SINGAPORE: Construction for the Kuala Lumpur-Singapore high-speed rail (HSR) line was due to start this year, but the project will now be postponed.
Singapore and Malaysia formally agreed to postpone construction until end-May 2020 on Wednesday (Sep 5). 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, Kuala Lumpur, 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.
Here's what you need to know:
WHAT DOES THE NEW AGREEMENT SAY?
Under the new agreement, the express service of the HSR is expected to start by Jan 1, 2031 instead of Dec 31, 2026.
Malaysia will also have to pay abortive costs amounting to about S$15 million 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, according to a joint statement by both countries on the matter.
During the suspension period, both countries will "continue to discuss on the best way forward for the HSR Project with the aim of reducing costs", the statement said.
WHAT DOES THE PROJECT ENTAIL?
Running for 350km, the planned HSR line has eight stops: Singapore, Iskandar Puteri, Batu Pahat, Muar, Melaka, Seremban, Sepang-Putrajaya and Kuala Lumpur. Terminus stations are planned for Kuala Lumpur's Bandar Malaysia and Singapore's Jurong East.
The line will host an express service from Kuala Lumpur to Singapore, a domestic service from Kuala Lumpur to Iskandar Puteri and a shuttle service from Iskandar Puteri to Jurong East.
In addition, co-located Singapore and Malaysia Customs, Immigration and Quarantine facilities are planned at Bandar Malaysia, Iskandar Puteri and Jurong East - meaning that a traveller at the Jurong East terminus could clear Singapore immigration and then Malaysian immigration a few steps later, before boarding the train and getting off in Kuala Lumpur.
In Singapore, Raffles Country Club and Jurong Country Club have been acquired by the authorities for the project, with the latter meant to house the HSR terminus.
HOW DID THE HSR PROJECT COME ABOUT?
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.
It was first unveiled in February 2013 by Prime Minister Lee Hsien Loong and Mr Najib at a leaders' retreat. The two countries signed a legally binding bilateral agreement on the project in 2016, paving the way for its implementation.
Construction on the project - which was estimated to cost around RM50 billion (S$16.8 billion) to RM60 billion by Malaysia's then-second finance minister - was due to start this year, with the line expected to begin operations in 2026.
WHAT WERE THE EXPECTED BENEFITS?
Apart from slashing travel time between Singapore and Kuala Lumpur, it has been said the rail link is expected to contribute RM21 billion (S$6.7 billion) in gross domestic product to Malaysia and Singapore, as well as create 111,000 jobs by 2060.
Separately, an environmental impact assessment report in 2017 had said that the long-term benefits for commuter safety and carbon emissions provide a "strong justification" for the project.
KEEN INTERNATIONAL INTEREST
Under the project, both governments each took responsibility for developing, constructing and maintaining the civil infrastructure and stations within their own countries.
Last year, Singapore's Land Transport Authority (LTA) announced the formation of a wholly owned subsidiary - SG HSR - to implement the project and build, own, fund and maintain the civil infrastructure in Singapore.
It would then work with its Malaysian counterpart, MyHSR, to jointly appoint an assets company and an international operator for the project through an open international tender.
The project has attracted keen interest globally, with Japan’s ambassador to Malaysia saying earlier this year that the country could offer a “truly holistic” package towards the project.
In addition to bidders from Malaysia and Singapore, others who have expressed an interest include firms from China, Japan, South Korea and Europe.
WHY DID MALAYSIA SAY IT WOULD PULL OUT EARLIER?
Dr Mahathir told reporters in May that the project was "not beneficial" to Malaysia, saying that the country would "make no money at all" from the arrangement.
In a separate interview with the Financial Times, he said the project would cost Malaysia RM110 billion (US$28 billion) but would not earn the country "a single cent".
In July, he then said his government will look to negotiate with Singapore the deferment of the project.
"When we looked at the financial situation of the country we thought that we couldn't go ahead (with the HSR)," he told reporters. "But having studied it and the implication of unilaterally discarding the contract, we decided we may have to do it at a later date, we may have to reduce the price. But reduction of the price is very difficult as far as we can make out. So it has to be deferred."
WHAT ABOUT THE RTS LINK?
Separately, Malaysia and Singapore also have an agreement for a Johor Bahru-Singapore Rapid Transit System Link which Prime Minister Lee has said will go on regardless of "whoever is the government" on either side.
About S$3 billion had been set aside for the RTS Link and the HSR project in the Ministry of Transport's FY18 budget, Finance Minister Heng Swee Keat said in his Budget speech earlier this year.
Editor's note: This story has been updated, following Malaysia's decision to postpone the HSR project.