Singapore incurred above $270m for terminated high speed rail project: Ong Ye Kung

SINGAPORE — Singapore has incurred more than $270 million for the terminated Kuala Lumpur-Singapore high speed rail project (HSR) and received so far about $15 million arising from Malaysia’s request to suspend construction of the project in 2018, Transport Minister Ong Ye Kung told Parliament on Monday (4 January).

As the HSR bilateral agreement (BA) is a legally-binding international contract, Malaysia is obliged to pay termination compensation to Singapore, including various abortive costs, Ong said. There was also a component of miscellaneous abortive costs for suspension of project requested by Malaysia which Singapore is currently verifying, he added.

The MP for Sembawang GRC said he was unable to disclose the exact terms due to confidentiality clauses in the agreement.

Singapore and Malaysia signed HSR BA in 2016, during the government of ex-Malaysian Prime Minister Najib Razak. Construction of the rail network was later suspended from September 2018 to 31 December 2020, at Malaysia’s request. The understanding between the two countries was that the extension of the suspension period until 31 December would be final.

The HSR agreement lapsed on 31 December after both sides were unable to reach an agreement on the proposed changes to the HSR project.

In a joint statement announcing the lapse on 1 January, the Prime Minister’s Office (PMO) of Malaysia and Singapore said that the Malaysian government had proposed the changes due to the impact of the COVID-19 pandemic on the Malaysian economy.

In response to Member of Parliament Louis Chua’s questions on the “substantive points of differences” to the cancellation and if Singapore would be able to recover the full amount of expenditure and the period for conclusion in the matter, Ong said that Singapore would be able to claim the full amount and that the government was starting the process of compensation.

While former Transport Minister Khaw Boon Wan mentioned that the sum incurred might reach $300 million, the actual amount – $270 million – was lower as contracts and activity was wound down when the project was suspended, Ong said.

On the proposed changes from Malaysia, Ong said, “Be clear about this, which is Singapore was not obligated to agree to any of such changes because we signed an agreement in 2016 already, but notwithstanding, we considered them in good faith. But we were unable to agree to one particularly significant change proposed by Malaysia.”

The proposed change involved the removal of the assets company, which was the system supplier and network operator of the HSR service between Singapore and Kuala Lumpur.

“As the HSR is a cross border service, it must be a single train system operating between Singapore and KL and Malaysia. Because neither country has the expertise and experience in operating the HSR. We agreed under the HSR BA to appoint a best in class industry player through an open and transparent international tender to assume the role of the assets co.”

This appointed assets company would the “centrepiece” of the HSR project and would have been accountable to both countries, said Ong.

“It is necessary to ensure that the interests of both countries are protected. This will minimise the possibility of future disagreements and disputes over the long duration of the project, lasting decades,” added Ong.

Hence Singapore was unable to accept the removal of the assets company, as it would be a “fundamental departure from the HSR BA” and informed Malaysia about its position.

Malaysia then allowed the project to be terminated and has to compensate Singapore in accordance with the agreement, said Ong.

Singapore remains willing to discuss any new proposal on the KL-Singapore HSR from Malaysia in “good faith” but “from a clean slate” Ong said.

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