2-year delay of HSR a "fair arrangement", says Khaw Boon Wan

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Transport Minister says M'sia's $15m reimbursement will cover contract breakage, winding down costs

The agreement signed between Singapore and Malaysia to suspend the High-Speed Rail (HSR) project for about two years is a "fair arrangement" for both countries, Transport Minister Khaw Boon Wan said in Parliament yesterday.

He said last month's deal "protects Singapore's interests, while reasonably accommodating Malaysia's request".

"It also shows that we can manage our bilateral ties on the basis of mutual respect, and resolve issues amicably in accordance with binding agreements and international law," he added.

Mr Khaw was replying to questions from Mr Ang Hin Kee (Ang Mo Kio GRC) and Non-Constituency MP Dennis Tan, on the considerations which led to Singapore agreeing to postpone the HSR project.

On Sept 5, the two sides inked a deal to suspend the HSR project up to May 31, 2020, with Malaysia agreeing to reimburse Singapore $15 million for the deferment.

With the delay, trains will start running only on Jan 1, 2031, instead of Dec 31, 2026.

Mr Khaw told the House there was no provision in the bilateral agreement to build the 350km line, signed in December 2016, for a deferment.

But in the "spirit of bilateral cooperation", Mr Khaw said both sides agreed to delay the project for about two years.

Malaysia had asked for a deferment of three to four years.

"Beyond two years, the current cost estimates would likely be no longer valid, which would affect the viability of the project and its business case," he said.

"A longer suspension period would also impact our development plans for the Jurong Lake District, which will host the Singapore HSR Terminus and many transport, commercial, residential and recreational developments."

He also said Singapore is open to having discussions with Malaysia - during the suspension period - on the way forward for the HSR project, with the aim of reducing costs.

He explained that the $15 million which Malaysia has agreed to reimburse Singapore by end-January next year includes contract breakage costs that Singapore has to pay to contractors for terminating ongoing projects, and to wind down operations.

For excavation works, for example, the excavations must be back-filled for safety, and re-excavated when the project resumes, thus increasing costs.

Singapore spent more than $250 million by end-May to implement the HSR project, which includes consultancy fees to design the civil infrastructure, manpower costs and land acquisition costs, he said.

Mr Khaw said there will be no further postponement beyond May 31, 2020.

"If Malaysia does not proceed with the HSR project by then, the project will be deemed to have been terminated by Malaysia, which will reimburse Singapore for the project implementation costs incurred by us up to the point of suspension," he said.