SINGAPORE - Singapore could not accept Malaysia's proposal to remove the systems supplier and network operator of the high-speed rail (HSR) project as it constituted a "fundamental departure" from the original agreement, said Transport Minister Ong Ye Kung.

This "particularly significant change" to remove the Assets Company (AssetsCo) was Singapore's main concern, he said in Parliament on Monday (Jan 4), and had led to the termination of the Kuala Lumpur-Singapore HSR project. 

Malaysia had allowed the bilateral agreement to lapse on the deadline of Dec 31, 2020, after both sides could not agree to changes it had proposed.

Responding to Workers' Party MP Louis Chua (Sengkang GRC) on the substantive differences between both sides that led to the termination, Mr Ong noted that the cross-border HSR service - had it gone ahead - must be a single train system operating between Singapore and Kuala Lumpur.

"Because neither country has the expertise and experience in operating the 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 AssetsCo," he said.

"Once appointed, the AssetsCo will supply the train system, operate the network, ensure that appropriate priority is given to cross-border HSR service vis-a-vis Malaysia's domestic service, and be accountable to both Singapore and Malaysia."

To Singapore, the AssetsCo is the "centrepiece" of the HSR project and is necessary to ensure that the interests of both Singapore and Malaysia are protected, he added.

"This will minimise the possibility of future disagreements and disputes over the long duration of the project, lasting decades," said Mr Ong.

"Singapore therefore informed Malaysia that the removal of the AssetsCo constituted a fundamental departure from the HSR bilateral agreement, and could not be accepted."

In response to Mr Melvin Yong (Radin Mas), Mr Ong said another proposed change by Malaysia - to connect the HSR to the Kuala Lumpur International Airport - would have led to the high-speed line sharing tracks with an existing rail line that connects to the airport.

"The Express Rail Link is an existing train system model (that) runs at half the full speed of HSR, so should we have proceeded, there would have been many technical issues to resolve," he said. "But having said that, the main concern for us was the removal of the AssetsCo."

Both countries had inked the legally binding bilateral agreement in 2016 after three years of negotiations.

At Malaysia's request, both sides signed a supplemental agreement in May 2018 to suspend construction of the project. A second agreement was signed to extend the suspension to Dec 31, 2020, "with the explicit understanding that it would be the final extension", Mr Ong said.

With the project's termination, Malaysia has to compensate Singapore in accordance with the HSR agreements, Mr Ong noted.

S'pore has spent $270m on HSR

The minister told Parliament that Singapore has spent about $270 million on the HSR project so far.

This is lower than an earlier estimate of about $300 million provided by previous transport minister Khaw Boon Wan in 2018, as Singapore had managed to wind down contracts and maintain activity at a low level, he said.

The compensation to be paid by Malaysia will include various abortive costs such as for consultancy services, design of infrastructure, and manpower to deliver the HSR Project. It will not include land acquisition costs, as the value of the land can be recovered, Mr Ong added.

Singapore is also verifying a “small component” of miscellaneous abortive costs” for the suspension of the project requested by Malaysia, he said.

The amount and schedule of payment is specified in the agreements, Mr Ong  said, adding that he could not disclose the figure due to confidentiality reasons.

Malaysia’s Minister in the Prime Minister’s Department Mustapa Mohamed has said that Malaysia will honour its obligations, and both countries will initiate the necessary procedures to determine the amount of compensation.

Malaysia had in 2019 remitted $15 million to Singapore as payment for abortive costs the Republic incurred as a result of the initial suspension of the HSR project.  This amount covered costs linked to the suspension, such as contract breakage and manpower, and is not part of the compensation.

In response to Mr Saktiandi Supaat (Bishan-Toa Payoh GRC), Mr Ong said Singapore remains willing to discuss any new proposal on the KL-Singapore HSR or similar projects in the future.

“Whether we are open to future discussions – of course, we are. But it should be on a clean slate after we settle the current HSR bilateral agreement,” he said.

Overall impetus, vision for Jurong Lake District not affected

Mr Ong also assured the House that the HSR's termination does not affect the overall impetus and vision for the Jurong Lake District (JLD).

In response to Mr Ang Wei Neng (West Coast GRC), he noted that the Ministry of National Development had started planning to transform Jurong as early as 2008, as part of a broader effort to develop urban centres outside the central business district.

The plans for the JLD were therefore developed well before Malaysia proposed the current HSR project, he said, adding: "It was only much later, in 2015, that we decided to locate the Singapore terminus of the HSR in Jurong."

While some details may need to be adjusted along the way due to the HSR's termination, he said the JLD will be the largest commercial and regional centre outside of the city centre when completed.

The land parcels that the Government has acquired are still needed to realise these plans, the minister added.

The Jurong Country Club site will provide for new mixed use developments and community facilities, while the Raffles Country Club site is still needed for the Cross Island Line's western depot and an integrated train testing centre.

"We will be able to realise the full potential of the land to benefit Singaporeans," Mr Ong said.

This article was first published in The Straits Times. Permission required for reproduction.