Malaysia has remitted the $15 million payment for the abortive costs incurred by Singapore in suspending the Kuala Lumpur-Singapore High Speed Rail (HSR) project.
In a media statement on Thursday (31 January), the Ministry of Transport said, “We have received confirmation from the Government of Malaysia through diplomatic correspondence that it has remitted to the Government of the Republic of Singapore the payment for abortive costs incurred by Singapore in suspending the Kuala Lumpur-Singapore High Speed Rail Project.”
The $15 million payment was agreed upon by both countries in September 2018, when they signed an agreement to postpone work on the HSR for about two years, up to May 31, 2020.
Both sides have committed to resume work on the project by the end of May 2020, failing which it will be deemed to be terminated. In that event, Malaysia will bear the costs incurred by Singapore in fulfilling the HSR agreement.
Question mark over mega project
The mega project has had a question mark over its future since Malaysia elected a new government in May last year. Malaysian Prime Minister Mahathir Mohamad had initially wanted to scrap the project, in a bid to trim the country’s RM1 trillion (S$329 billion) national debt.
The HSR express service, which is expected to transport passengers from Singapore to Kuala Lumpur in just 90 minutes, is now slated to start operations in 2031, instead of its original plan of 2026.
Minister of Transport Khaw Boon Wan told Parliament in October that the $15 million abortive costs include contract breakage costs, which Singapore has to pay to contractors for terminating ongoing projects, and costs of winding down operations such as ongoing excavation works.
More than $250m already spent by Singapore
Khaw had also revealed in May 2018 that Singapore had already spent more than $250 million on the project. These include costs for consultancies to design the civil infrastructure, for manpower and for land acquisition.
He said that while Singapore can recover value for some of the expenditure, a significant amount which has been spent will be completely wasted expenditure if the project does not proceed.