Assets company removal 'main concern' that led to HSR termination, project has cost Singapore more than S$270 million: Ong Ye Kung

SINGAPORE: The "main concern" that led to the termination of the Kuala Lumpur-Singapore High-Speed Rail (HSR) project was Malaysia's suggestion that the assets company that was to manage the project be removed, said Minister for Transport Ong Ye Kung on Monday (Jan 4).

Speaking in the first Parliament session of the year, Mr Ong also revealed that Singapore had incurred more than S$270 million in costs for the project, which was first announced in 2013. 

The revelations come after the prime ministers of both Malaysia and Singapore issued a joint statement on Jan 1 to say that the HSR would be discontinued after an agreement on the project lapsed on Dec 31. 

The statement noted that the Malaysian government had proposed "several changes" to the project in light of the impact of the COVID-19 pandemic on the country's economy.

Both governments had conducted several discussions on these changes and had not been able to reach an agreement, said Mr Lee Hsien Loong and Mr Muhyiddin Yassin.

READ: KL-Singapore HSR project terminated after agreement lapses, both countries to proceed with 'necessary actions'

A joint tender for an assets company for the HSR project was called by Malaysia's MyHSR and Singapore's SG HSR in December 2017. 

The assets company would have been necessary to ensure the interests of both countries were protected and minimise the possibility of future disputes over the HSR, Mr Ong told Parliament.

He noted that neither Malaysia nor Singapore had experience in running a high-speed rail line and so it had been agreed that a "best-in-class industry player" would be appointed to act as an assets company through an "open and transparent international tender".

This company would have supplied the train system as well as operated the network, and would have been accountable to both countries. 

WATCH: Other projects could still bring benefits despite termination of KL-Singapore HSR, say experts | Video

The removal of the assets company represented a "fundamental departure" from the bilateral agreement and could not be accepted, said Mr Ong. 

Malaysia then decided to allow the agreement to be terminated, he added. 

He noted that while Malaysia is obligated to compensate Singapore for the termination of the project, the exact terms of the compensation cannot be revealed due to confidentiality agreements under the bilateral agreement. 

The amount will include various abortive costs - such as for consultancy services, design of infrastructure, and manpower - but not land acquisition costs as the value of the land can be recovered, he said. 

Singapore is also verifying a "small component of miscellaneous abortive costs" for the project's suspension requested by Malaysia, he added.

"Now that the HSR (bilateral agreement) has been terminated, Singapore is willing to discuss any new proposal on the KL-Singapore HSR from Malaysia in good faith, but starting from a clean slate," said Mr Ong. 

IMPACT TO AVIATION HUB

Mr Ong was speaking in response to Sengkang GRC Member of Parliament Louis Chua, who had asked regarding the total expenditure incurred to date by Singapore on the HSR project as well as the terms specified in the bilateral agreement in relation to compensation upon termination of the agreement by either party.

Mr Ong also addressed Radin Mas MP Melvin Yong, noting that some media reports had suggested a proposal to connect the HSR to the Kuala Lumpur International Airport was a point of contention due to the possible impact to Singapore's aviation hub status. 

Mr Ong said, however, that the main concern there would be technical issues as the HSR would have had to share tracks with the Express Rail Link, an existing rail system that runs at half the HSR's expected speed. 

READ: From conception to termination: Timeline of KL-Singapore HSR project over 8 years

In fact, the heavy air traffic between Kuala Lumpur and Singapore, which Mr Ong described as the busiest air link in the world with around 5 million passengers a year, pointed to the HSR project as being "viable, mutually beneficial and strategic for the long term". 

In Parliament, Hougang MP Dennis Tan asked for the reasoning given by the Malaysian government on their change in position regarding the appointment of an assets company. 

"I thank the Member for the question but I really cannot speak for the Malaysian government," said Mr Ong in response to the Workers' Party MP. 

LITTLE IMPACT TO PLANS FOR JURONG 

Responding to questions from West Coast GRC MP Ang Wei Neng, the Transport Minister said there was little impact to plans for the Jurong Lake District, where the Singapore terminal for the HSR would have been located. 

Plans to transform the area began in 2008 as part of efforts to build urban centres outside Singapore's central business district, well before the HSR project was first proposed in 2012 and before the decision was made to locate the terminal in Jurong in 2015. 

"This will be the largest commercial and regional centre outside of our city centre, bringing many jobs, business and recreation opportunities for Singaporeans and Singapore companies," said Mr Ong.

The land parcels acquired by the Government would still be needed to realise these plans, he said, noting the former site of the Jurong Country Club would be used for new mixed use developments and community facilities while that of the Raffles Country Club would be used for the future Cross Island Line western depot and an integrated train testing centre. 

Another cross-border rail project, the Johor Bahru-Singapore Rapid Transit System Link (RTS), was "progressing well" and Singapore will break ground for the project soon, said Mr Ong.