SINGAPORE — The Malaysian government has reimbursed S$102.8 million for costs that Singapore had incurred in the High-Speed Rail (HSR) project, which was scrapped on Jan 1 this year.

The payment of S$102,815,576 compensates the Singapore Government for costs incurred in the development of the HSR project, and in relation to the extended suspension of the HSR project.

The project was terminated after both countries failed to reach an agreement on changes proposed by Malaysia by the deadline of Dec 31 last year.

In a joint statement on Monday (March 29), Singapore’s Transport Ministry and Malaysia’s Economic Planning Unit under its Prime Minister’s Department said that both countries had reached an amicable agreement on the amount following a verification process by the Malaysian government.

“This amount represents a full and final settlement in relation to the termination of the bilateral agreement. Both countries remain committed to maintaining good relations and fostering close cooperation for the mutual benefit of the peoples of the two countries,” they said.

Singapore’s Transport Minister Ong Ye Kung had said in Parliament on Jan 4 that Singapore has incurred more than $270 million on the project. The figure includes the cost for consultancy services, design infrastructure and manpower.

In response to media queries on why only S$102.8 million was provided as compensation from Malaysia, MOT said that the S$270 million includes land acquisition cost.

“Because the Singapore Government can recover value from the land we acquired, we are not seeking compensation for it. For example, one piece of land acquired will be used to develop the Integrated Train Testing Centre, which broke ground recently.” 

The ministry explained that the bulk of the final compensation amount of S$102.8 million was “computed and determined” when Singapore acceded to Malaysia’s request to suspend the project and was stipulated in the HSR agreements.

Both sides had initially signed the agreement in 2016, which was touted to cut travel times between Singapore and Kuala Lumpur to 90 minutes.

However, it was thrown into doubt following the election of a new government to replace former Malaysian prime minister Najib Razak’s in May 2018.

Shortly after being elected, then prime minister Mahathir Mohamad said that he wanted to scrap the project to rein in the country’s RM1 trillion (S$330 billion) debt. 

The construction of the HSR project was later suspended, from Sept 2018 to Dec 31, 2020, at Malaysia’s request, with the understanding that the extension of the suspension period until Dec 31 would be the final extension.

In 2019, Malaysia paid Singapore S$15 million for suspending the project. The latest compensation comes on top of the payment that Malaysia made in 2019.

In a Facebook post, Mr Ong said he was glad that both countries were able to “close this chapter amicably”, without affecting their good bilateral relationship.

“Looking ahead, there are many areas that we have opportunities to cooperate on,” he added. 

“These include the issues (that Singapore's Foreign Affairs) Minister Vivian Balakrishnan discussed with leaders in Malaysia last week, such as the restoration of some air travel, which the Ministry of Transport will be very involved in, and also commuting via the Causeway.”