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Chronology of developments with regards
to the water issue ...
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| 17 Dec 98 |
PM Goh agreed with PM Mahathir’s
proposal to resolve the outstanding bilateral issues, including
long-term supply of water to Singapore, together as a package. |
| Mar – May 99 |
Three rounds of negotiations on the
package of issues were held at the officials level. However,
not much progress was made. |
| 15 Aug 00 |
At a four-eye meeting in Putrajaya,
SM Lee and PM Mahathir reached an agreement on a list of items
including the price of 45 sen per 1,000 gallons for current
and future water. This was the first time the issue of current
water was discussed as part of the package. Singapore also
agreed to discuss Malaysia’s proposal to build a new bridge
to replace the Causeway as part of the package. |
| 24 Aug 00 |
SM Lee wrote to then Malaysian Finance
Minister Tun Daim Zainuddin confirming the list of items which
he and PM Mahathir had agreed to. |
| 21 Feb 01 |
PM Mahathir replied to SM Lee that
“Johore believes that a fair price would be 60 cents (sic) per
mgd (sic) of raw water” and that this “should be reviewed every
five years”. |
| 23 Apr 01 |
SM Lee noted in his reply to PM Mahathir
that there were two main variations from their oral understanding
reached on 15 Aug 00. These were PM Mahathir’s proposal of
60 sen for raw water and the mix of raw and treated water to
be supplied. |
| 4 Sep 01 |
SM Lee met with PM Mahathir for a
second time in Putrajaya followed by a joint press conference.
Both leaders announced that they had agreed on a basic skeleton
of an agreement on the package of issues. SM Lee explained
that Singapore had offered to pay 45 sen for current raw water
in return for assured raw water supply from Malaysia, beyond
2061, at 60 sen. |
| 8 Sep 01 |
SM Lee wrote to PM Mahathir to follow-up
on their 4 Sep 01 discussion on Malaysia’s proposal to build
a bridge to replace the Causeway. |
| 21 Sep 01 |
SM Lee wrote again to PM Mahathir
to convey Singapore’s counter-proposals on some of the bilateral
issues and to confirm other issues which had earlier been agreed.
Singapore proposed to revise the price of current water from
3 sen to 45 sen per 1,000 gallons, with no further price reviews.
For additional raw water to be supplied from 2011-2061 and 2061-2161,
Singapore agreed to PM Mahathir’s proposed price of 60 sen per
1,000 gallons, to be reviewed every five years for inflation
from 2011. |
| 18 Oct 01 |
PM Mahathir conveyed to SM Lee a
new proposal to review the price of treated and raw water based
on a common formula, for instance, compound rate as the basis.
PM Mahathir also raised the issue of compensation for additional
railway land should the KTM rail service end in Johore Baru.
|
| 10 Dec 01 |
SM Lee replied to PM Mahathir to
clarify Singapore’s proposal on the bilateral issues including
the price of water and sought clarification on the additional
railway lands referred to by PM Mahathir. SM Lee expressed
the hope that PM Mahathir would consider the long-term significance
and value of retaining the railway link between Malaysia and
Singapore. He requested PM Mahathir to set out Malaysia’s position
on the package issues so as to establish a clear framework for
the officials to work on. |
| 5 Feb 02 |
Singapore conveyed a TPN to register
“deep concern” over Malaysian statements on the Water Agreements
which had grave implications. Singapore reminded Malaysia that
the 1961 and 1962 Water Agreements are binding legal arrangements
duly confirmed and guaranteed by both Governments in the Separation
Agreement. |
| 4 Mar 02 |
PM Mahathir conveyed completely new
proposals on the package issues in his letter to SM Lee. Malaysia
proposed an immediate increase in the price of current raw water
to 60 sen for the first five years, and to RM3 from 2007 to
2011. Subsequently, the price would be revised annually based
on inflation. Malaysia also proposed that current treated water
be revised from the current 50 sen to RM1 with no price reviews.
As for future water after 2061, Malaysia proposed that negotiations
begin only in 2058. |
| 11 Mar 02 |
SM Lee noted that Malaysia’s latest
proposals had completely changed from what both leaders had
discussed at their meetings and in subsequent correspondences.
Singapore would therefore have to study the implications of
Malaysia’s new offers before responding. |
| 14 Mar 02 |
Malaysia replied to Singapore’s TPN
of 5 Feb 02 reiterating that it was committed to resolving the
water issue in the context of an agreement on the overall package
of issues as agreed by the two PMs in Dec 98. Malaysia pointed
out that at no time was there a suggestion that the Malaysian
Government would depart from such a commitment. |
| 25 Mar 02 |
Singapore took note of Malaysia’s
commitment as conveyed in its 14 Mar 02 TPN. |
| 11 Apr 02 |
PM Goh conveyed Singapore's
response to Malaysia’s latest proposals as contained in PM Mahathir’s
4 Mar 02 letter. For the sake of good long-term relations,
Singapore would produce as much water as it could to supplement
the existing Water Agreements by producing NEWater. Since Malaysia
did not accept Singapore’s earlier offer of 45 sen for current
water and 60 sen for future water, Singapore proposed to peg
the price of future water to an agreed percentage of the cost
of alternative source of water which was NEWater. PM Mahathir’s
letter of 4 Mar 02 and PM Goh’s reply of 11 Apr 02 would form
the basis for further discussions between the respective Foreign
Ministers and officials on the package of issues. |
| 1-2 Jul 02 |
The First Ministerial Meeting on
the Package of Issues was held in Putrajaya, Malaysia. On 2
Jul, Malaysia suddenly revised its package proposal. Malaysia
agreed that the price review of current water should be in accordance
with the provisions of Clause 17 and Clause 14 of the 1961 and
1962 Water Agreements respectively. Malaysia proposed that
the pricing formula for future water should be based on “competitive
rates” and Malaysia may consider “benchmarking against, amongst
others, the China-Hong Kong model and other relevant models”.
Singapore responded that it was willing to discuss the price
review provided it was part of the package, although the review
should have been undertaken in 1986/97. Singapore explained
why the China-Hong Kong price model was not relevant to the
current Water Agreements as it was Singapore which has borne
all the infrastructual and maintenance costs. |
| 2-3 Sep 02 |
At the Second Ministerial Meeting
held in Singapore, Malaysia reaffirmed that the price revision
of current water “shall be in accordance with the provisions
of the 1961 and 1962 Water Agreements”. However, Malaysia proposed
a formula pegged to the average cost of NEWater and desalination.
This resulted in a price of RM6.25 per 1,000 gallons for current
raw water. Malaysia also proposed that discussions on future
water take place only in 2059. Singapore requested Malaysia
to explain the rationale of its pricing formula based on the
provisions of the Water Agreements. Singapore also stressed
that discussions on future water must be undertaken now and
not in 2059 as the issue of future water had always been part
of the package under negotiations. Malaysia agreed to host
the next Ministerial Meeting. |
| 8 Oct 02 |
PM Mahathir told PM Goh at a meeting
in Putrajaya that Malaysia wanted to “decouple the water issue”
from the other items in the package. PM Goh responded that
if the water issue was taken out of the package, then Singapore
would have less leeway to make concessions on other issues.
|
| 10 Oct 02 |
PM Goh received a letter from PM
Mahathir dated 7 Oct 02 stating that Malaysia had decided to
“discontinue the package approach and give the highest priority
to first resolving the water issue, particularly the price review
of raw water”. This letter was not mentioned at the 8 Oct 02
meeting between the two PMs. |
| 14 Oct 02 |
PM Goh reminded PM Mahathir that
they had both agreed on the package approach in Dec 98 and that
was why Singapore had been prepared to make concessions. But
now that Malaysia wanted to deal with the water issue separately
and discontinue the package approach, trade-offs on other issues
in the package were no longer possible. Henceforth, Singapore
would have to deal with water and the other issues on their
stand-alone merits and no longer as a package. |
| 16-17 Oct 02 |
The senior officials met in JB to
discuss the water issue. However, Malaysia was only prepared
to engage in discussions on the price review of current raw
water while future water was to be discussed only in 2059.
Singapore responded that although our legal position was that
Malaysia had lost its right to the review, Singapore was still
prepared to discuss the review as part of an overall agreement
on the water issue including future water. Singapore again
sought clarification for the basis of Malaysia’s proposal to
review the price of current water from 3 sen to RM6.25. According
to the provisions of the Water Agreements, the review of the
price of raw water must be based on the rise or fall in the
purchasing power of money. Singapore noted that this would
result in the price of not more than 12 sen for raw water in
2002. However, Malaysia could not provide a satisfactory explanation
of its pricing formula. |
