News: Malaysia pays $102.8 million to Singapore for terminated KL-Singapore HSR project

Mar 30, 2021

Based on the agreement, the termination compensation includes abortive costs but not land acquisition costs since the value of the land can still be recovered, said Singapore’s Transport Minister Ong Ye Kung.

Malaysia has paid Singapore over $102 million as compensation for the terminated Kuala Lumpur-Singapore High-Speed Rail (HSR) project.

The $102,815,576 (RM320,270,519) payment was made to reimburse Singapore for the costs incurred for the HSR project’s development, and for the extension of the project’s suspension, reported Channel News Asia (CNA) citing ministers from both countries.

“The two countries reached an amicable agreement on the amount following a verification process by the Government of Malaysia. This amount represents a full and final settlement in relation to the termination of the bilateral agreement,” said Singapore’s Transport Minister Ong Ye Kung and Malaysia’s Minister in the Prime Minister’s Department (Economy) Mustapa Mohamed in a joint statement.

“Both countries remain committed to maintaining good relations and fostering close cooperation for the mutual benefit of the peoples of the two countries,” added the joint statement as quoted by CNA.

Further read: Will The High Speed Railway Project Termination Affect Property Prices in Jurong?

On 1 January, the Prime Ministers of both countries issued a joint statement announcing that the HSR project was terminated after the bilateral agreement lapsed on 31 December 2020.

Ong has previously said that Malaysia has to compensate the city-state for the costs incurred in fulfilling its obligation under the agreement.

He revealed that Singapore incurred over $270 million on the project, which includes some abortive costs such as the costs for design infrastructure, consultancy services and manpower to deliver the project.

Based on the agreement, the termination compensation includes abortive costs but not land acquisition costs since the value of the land can still be recovered, said Ong.

When asked if Singapore could claim “the full amount” excluding land acquisition costs, he explained that the agreement had specified a “fixed amount”, which he could not disclose due to confidentiality obligations.

“Due to Singapore’s confidentiality obligations under the HSR bilateral agreement, we are unable to reveal the exact terms in relation to the compensation for the termination of the HSR project,” the Transport Minister had said.

Mustapa, on the other hand, had said Malaysia would honour its obligations under the agreement.

Meanwhile, a spokesperson for the Ministry of Transport said the land acquisition costs incurred by Singapore was already included in the $270 million.

“Because (the) Singapore Government can recover value from the land we acquired, we are not seeking compensation for it,” added the spokesperson on Monday (29 March) as quoted by CNA.

“For example, one piece of land acquired will be used to develop the Integrated Train Testing Centre, which broke ground recently. For the final compensation amount of $102 million, the bulk of it was computed and determined when we acceded to Malaysia’s request to suspend the project, and was stipulated in the HSR agreements.”

In a Facebook post, Ong said he was glad that both countries were “able to close this chapter amicably, without affecting the good bilateral relations”.

He noted that there are many areas that the two countries have opportunities to cooperate on, which include the issues discussed by Singapore’s Foreign Minister Vivian Balakrishnan with Malaysia’s leaders last week.

Among them are the restoration of some air travel and commuting via the Causeway, said Ong.

In September 2018, the two countries agreed to suspend the construction of the project until end-May 2020, with Malaysia paying Singapore $15 million for costs incurred by the postponement.

Malaysia later requested for further suspension of the project until end-December 2020 to allow both sides to assess and discuss Malaysia’s proposed changes on the HSR project.

Aside from reducing travel time between Singapore and Kuala Lumpur to just 90 minutes, the proposed 350km HSR line is also expected to create 111,000 jobs by 2060 and contribute $6.7 billion (RM21 billion) in gross domestic product to Singapore and Malaysia. 

Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this story, email: victorkang@propertyguru.com.sg

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