HSR Project Cancellation: Malaysia Expects To Pay Less Than RM891 Million To Singapore

Mustapa Mohamed contended the appointment of a neutral company to manage the project was too costly for the country, while Singapore said the appointment was the "centrepiece" for the project's success.

Cover image via Yusof Mat Isa/Malay Mail & Focus Malaysia

Minister in the Prime Minister's Department Datuk Seri Mustapa Mohamed has revealed that Malaysia is expected to pay Singapore less than RM891 million for the cancellation of the High-Speed Rail (HSR) project

Mustapa, who is in charge of the nation's economic affairs, made the revelation on Astro Awani last night, 4 January, despite saying earlier in the morning that Malaysia cannot disclose the compensation amount as both countries have signed a non-disclosure agreement.

His revelation came after Singapore Transport Minister Ong Ye Kung told his Parliament on Monday that the island nation had spent more than SGD270 million (about RM891 million) on the project.

Mustapa estimated that the final compensation amount would be less than the amount Singapore had spent because it will not include land costs.

It is learnt that the Singaporean government spent a sizeable amount to purchase land in Malaysia meant for the project.

"Therefore, we are confident that the compensation cost will be much lower than SGD270 million. Anyway, the matter has not been finalised and will be discussed soon," The Edge Markets quoted him as saying.

He assured the public that the final amount will be revealed because it is taxpayers' money after all.

Minister in the Prime Minister's Department (Economic Affairs) Datuk Seri Mustapa Mohamed.

Image via Astro Awani

During Singapore's Parliament session yesterday, Ong attributed Malaysia's decision to remove a neutral company to manage the project as the reason for the project's termination

The Singapore Transport Minister said the appointment of Assets Company (AssetsCo) as the systems supplier and network operator was the "centrepiece" of the HSR project as it would ensure that the interests of both Singapore and Malaysia are protected, reported The Straits Times.

He explained that AssetsCo's role would be the middleman between the two countries, minimising the possibility of future disagreements and disputes over the decades-long project.

"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."

The minister said the removal of AssetsCo was a "fundamental departure" from the original agreement.

Singapore Transport Minister Ong Ye Kung.

Image via CNA

Meanwhile, Malaysia's decision to drop AssetsCo in the project was simply because the fee was too high

Mustapa said without AssetsCo, the government could save 30% in total expenditure, reported The Edge Markets.

"The Malaysian government had given a 30-year guarantee to AssetsCo amounting to RM60 billion, or about RM2 billion annually," said the minister.

"The guarantee would mean that if the payments to AssetsCo were less than RM60 billion, the government must pay by using other revenue to cover the gap. This is also a form of savings."

Free Malaysia Today reported him as saying that the AssetsCo model was too costly, especially when the country is still battling the COVID-19 pandemic.

However, the recent exit from the mega-project does not mean Malaysia is not interested to explore a high-speed railway system connecting both countries in the future, as a study has shown that the economic benefits over 50 years would amount to RM300 billion.

With that said, he dismissed speculation that the HSR project would be replaced with a high-speed rail initiative linking Kuala Lumpur and Johor Bahru.

"The government will be conducting a detailed review to determine our next direction. Any talk on a high-speed-rail project linking Kuala Lumpur and Johor Bahru is just speculation," Mustapa said, reported New Straits Times.

The HSR project aimed to reduce travel time between Kuala Lumpur and Singapore to 90 minutes. However, premiers of both countries announced on 1 January that the project was officially terminated:

Read more about the HSR project here:

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