PUTRAJAYA: 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.
In a joint statement released on Wednesday (Sep 5), both countries said the HSR express service is now expected to start by Jan 1, 2031, instead of the original commencement date of Dec 31, 2026.
The new agreement was signed by Malaysia's Economic Affairs Minister Azmin Ali and Singapore's Transport Minister Khaw Boon Wan at the Prime Minister's Office in Putrajaya on Wednesday afternoon.
The signing was witnessed by Singapore Deputy Prime Minister Teo Chee Hean, his Malaysian counterpart Wan Azizah Wan Ismail and Malaysian Prime Minister Mahathir Mohamad.
At a news conference after the signing, Mr Azmin said Malaysia will have to pay Singapore S$15 million in abortive costs before the end of January 2019 for suspending the project.
Additionally, if Malaysia does not proceed with the project by May 31, 2020, it will also bear the agreed costs incurred by Singapore in fulfilling the HSR Bilateral Agreement.
The Singapore Government had spent more than S$250 million on the project by the end of May this year, said Mr Khaw in July. This included costs for consultancies to design the civil infrastructure, costs for dedicating manpower to oversee and deliver the project and costs for land acquisition.
During the suspension period, both countries will "continue to discuss the best way forward for the HSR project with the aim of reducing costs", the joint statement said.
"We have all worked tirelessly in order to bring about a resolution that is mutually beneficial," said Mr Azmin after the signing ceremony.
"Without doubt, this agreement would not have happened if not for our strong commitment to bilateral cooperation between our two countries," he added.
"I am confident that this spirit will see us through the final fruition of the Kuala Lumpur-Singapore High-Speed Rail project."
Mr Khaw also spoke after signing the new agreement.
"Many Singaporeans had been looking forward to the realisation of this project and we remain committed to this project," he said, adding that he understood why Malaysia had to suspend the development of the HSR.
The HSR is among several mega projects approved by the previous Malaysian government that have come under review, as the Pakatan Harapan administration relooks the country's finances after winning the May general election.
Dr Mahathir had announced shortly after the election that the HSR project would be scrapped entirely, saying that the rail will not benefit Malaysia.
He later said in July that the project would be deferred instead.
During Wednesday's news conference, Mr Azmin revealed that a flurry of negotiations led to the announcement. The Malaysian Cabinet initially asked for the project to be on hold for three to four years - a message he passed on when visiting Singapore, he said.
Mr Khaw later met him in Kuala Lumpur and told him Singapore was willing to consider postponement of a year. The Malaysian minister returned to Singapore to appeal for it to be suspended for longer.
Both sides agreed that if the deferment was beyond two years, the business model for the project would have changed by then, and "costs would continue to escalate". The two countries then mutually agreed on a two-year deferment.
Given the length of suspension, the Singapore and Malaysia companies managing the rail project - SG HSR and MyHSR - will be calling off the ongoing international joint tender for the HSR Assets Company (AssetsCo).
AssetsCo was meant to be responsible for designing, building, financing and maintaining all rolling stock as well as rail assets such as power, signalling and telecommunications.
The proposed 350km-long HSR line aims to reduce travel time between Singapore and Kuala Lumpur to around 90 minutes by train, from the current 11 hours on existing train services.
When operational, the line will offer an express service between Kuala Lumpur and Singapore, a domestic service from Kuala Lumpur to Iskandar Puteri and a shuttle service from Iskandar Puteri to Jurong East.