Malaysia pays S$102.8 million in compensation for terminated KL-Singapore HSR project

SINGAPORE: Malaysia has paid more than S$102 million in compensation to Singapore for the terminated Kuala Lumpur-Singapore High-Speed Rail (HSR) project, ministers from both countries said on Monday (Mar 29). 

The payment of S$102,815,576 (RM320,270,519) has been made to Singapore for costs incurred for the development of the HSR project, and in relation to the extension of suspension of the project, Singapore's Transport Minister Ong Ye Kung and Malaysia's Minister in the Prime Minister’s Department (Economy) Mustapa Mohamed said in a joint statement.

"The two countries reached an amicable agreement on the amount following a verification process by the Government of Malaysia. This amount represents a full and final settlement in relation to the termination of the bilateral agreement," the statement read.

"Both countries remain committed to maintaining good relations and fostering close cooperation for the mutual benefit of the peoples of the two countries."

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

S$270 MILLION INCLUDES LAND ACQUISITION COSTS

The HSR project was discontinued after the agreement lapsed on Dec 31, 2020, the Prime Ministers of both countries said in a joint statement on Jan 1.

Singapore’s Ministry of Transport previously said that Malaysia has to compensate Singapore for costs already incurred by Singapore in fulfilling its obligations under the bilateral agreement. Mr Mustapa had also said that Malaysia would honour its obligations under the agreement, and that both countries would “initiate the necessary” to determine the amount of compensation.

Mr Ong told Parliament on Jan 4 that Singapore had incurred more than S$270 million on the project. Some of these costs, such as costs for consultancy services, design infrastructure and manpower to deliver the project, are abortive costs.

According to the agreement, Malaysia was "obliged" to pay termination compensation to Singapore. This included various abortive costs but not land acquisition costs, as the value of the land can be recovered, Mr Ong had said.

"Due to Singapore’s confidentiality obligations under the HSR bilateral agreement, we are unable to reveal the exact terms in relation to the compensation for the termination of the HSR project," the Transport Minister had said.

When MP Louis Chua (WP-Sengkang) asked if Singapore would be able to claim "the full amount", excluding land acquisition costs, Mr Ong explained it was a "fixed amount" specified in the agreements, but could not be disclosed because of confidentiality obligations.

A spokesperson for Singapore's Ministry of Transport said on Monday that the S$270 million includes land acquisition costs.

"Because (the) Singapore Government can recover value from the land we acquired, we are not seeking compensation for it," the spokesperson added.

"For example, one piece of land acquired will be used to develop the Integrated Train Testing Centre, which broke ground recently. For the final compensation amount of S$102 million, the bulk of it was computed and determined when we acceded to Malaysia’s request to suspend the project, and was stipulated in the HSR agreements."

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

In a Facebook post on Monday, Mr Ong said: "I am glad that we were able to close this chapter amicably, without affecting the good bilateral relations between our two countries."

He added that there are many areas that Singapore and Malaysia have opportunities to cooperate on, including the issues that Singapore's Foreign Minister Vivian Balakrishnan discussed with Malaysia's leaders last week. 

This includes the restoration of "some air travel", as well as commuting via the Causeway, said Mr Ong.

READ: Singapore, Malaysia to work towards recognising COVID-19 vaccine certificates, 'progressively restore' cross-border travel

READ: Terminated HSR project a missed opportunity to boost economic competitiveness for Singapore, KL: Experts

In September 2018, both sides agreed to postpone the construction of the HSR until end-May last year. Malaysia had to pay Singapore S$15 million for costs incurred in suspending the project.

Malaysia later requested a further seven-month extension until the end of December to allow both sides to discuss and assess Malaysia’s proposed changes to the project.

READ: Malaysia expects compensation for HSR project's termination to be below S$270 million: Mustapa Mohamed

The proposed 350km-long HSR line had aimed to reduce travel time between Singapore and Kuala Lumpur to about 90 minutes by train, from the current 11 hours on existing train services.

Apart from slashing travel time between Singapore and Kuala Lumpur, it was expected that the rail link would contribute S$6.7 billion (RM21 billion) in gross domestic product to Malaysia and Singapore, as well as create 111,000 jobs by 2060.