Termination of KL-SG HSR: M'sia pays S'pore S$102 million

This amount represents a full and final settlement in relation to the termination of the bilateral agreement

Joshua Lee | March 29, 2021, 05:24 PM

The Malaysian government has compensated Singapore S$102,815,576 (RM320,270,519) as reimbursement for costs incurred by the latter in the development of the High Speed Rail (HSR) project, and in relation to the extension of suspension of the project.

This was announced in a joint statement by Singapore's Ministry of Transport and Malaysia's Economic Planning Unit in the Prime Minister's Office on March 29, 2021.

"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.

Both countries remain committed to maintaining good relations and fostering close cooperation for the mutual benefit of the peoples of the two countries."

Transport Minister Ong Ye Kung announced in a Facebook post that the matter was concluded amicably, and that there are many other opportunities for both governments to cooperate on looking ahead.

"I am glad that we were able to close this chapter amicably, without affecting the good bilateral relations between our two countries."

Cancelled in January 2021

The HSR between Singapore and Kuala Lumpur was cancelled earlier this year after both countries were unable to reach an agreement regarding several changes to the project that were proposed in light of the Covid-19 pandemic.

Announcing news of the cancellation in January 2021, Singapore's Ministry of Transport said that Malaysia had to compensate Singapore for "costs already incurred by Singapore in fulfilling its obligations under the High Speed Rail Bilateral Agreement".

Project suspended twice

Originally mooted in the 1990s, the project was repeatedly shelved due to cost issues.

Then, at the 2013 Singapore-Malaysia Leaders' Retreat, former Malaysian Prime Minister Najib Razak and Singapore's Prime Minister Lee Hsien Loong formally agreed to build a High Speed Rail link between Kuala Lumpur and Singapore.

It was going to be a game changer, allowing travellers to zip between Singapore and Kuala Lumpur within 90 minutes.

Both countries signed the Kuala Lumpur – Singapore High Speed Rail Bilateral Agreement in December 2016.

In 2018, Mahathir Mohamad, who became the country's seventh prime minister after his Pakatan Harapan coalition won the May general election, requested the suspension of the HSR project, citing high construction costs.

In September that year, both countries agreed to suspend the HSR project until May 2020.

Malaysia subsequently reimbursed Singapore S$15 million in abortive costs for putting the project on hold.

New government, another suspension

Mahathir resigned in February 2020 amid a political crisis. His successor, Muhyiddin Yassin, proposed changes to the HSR project and requested to extend the suspension to December 31, 2020 in order to discuss said changes.

"During the suspension period, Malaysia has proposed some changes to the HSR Project, and we have been discussing them in good faith with Malaysia," said Singapore's Ministry of Transport on November 26, 2020.

Earlier this month, Malaysian media reported that the Malaysian government intended to go ahead with the HSR project without Singapore, and pay up around RM300 million (about S$100 million) as compensation for terminating the HSR Bilateral Agreement.

Top image is an artist impression of the Kuala Lumpur Bandar Malaysia HSR Terminus.