KUALA LUMPUR, Jan 5 — Malaysia holds the view that the amount of compensation needed to be paid to Singapore for the termination of the Kuala Lumpur-Singapore High Speed Rail (HSR) project is much lower than S$270 million, said Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed.
He was referring to Singapore’s Transport Minister Ong Ye Kung’s remark that Singapore spent more than S$270 million on the project, including the costs for consultancy services and manpower.
“The transport minister also said the compensation would not include land costs and we are made to understand that the Singapore government has acquired several pieces of land to implement the project.
“Therefore, we are confident that the compensation cost will be much lower than S$270 million. Anyway, the matter has not been finalised and will be discussed soon,” he said during the Agenda Awani programme yesterday.
On Jan 1, Malaysia and Singapore jointly announced the cancellation of the 350km rail line project after failing to reach an agreement on proposed changes by the Dec 31, 2020 deadline.
The bilateral agreement for the project’s development, signed with Singapore on Dec 13, 2016, was based on the aspiration for a closer economic integration between the two countries.
The construction of the HSR, proposed in 2010 as one of the Economic Transformation Programme’s initiatives, was deferred until May 2020 after Malaysia’s 14th General Election, following a review of several of the government’s investment commitments. The two governments later postponed the project for a second time to Dec 31, 2020.
On Monday morning,Mustapa, via Facebook, said that the compensation figure for the cancellation of the HSR project could not be disclosed as both Malaysia and Singapore were bound by a confidentiality clause in the bilateral agreement.
Nonetheless, during the live broadcast yesterday, he gave assurance that the government would announce the compensation amount as soon as it had been finalised.
In addition, Mustapa said, the government would be able to save 30 per cent by not using the services of Asset Company (AssetCo).
It was announced previously that AssetCo was to be responsible for designing, building, financing and maintaining all rolling stock, as well as designing, building, financing, operating and maintaining all rail assets such as track work, power, signalling and telecommunications for the HSR project.
“The Malaysian government had given a 30-year guarantee to AssetCo amounting to RM60 billion, or about RM2 billion annually.
“The guarantee would mean that if the payments to AssetCo were less than RM60 billion, the government must pay by using other revenue to cover the gap. This is also a form of savings,” he said.
Mustapa said taking into account the design, stations and other things with the approach without AssetCo, the overall estimated cost savings was 30 per cent, a large number by any account.
Elaborating further, he said Malaysia was still interested to continue the HSR project which was seen as beneficial to the economy, but the current economic situation due to COVID-19 forced it to review the implementation model.
“According to a study, the benefits to the economy over 50 years would total about RM300 billion. The benefits are great, which is why we are still keen to implement the project.
“It’s only the model, or method, that we felt may not be appropriate amid the COVID-19 situation. So we took another look,” he added.