Singapore has spent $250 million on High-Speed Rail: Khaw

Singapore will continue to hold up its end of the Kuala Lumpur-Singapore High-Speed Rail (HSR) project even as its future now hangs in the balance following the change in government in Malaysia, Parliament was told yesterday.

During yesterday's sitting, Transport Minister Khaw Boon Wan said Singapore had not received an official reply from Malaysia despite sending a diplomatic note to Putrajaya on June 1 to seek clarification on its position on the project.

"The public statements made by the Malaysian ministers and Prime Minister Mahathir (Mohamad) himself on the termination of the project have not been followed through with any official communication to us," Mr Khaw said in reply to queries from MPs.

He said based on preliminary estimates, Singapore has already spent more than $250 million on the project as of the end of May and is likely to expend another $40 million by year-end.

"This is actual money that has already been spent, our taxpayers' money," he said.

"We can recover value for some of the expenditure, even if the HSR project does not proceed. But a significant amount which has been spent will be completely wasted expenditure if the project does not proceed.

"It will be most unfortunate if Malaysia has in fact decided to terminate but delays in notifying us, because there will be further wasted expenditure."

Dr Mahathir had announced in May plans to scrap the project, but there has been no confirmation so far.

"At this point, we have been left with no choice but to continue performing in accordance with the (HSR bilateral agreement), and thus continue to incur more costs," Mr Khaw said.

"This bilateral agreement is an international treaty that is binding on the countries that signed it.

"In other words, both Singapore and Malaysia are legally bound to perform our obligations under the bilateral agreement, regardless of any changes in government."

Mr Khaw added that more than $6 million was incurred in June, and he expects the same to be incurred this month.

AUGUST TO DECEMBER: $40M

"These costs will increase rapidly with time. From August to end-December, we will need to spend at least $40 million more," he said.

These include ongoing manpower costs, operating expenses and contract costs.

Mr Khaw, who is also Coordinating Minister for Infrastructure, said Malaysia proposed the project to Singapore in 2013.

After the bilateral agreement in December 2016, Singapore acquired land, passed legislation and set up an infrastructure company with more than 100 specialists to build, own, fund and maintain the HSR civil infrastructure here.

Under the agreement, each government foots the bill for civil engineering works within its borders, he said. The bilateral agreement also "provides for how compensation is to be dealt with" should either side decide not to proceed.

He said it is in Malaysia's interest to officially inform Singapore of its position "because the costs that we have incurred will add to the total amount of compensation".

Mr Khaw also said Singapore has not heard "anything officially" from Malaysia on the Johor Baru-Singapore Rapid Transit System (RTS) Link since its new government came into power.

SMRT and Prasarana Malaysia were to have incorporated a joint venture company to operate the RTS Link by June 30.

"That did not happen, as Prasarana had suspended discussions with SMRT after Malaysia's general election," Mr Khaw said.

"This means that both countries should now proceed to call an open, international tender to appoint the RTS Link operator, unless we mutually agree on a postponement of the deadline."

Under the agreement, the countries can call an open tender to appoint an operator if SMRT and Prasarana fail to form a joint venture.

Minister for National Development and Second Minister for Finance Lawrence Wong said the hike in the goods and services tax (GST) between 2021 and 2025 was not linked to the HSR project.

Replying to queries from Workers' Party chief Pritam Singh, he said the Government either saves ahead if possible or relies on borrowing when financing infrastructure investments, rather than use recurrent revenue sources like the GST.

"These are two separate matters. The increase in GST was never meant to finance lumpy investments in infrastructure in the first place," Mr Wong added.