KUALA LUMPUR: Malaysia will honour its obligations under the Bilateral Agreement for the cancelled High-Speed Rail (HSR) project, Minister in the Prime Minister's Department Mustapa Mohamed said on Friday (Jan 1).
The Singapore and Malaysian governments had on Friday announced the termination of the HSR project following the lapse of their agreement on Dec 31, 2020.
“By virtue of the Bilateral Agreement and previously agreed terms, Malaysia will honour its obligations under the Bilateral Agreement. Both countries will initiate the necessary to determine the amount of compensation.”
He said that the COVID-19 pandemic had severely impacted the Malaysian economy, and that the terms of the Bilateral Agreement signed in 2016 were no longer viable for Malaysia given the current economic situation.
“Since late 2018, the government has explored a number of alternatives to reduce the cost of the Kuala Lumpur–Singapore High Speed Rail (HSR) project. This has become more urgent with the onset of the COVID-19 pandemic.”
Mr Mustapa added that since mid-2020, the government of Malaysia had proposed some changes to the project, including the project structure, alignment and station design.
The original project structure, he said, would have required substantial and long-term government guarantees.
“The new project structure is expected to provide the Government the flexibility in financing options, such as deferred payments, public-private partnerships and the possibility of accessing financing at favourable rates,” he said.
"More importantly, the proposed changes to the project structure would have allowed us to leverage on the HSR project to accelerate Malaysia’s economic recovery post the COVID-19 pandemic, by bringing forward the start of the construction phase by almost two years."
He added that that both governments had conducted a number of discussions on their respective positions with the above changes in mind.
"However, we had not been able to come to an agreement on these changes," he said.
On Friday, Singapore Prime Minister Lee Hsien Loong and Malaysian Prime Minister Muhyiddin Yassin announced that the project would be discontinued after the HSR Bilateral Agreement lapsed on Dec 31, 2020.
Mr Mustapa added: "Moving forward, the government will undertake a detailed study to explore all possible options, including the viability of a domestic HSR project and its benefits to Malaysians."