Why S'pore spent S$270 million on HSR but only compensated S$102 million by M'sia

The compensation was announced earlier today (March 29).

Tanya Ong | March 29, 2021, 09:37 PM

Earlier today (March 29), it was announced that the Malaysian government has compensated Singapore S$102,815,576 (RM320,270,519).

This was reimbursement for costs incurred by Singapore in the development of the High Speed Rail (HSR) project, and in relation to the extension of suspension of the project.

Compensation amount not the amount spent by Singapore

In response to media queries, a Ministry of Transport (MOT) spokesperson clarified the difference between the amount that Singapore has spent on the HSR project, and the amount that Malaysia has compensated Singapore.

In Jan. 2021, Minister for Transport Ong Ye Kung had said in Parliament that Singapore has spent about S$270 million on the project. This S$270 million includes land acquisition cost.

A MOT spokesperson told Mothership that the Singapore government can recover value from the land we acquired. Hence, Singapore is not seeking compensation for it.

For example, the spokesperson said that one piece of land acquired will be used to develop the Integrated Train Testing Centre, which will be located at the former site of the Raffles Country Club in Tuas.

"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," the spokesperson added.

Background information on HSR project

The project was originally mooted in the 1990s but repeatedly shelved due to cost issues.

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.

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.

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.

In Jan. 2021, both Singapore and Malaysia announced via a joint statement that Malaysia had proposed several changes to the HSR project in light of the Covid-19 pandemic. Despite several discussions, both countries were unable to reach an agreement.

Top photo via SG HSR, LTA.