Singapore's financial interests 'absolutely safeguarded': Vivian Balakrishnan on HSR project

Singapore's financial interests 'absolutely safeguarded': Vivian Balakrishnan on HSR project

Singapore and Malaysia have formally agreed to postpone the construction of the KL-Singapore High-Speed Rail until end-May 2020, with Malaysia having to pay Singapore S$15 million for costs incurred in suspending the project. Afifah Ariffin reports. 

SINGAPORE: In the matter of the Kuala Lumpur-Singapore High-Speed Rail (HSR), Singapore's financial interests are "absolutely safeguarded", said Minister for Foreign Affairs Vivian Balakrishnan on Wednesday (Sep 5). 

"This is a positive development," Dr Balakrishnan said in a press conference, referring to the new HSR agreement signed by both Singapore and Malaysia in Putrajaya several hours earlier, which formally recognised the postponement of the project to end-May 2020. 

"We've been able - both sides - to respect the sanctity of the agreements solemnly entered into. Second, Malaysia now has time - up to two years - to consider how to proceed if it wishes to proceed. 

READ: KL-Singapore High-Speed Rail formally postponed; service targeted to start by Jan 2031

"Third, equally important to us is that we have safeguarded our financial interests. The abortive cost and the compensation cost will all be dealt with at the appropriate times specified in the agreements, which are legally binding." 

Earlier in the press conference, Deputy Prime Minister Teo Chee Hean had fielded a question about whether the S$15 million abortive cost Malaysia has agreed to pay Singapore for the postponement was fair. 

Singapore's Transport Minister Khaw Boon Wan revealed back in July that the country had spent more than S$250 million on the project. 

READ: "Greater clarity" on way forward for KL-Singapore High-Speed Rail project, says Khaw

"Some of the (S$250 million) is actually represented in costs which are recoverable," said Mr Teo. "For example, the costs associated with land acquisition. We still continue to have the land so it's not reasonable to put that on Malaysia. 

"But there are costs which we have spent that will need to be recovered if the HSR project does not proceed after the deferment period. There are abortive costs associated with suspending the project for two years and this is the S$15 million ... Subsequently, if for whatever reason the project is not resumed, then there are agreed compensation costs which will come into effect." 


Mr Teo described the agreement signed by both parties on Wednesday as "a good balance". 

"The side letters allow Malaysia's concerns to be addressed right now. They do have financial concerns and they do want to take the opportunity to review on their side what they want to do with the HSR," he said. 

"On our side, the side letter takes into account our interests as expressed in the bilateral agreement. It's a good balance and a good outcome for the HSR. 

READ: KL-Singapore HSR - what you need to know

"How it will proceed further... I think both sides hope to be able to proceed with the project and benefit from it. I think it remains to be seen and we have two years to review and to think about it," he added. 

When asked if he thought the HSR would proceed after the deferment period, Mr Teo said: "I don't speculate on these things." 

"On whether there can be further deferments, the short answer is no," Dr Balakrishnan added.

"First of all, the original bilateral agreement does not provide for it. The deferment is now pursuant to this side letter and the side letter states specifically that if a decision is not made by the expiry period, the project is considered terminated. Full compensation as specified in this agreement will then be liable. So our financial interests are absolutely safeguarded," he said.  

Source: CNA/hs