HSR to continue in 2020 after suspension ends
PUTRAJAYA: Malaysia is committed to continuing with the High Speed Rail (HSR) project after its two-year suspension ends in May 2020, for which the government will reimburse Singapore S$15mil (RM45.1mil).
While both Malaysia and Singapore have agreed to suspend the project and on the reimbursement amount, Economic Affairs Minister Datuk Seri Azmin Ali declined to reveal the cost the government would have to pay should the project be cancelled later on.
“We also discussed what would happen in the event that we cancel the project.
“But I don’t think I want to jump to a conclusion because the agreement signed (on the suspension) clearly states our commitment to continuing with the project after May 2020,” he said at a press conference with Singapore’s Transport Minister Khaw Boon Wan yesterday.
The two had earlier signed and exchanged documents to vary the HSR Bilateral Agreement, with the terms based on an understanding between the new Pakatan Harapan administration and Singapore.
Prime Minister Tun Dr Mahathir Mohamad and Singapore Deputy Prime Minister Teo Chee Hean witnessed the signing at the Prime Minister’s Office.
With the new agreement, the HSR service is expected to start by Jan 1, 2031, instead of Dec 31, 2026, as planned earlier.
Azmin said the S$15mil was to be paid by the end of January next year and thanked Singapore for allowing Malaysia time to prepare the funds.
“This agreement would not have happened if not for our strong commitment to strong bilateral cooperation between our two countries.
“I am confident that this spirit will see us through to the final conclusion of the HSR project,” he said.
Khaw said although the HSR Bilateral Agreement had no provision for suspension, this was agreed
upon in the spirit of bilateral cooperation.
Singapore, he said, remained committed to the project, adding that the almost 400km distance between the two capitals were seen by industry experts as a “sweet spot”.
“If cities are too far away, people would rather fly; if they are too near, they just take the road.
“But 400km represents a kind of sweet spot. Singaporeans are looking forward to the realisation of this project,” he added.
On the reimbursement, Khaw said the suspension involved abortive costs due to contractual delays.
“As almost the entire stretch of the HSR part in Singapore will be underground, utility services such as gas and water pipes as well as electricity cables have to be diverted and we have already started doing that. All those things mean cost,” he said.
On the reimbursement to Singapore should the project be terminat-
ed, Khaw said the payment would be for costs incurred by his government for fulfilling its obligations under the HSR Bilateral Agreement up to yesterday’s suspension.
“That will be a larger quantum and again, there will be a careful, thorough exercise between the technical people from both sides, going through items and details so that the figures we reach is something that we can defend to our taxpayers,” he said.
On how both countries reached the agreement to suspend the HSR, Azmin said Malaysia had wanted the project to be postponed for three to four years based on its economic condition, while Khaw told him that Singapore was willing to consider a year.
“We know that if the deferment period is beyond two years, the business model will change and the cost will continue to escalate.
“Based on our negotiations, we have mutually agreed on the defer-
ment period,” Azmin said.
Khaw said while Singapore understood why Putrajaya needed to suspend the project, the period of how long this should be would affect the countries and the project itself.
“When you talk about a year-long deferment, it actually means several years of postponing the commencement of the project.
“When we studied this project, we considered the cost, how much revenue we could take in and whether the project was viable.
“When we talked about pushing the project into the future, the projections became more and more uncertain.
“But we finally came to an agreement of May 2020 and we think this is a suspension period which we can try to manage,” Khaw added.