MALAYSIA and Singapore have terminated the contract to build a high-speed rail (HSR) linking the two countries after failing to reach agreement on proposed changes to the project.

Malaysia’s Prime Minister Muhyiddin Yassin and his Singapore counterpart Lee Hsien Long issued a joint statement announcing the end of the deal after the expiry of the project suspension period yesterday.

“In light of the impact of the Covid-19 pandemic on the Malaysian economy, the government of Malaysia had proposed several changes to the HSR project,” they said in the statement.

“Both governments had conducted several discussions with regard to these changes and had not been able to reach an agreement. Therefore, the HSR agreement has lapsed on December 31, 2020.”

Malaysia and Singapore will meet their respective obligations that come with the dissolution of the agreement.

The two leaders said they remain committed to maintaining good bilateral relations and will cooperate closely on various initiatives, including strengthening connectivity between the two countries.

The project was put on ice in 2018 after Pakatan Harapan won the general elections. The new government had asked for and received a deferral of two years from Singapore, paying S$15 million (RM45 million) for the favour.

In May, Perikatan Nasional, which ousted the PH government mid-term, asked for yet more time to allow further discussion.

Singapore acquiesced to a final extension, until December 31.

Sources informed The Malaysian Insight last month that Malaysia would pay its neighbour RM300 million in compensation.

In a separate statement, Singapore’s Transport Ministry said Malaysia will recompense the city state for losses resulting from the termination of the bilateral agreement (BA)
 
“Singapore and Malaysia signed the Kuala Lumpur-Singapore High-Speed Rail Bilateral Agreement in 2016. The construction of the HSR project was subsequently suspended, from September 2018 to December 31, 2020, at Malaysia’s request, with the understanding that the extension of the suspension period until December 31, 2020 would be the final extension,” the ministry said.

“Malaysia has since allowed the HSR BA to be terminated and has to compensate Singapore for costs already incurred by Singapore in fulfilling its obligations under the HSR BA in accordance with the Parties’ agreement.”

It said Singapore has a deep and multifaceted relationship with Malaysia and is looking forward to continued good relations and close cooperation with its neighbour for mutual benefit. – January 1, 2021.