Malaysian Prime Minister Mahathir Mohamad told Bloomberg in an interview today (June 25) that the Malaysian government needs to renegotiate the 1962 Water Agreement with Singapore as it is "too costly".

In an interview with Channel NewsAsia on the same day, he further said that the price of 3 sen per thousand gallons of raw water sold to Singapore is "manifestly ridiculous", adding that Malaysia will make a presentation to Singapore on renegotiating the terms of the water supply deal.

M'sia missed the chance to renegotiate prices

According to a document retrieved from the Ministry of Foreign Affairs, Malaysia has missed the window of opportunity for a price renegotiation:

“Under the Water Agreement, Malaysia should have asked for a price revision in 1986 and 1987.

But Malaysia chose not to do so.”

Singapore's then-Foreign Affairs Minister K. Shanmugam reiterated that in 2014, saying that Malaysia lost its right to review the price of raw water sold to Singapore after not doing so in 1987.

M'sia doesn't want to pay more for treated water

As to why Malaysia chose not to ask for a price review 30 years ago, it is because if it raised the price of the raw water, it would then have to pay higher prices for the treated water it buys from Singapore.

This view was expressed by Mahathir in October 2002.

Shanmugam further said in 2014:

"Malaysian leaders have acknowledged that Malaysia benefits from the current arrangement, and explained that indeed was why Malaysia made a carefully considered decision not to review the water price in 1987."

There might have been other factors at play as well.

According to Lee Poh Onn, a senior fellow at ISEAS-Yusof Ishak Institute, Malaysia was also facing certain domestic issues in the mid-1980s, such as the short but severe recession and Operasi Lalang in 1987 that needed the federal government to consolidate its rule instead of dealing with the issue of revising water prices.

[related_story]

Why is M'sia raising the water price issue now?

Former Ambassador-at-Large Bilahari Kausikan gave his take on this issue in a Facebook post, saying that Mahathir is raising the issue now as political leverage so as to negotiate better terms for Malaysia when it formally drops the Singapore-KL high speed rail project.

He said:

"I think he is raising water only as a diversionary tactic in preparation to ask for a waiver or reduction of the compensation due to us if he formally cancels the high-speed rail project."

He added that Mahathir's "intention is to make the Singapore government look unreasonable hoping, first, that Singaporeans will pressure our government on his behalf, and, second, to set up an alibi with his own people."

He added that Mahathir's raising of the water price issue is nothing new, and urged Singaporeans not to be "deceived".

He also said that Singapore should never allow Malaysia to change the terms of "solemn international agreements" as it would be difficult to put an end to such requests.

Here's his post in full:

Top image via CNA