HSR train has pulled out but Malaysia and Singapore remain on the platform

Leaders from Malaysia and Singapore have made a series of statements regarding the termination of the Kuala Lumpur-Singapore High Speed Rail (HSR) project.

Singapore Transport Minister Ong Ye Kung revealed in Parliament on Monday that the republic could not accept Malaysia’s proposal to remove the systems supplier and network operator of the project as it constituted a “fundamental departure” from the original agreement.

Ong also said Malaysia wanted the train to stop at KL International Airport (KLIA) and not in Kuala Lumpur.

The Singapore minister added that S$270 million had been spent on the project, the amount which Malaysians fear is needed to compensate its neighbour for exiting the deal.

Later in the day, Malaysia’s Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed appeared on a television programme to rubbish talk of Malaysia wanting to appoint cronies for the project.

He also said the current economic situation due to the Covid-19 pandemic forced Malaysia to review the implementation model.

Malaysia’s justification, however, was not well received by the people.

Umno deputy president Datuk Seri Mohamad Hasan has today called on the government to explain the real reasons behind the cancellation of the project.

The project was announced in 2013 by former Malaysian prime minister Datuk Seri Najib Razak and Singapore Prime Minister Lee Hsien Loong at the Singapore-Malaysia Leaders’ Retreat. The memorandum of understanding was signed in 2016.

Twentytwo13 takes a look at the HSR project drama over the past two days.

Why was the bilateral agreement terminated?

Ong told Parliament that the “particularly significant change” to remove the assets company (AssetsCo) was Singapore’s main concern that led to the termination of the project.

“As neither country has the expertise and experience in operating the HSR, we agreed to appoint a best-in-class industry player through an open and transparent international tender to assume the role of the AssetsCo,” he said.

“The AssetsCo would supply the train system, operate the network, ensure appropriate priority was given to cross-border HSR service vis-a-vis Malaysia’s domestic service, and be accountable to both Singapore and Malaysia.”

Mustapa said the decision to allow the bilateral agreement with Singapore to lapse on Dec 31 was based on a “detailed study”. The government felt it was best to propose a new model for the project to protect national interest and save the rakyat’s money.

AssetsCo vs ‘cronies’?

The HSR project was supposed to be implemented through an AssetsCo model and a reputable industry player appointed through an open and transparent international tender with the company accountable to Malaysia and Singapore.

This led to talk that Malaysia wanted to appoint cronies to run the show.

Mustapa denied that government leaders wanted to appoint cronies through direct negotiations. He added that a study showed the AssetsCo model would have been too costly, especially while Malaysia is still battling Covid-19.

“The Malaysian government had given a 30-year guarantee to the AssetsCo amounting to RM60 billion (S$19.7 billion), or about RM2 billion annually.

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

Najib fuelled the cronies talk on Monday by claiming on Facebook that Perikatan Nasional (PN) wanted to appoint contractors and vendors for the project through direct negotiations, without interference from Singapore. He added Singapore also didn’t agree with PN for the HSR train’s final stop to be KLIA.

“The project was not cancelled by Malaysia because of Covid-19 as announced by PN,” Najib wrote.

How much will Malaysia pay Singapore?

Singapore’s Ong said the republic has spent over S$270 million in preparation for the HSR project so far.

Mustapa, however, said the government believed the termination compensation amount would be “much lower”.

“It has not been finalised. Once finalised, the government will announce to the rakyat as this is the rakyat’s money,” Mustapa added on television.

It must be noted that hours before appearing on the programme, Mustapa said via Facebook that the compensation figure could not be disclosed as both Malaysia and Singapore were bound by a confidentiality clause in the bilateral agreement.

Is this the end of the HSR project?

According to Ong, Singapore is willing to discuss any new proposal on the project 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.

Mustapa also did not dismiss the possibility that this marked the end of the project as he described it as beneficial to the economy.

“According to a study, the benefits to the economy over 50 years would total about RM300 billion. The benefits are great, which is why we are still keen to implement the project,” Mustapa said.

“It’s only the model, or method, that we felt may not be appropriate given the Covid-19 situation. So we took another look.”