Singapore agrees to defer HSR construction to May 2020

Singapore has agreed to suspend construction of the Kuala Lumpur-Singapore High-Speed Rail (HSR) project until the end of May 2020, says Minister of Economic Affairs Datuk Seri Mohamed Azmin Ali.

He said following Malaysia's request for the deferment of the project, the government has agreed to pay an abortive cost of S$15 million to the Singapore government by Jan 31, 2019.

"When I first met with Singapore’s Minister for Transport and Coordinating Minister for Infrastructure Khaw Boon Wan, I presented the mandate from the Malaysian cabinet that we would like the project to be postponed for at least three to four years," he said at a joint conference with Khaw today, Malaysia’s National News Agency (Bernama) reported.

Azmin said he agreed with Khaw that if the deferment period is beyond two years, the business model would certainly change with the cost continuing to escalate.

Earlier, Azmin and Khaw exchanged legal documents in Putrajaya to vary the HSR Bilateral Agreement based on the new understanding.

The signing was witnessed by Prime Minister Tun Dr Mahathir Mohamad, his deputy Datuk Seri Dr Wan Azizah Wan Ismail and Singapore Deputy Prime Minister Teo Chee Hean.

On the possibility of Malaysia cancelling the project, Azmin said: "I do not want to jump to the conclusion because the agreement signed today clearly stated our commitment to continue the project after May 2020."

A joint statement by Singapore and Malaysia on the HSR project said that if by May 31, 2020 Malaysia does not proceed with the HSR Project, Malaysia would also bear the agreed costs incurred by Singapore in fulfilling the HSR Bilateral Agreement.

"During the suspension period, Malaysia and Singapore will continue to discuss the best way forward for the HSR Project with the aim of reducing costs," the statement said.

It added that the HSR Express Service between Singapore and Kuala Lumpur is expected to commence by Jan 1, 2031 instead of the original start date of Dec 31, 2026.

"Given the length of the suspension, Singapore’s and Malaysia's infrastructure companies SG HSR Pte Ltd and MyHSR Corporation Sdn Bhd would be calling off the ongoing international joint tender for the HSR Assets Company (AssetsCo).

"The Ministers reaffirmed the mutual benefits of the HSR Project as it will bring both countries closer together by improving connectivity, deepening people-to-people ties and catalysing further economic cooperation," it noted.

Khaw said under the new understanding, the project would be deemed terminated if the construction is not resumed by May 2020 and Malaysia would reimburse Singapore for the wasted costs they have incurred in fulfilling the HSR agreement.

"Malaysia has explained their reason to suspend the project, they decided to suspend it for a year and we think we can manage.

"But if it’s longer, let's say four years, then the situation is quite difficult because it will affect both countries and the project itself," he said.

Khaw said many Singaporeans are looking forward to the realisation of the HSR project and its government remains committed to the project.

He added that even though the HSR bilateral agreement has no provision for such a project suspension, Singapore has given Malaysia a fair consideration in the spirit of bilateral cooperation.