Singapore spent over $250m so far for HSR project

It is still pressing Malaysia for clarification on their stance towards the project.

Singapore has now incurred over $250m of taxpayers’ money in building the high speed rail (HSR) project with Kuala Lumpur Transport as it awaits Malaysia’s decision on whether it wants to drop the project or not, Transport Minister Khaw Boon Wan said.

“We can recover value for some of the expenditure, even if the HSR Project does not proceed. But a significant amount which has been spent will be completely wasted expenditure, if the project does not proceed,” Khaw said in a parliamentary reply.

He added that the bilateral agreement (BA) with Malaysia provides for how compensation is to be dealt with. “should Malaysia cause the HSR Project to be terminated, we will deal with the question of compensation from Malaysia for costs incurred by Singapore in accordance with the BA and international law.”

It was previously reported that Singapore had officially asked for Malaysia’s position on the HSR project. To date, Singapore has still not received a reply from the Malaysian Government, Khaw said.

“The public statements made by the Malaysian Ministers, and Prime Minister Dr Mahathir himself, on the termination of the Project have not been followed through with any official communication to us. At this point, therefore, we have been left with no choice but to continue performing in accordance with the BA, and thus continue to incur more costs,”.

The minister added that Singapore incurred over $6m in June, another $6m in July, and will need to spend at least $40m more from August to end-December 2018.

Singapore acquired land to facilitate the construction of the HSR, passed legislation in Parliament, and set up an Infrastructure Company, SG HSR Pte Ltd under LTA. It has formed a team of more than 100 specialists in the company, to build, own, fund and maintain the HSR civil infrastructure in Singapore. 

Moreover, the tenders for the HSR civil infrastructure in Singapore, as well as the joint tender with Malaysia to appoint an Assets Company (or AssetsCo) are underway. By May this year, SG HSR had called five tenders to construct the HSR civil infrastructure within Singapore.

Khaw also shared that Malaysian Economic Affairs Minister Dato’ Seri Mohd Azmin bin Ali suggested that both countries’ officials meet to discuss the HSR Project. “I welcomed the suggestion. I asked him for details on the scope of the discussion so that the meeting could be productive. He agreed and promised to send me a letter on the details. He has yet to do so,” he added.

Besides costs incurred by Singapore, rail consortia from China, Japan, Europe and other interested parties such as international financial institutions, have also been incurring costs preparing their bids for the HSR Assets Company or “AssetsCo” tender, which was jointly launched by Singapore and Malaysia last December, the minister added.

“Following the recent statements by Malaysian leaders, the bidders have sought urgent clarification from Singapore and Malaysia on the status of the HSR Project,” he said. “It is not tenable for them to proceed with their bids without knowing if the project is off, or to put their consortia and resources on hold indefinitely with the attendant opportunity and financing costs.”

Khaw said that the Singapore government will continue to press for official clarification from the Malaysian government and that there are appropriate processes at law in case Malaysia should wish to propose changes to the BA, or to terminate it.

Separately, Khaw gave an update on the Singapore Rapid Transit System (RTS) Link between Singapore and Johor Bahru.

Singapore’s SMRT Corporation Limited and Malaysia’s Prasarana Malaysia Berhad needed to incorporate a Joint-Venture Company to become the RTS Link operator by 30 June 2018. That did not happen as Prasarana had suspended discussions with SMRT after Malaysia’s General Elections.

“This means that both countries should now proceed to call an open, international tender to appoint the RTS Link operator unless we mutually agree on a postponement of the deadline,” Khaw said.

In the meantime, Singapore will continue to work with Malaysia to reduce congestion through other means. Both countries lowered the tolls during off-peak hours at Tuas Checkpoint, to encourage motorists to travel outside the peak periods. Singapore also agreed to Malaysia’s suggestion to increase the number of KTMB Tebrau Shuttle services from 26 to 31 daily, which has been implemented since mid-February.

“These measures have helped to alleviate the congestion but are not the complete solution. We look forward to the completion and operation of the RTS Link, which will be able to transport 10,000 travellers per direction per hour between Singapore and Johor Bahru,” the minister said.