will fully respect the sanctity of international agreements and that any disputes will be resolved peacefully with International law.”