What killed the HSR project

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The Kuala Lumpur-Singapore High-Speed Rail (HSR) project was terminated because Malaysia had proposed to remove an assets company previously agreed on, Transport Minister Ong Ye Kung said.

Speaking in Parliament on Monday, he said the original agreement between Singapore and Malaysia on the HSR had included the setting up of an assets company to act as a systems supplier and network operator of the HSR service, which would, in turn, ensure the interests of both countries were protected.

When Malaysia proposed to remove the assets company, Singapore was unable to agree to this “particularly significant change”, which constitutes a “fundamental departure” from the HSR bilateral agreement signed by the two neighbours in 2016, Ong said.

He was responding to a question from Workers’ Party MP Louis Chua, who had asked the minister to specify the substantive points of differences that had led to the HSR’s cancellation.

The project was terminated on January 1, after both countries failed to reach an agreement on changes proposed by Malaysia by the deadline of December 31.

Ong said: “As the HSR is a cross-border service, it must be a single-train system operating between Singapore and Kuala Lumpur, and Malaysia.

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“Because neither country has the experience and expertise in operating an HSR, we agreed under the HSR (bilateral agreement) to appoint a best-in-class industry player through an open and transparent international tender to assume the role of the assets company.”

Once appointed, the assets company would supply the train system, operate the network and ensure that appropriate priority is given to cross-border HSR service vis-a-vis Malaysia’s domestic service, he added.

Saying the assets company would be accountable to both countries, Ong added: “To Singapore, (the) assets (company) is the centrepiece of the HSR project. It is necessary to ensure the interests of both countries are protected.

“This will minimise the possibility of future disagreements and disputes over the long duration of the project lasting decades.”

Singapore ‘willing to discuss’ new HSR proposals

Notwithstanding the termination of the project, Ong said Singapore would be willing to discuss any new proposals relating to the HSR from Malaysia in good faith.

Such a discussion, however, would have to start from a clean slate, after Malaysia compensates Singapore in accordance with the parties’ former agreement, he said.

The compensation would include costs already incurred by Singapore in fulfilling its obligations under the HSR bilateral agreement, such as the setting up of SG HSR, an infrastructure company that is a wholly-owned subsidiary of the Land Transport Authority.

Ong said he is unable to reveal the exact amount of compensation that Malaysia will have to pay Singapore, due to confidentiality obligations under the HSR agreement, but he revealed Singapore had so far spent more than S$270 million (RM822 million) on the project.

This sum includes abortive costs for various components, such as the consultancy services, design of infrastructure and manpower hired to deliver the HSR project, but it does not include land acquisition costs as the value of the land can be recovered, he said.

In calculating the compensation sum, there will be a “small component” of miscellaneous abortive costs for the suspension of the project requested by Malaysia, and Singapore is currently verifying this amount, he added.

To date, Singapore has received about S$15 million from Malaysia, due to the latter’s request to suspend the construction of the HSR project back in 2018, and up to May 2020, he said.

No major change to planned Jurong regional centre

Aside from Chua, four other MPs asked about the implications of terminating the HSR agreement.

Among them was Ang Wei Neng, MP for West Coast Group Representation Constituency, who asked how it would impact plans for the 360ha Jurong Lake District, which was meant to be the location of the HSR terminal on the Singapore side.

Ong said the National Development Ministry had started planning the Jurong regional centre as early as in 2008 as part of a broader effort to develop urban centres outside of the central business district, well before Malaysia had proposed the HSR project in 2012.

It was only much later, in 2015, that the authorities had decided to locate the Singapore terminus of the HSR in Jurong.

The land parcels acquired by the government, including for the HSR, will still be used to realise other plans for the area, so their “full potential” will still be tapped to benefit Singaporeans, he added.

For instance, the former site of the Jurong Country Club is needed to provide for new mixed-use developments and community facilities, while the former site of the Raffles Country Club is needed for the Cross Island Line’s western depot and the integrated train testing centre.

“The termination of the HSR project, therefore, does not affect the overall impetus and vision for (the Jurong Lake District) although some details may need to be adjusted along the way,” Ong said.

“When completed, 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.” – TODAY


Related reports:

Jan 4, Calls for government to reveal compensation cost of cancelled HSR project increase

Jan 2, Najib: PN govt wants to pay “crony” private company annually after HSR contract termination