Malaysia Prime Minister Mahathir Mohamad said on Sunday, Feb. 17, that the price of raw water will be up for negotiation. Again.

Foreign Minister Saifuddin Abdullah will lead a group of Malaysian officials for talks with Singapore.

But Mahathir did not provide details on when or where this will take place.

Currently, Singapore buys raw water from Johor

Mahathir told reporters after launching the National Community Policy in Puchong:

“We are of the view that the price of 3 sen for 1,000 gallons of raw water was decided in 1926. At that time, the value of 1 sen could buy a lot of goods, but now with 1 sen we can’t buy anything, even with 3 sens we can’t buy anything.”

“By right, price of goods should be current. Today we are not talking about millionaires, but billionaires because income has increased tremendously."

“So, if you think that the price set in 1926 still remains until the year 3000 — another millennium — is it reasonable? I feel it is unreasonable. Until when?”

Background

1961 and 1962 water agreements

Singapore and Malaysia signed water agreements in 1961 and 1962.

The first expired in 2011 and the second will expire in 2061.

Both pacts were guaranteed by the Malaysian government in 1965 in the Separation Agreement.

Protracted post-1997 Asian Financial Crisis negotiations

A six-year negotiation was carried out following the 1997 Asian Financial Crisis, but Malaysia called it off subsequently.

Mahathir back in 2018

Mahathir won the election with the Pakatan Harapan coalition in Malaysia’s general elections in May 2018.

He then criticised the price of raw water sold to Singapore as “manifestly ridiculous” and said Malaysia will make a presentation to its neighbour on renegotiating the terms of the deal.

Singapore's side of the bargain

Singapore pays 3 sen for every 1,000 gallons of raw water, and resells treated water to Johor at 50 sen for every 1,000 gallons.

A Singapore government-produced booklet, "Water Talks in 2003", explained how Singapore is in effect absorbing RM1.90 per thousand gallons in cost.

Singapore bears the full cost of treating the water, and other infrastructural costs, building dams and treatment plants, and operating and maintaining the pumps and pipelines.

It had spent S$1 billion on such projects as of 2003, while “Malaysia did not have to spend a cent”.

The government added that the real cost of treating the water is RM2.40 per thousand gallons.

Latest developments overshadowed

Mahathir raised the water price issue with Singapore’s Prime Minister Lee Hsien Loong when they met last November in the Republic.

Both prime ministers expressed their willingness for officials to have further discussions to “better understand each other’s positions”, even though they expressed differing views on the right to review the price of water under the 1962 Water Agreement.

The two prime ministers had also agreed that Attorneys-General from both sides would meet for discussions on whether Malaysia still had the right to review the price of water under the 1962 Water Agreement.

But these discussions were overshadowed by new issues between Singapore and Malaysia, such as the Johor Baru port limits and the Seletar ILS (Instrument Landing System) procedures.

The two AGs would meet again.