Compensation amount for terminating HSR project cannot be disclosed due to confidentiality clause: Malaysian minister

SINGAPORE: The compensation to be paid by Malaysia to Singapore after the Kuala Lumpur-Singapore High-Speed Rail (HSR) project was terminated cannot be disclosed publicly because there is a confidentiality clause in the agreement between the two countries, said Malaysia's Minister in the Prime Minister’s Department (Economy) Mustapa Mohamed.

The project was terminated last Friday after the HSR agreement lapsed on Dec 31, 2020. 

In a Facebook post on Monday (Jan 4), Mr Mustapa said that the compensation is "not punitive in nature" and is an amount Malaysia will reimburse for specific costs of the project that Singapore has already spent money on. 

"We are waiting for the cost details from Singapore, and once received, it will be scrutinised before we confirm them. The types of claims made have already been agreed upon," said Mr Mustapa. 

"However, the amount of compensation cannot be disclosed because under the Bilateral Agreement, both countries are bounded by a confidentiality clause. Yet, my team and I will discuss with Singapore to share information on the amount of compensation after it is finalised. Therefore, any figures on compensation mentioned by any party are merely speculation," he added. 

Speaking in Parliament on Monday, Singapore's Transport Minister Ong Ye Kung also said: "The compensation amount for the termination and schedule for payment are specified in our Agreements." 

"In addition, there is a small component of miscellaneous abortive costs for the suspension of the project requested by Malaysia that Singapore is currently verifying, before we send to Malaysia. Due to Singapore’s confidentiality obligations under the HSR Bilateral Agreement, we are unable to reveal the exact terms in relation to the compensation for the termination of the HSR Project," he added.

Mr Ong said that the expenditure for the project so far is slightly more than S$270 million.

READ: From conception to termination: Timeline of KL-Singapore HSR project over 8 years

The proposed HSR line had aimed to reduce travel time between Singapore and Kuala Lumpur to around 90 minutes by train, from the current 11 hours on existing train services.

In September 2018, both sides agreed to postpone the construction of the HSR until end-May last year. Malaysia had to pay Singapore S$15 million for costs incurred in suspending the project.

Malaysia later requested a further seven-month extension to allow both sides to discuss and assess Malaysia’s proposed changes to the project.

Mr Khaw Boon Wan, who was then Singapore’s Transport Minister, agreed to the "final extension of the suspension period" until Dec 31. 

After the termination of the project was announced on Jan 1, Mr Mustapa said Malaysia will honour its obligations under the Bilateral Agreement and that both countries would initiate the necessary to determine the amount of compensation. 

COVID-19 FORCED MALAYSIA TO RE-EVALUATE HSR: MUSTAPA 

In his Facebook post on Monday, Mr Mustapa explained that the Malaysia government was keen on the HSR project, but the COVID-19 pandemic has forced it to re-evaluate the situation. 

He noted that similar rail projects in Japan and Taiwan have proven to be catalysts for economic development and the project would have reduced carbon emissions due to the reduction in air travel between Kuala Lumpur and Singapore. 

"However, the COVID-19 pandemic has changed everything," said Mr Mustapa. 

"This pandemic has posed a huge challenge to the health and economic sectors like we have never encountered. No one could have anticipate this pandemic and its devastating impact on the Malaysian economy and around the world. This situation has forced the government to re-evaluate the HSR project," he added. 

Commenting on earlier speculation that the HSR project will be replaced with a high-speed rail between Kuala Lumpur and Johor Bahru, Mr Mustapa said the Malaysian government will conduct a "detailed study" to determine the next move. 

"Currently, any talk on the KL-JB high-speed rail project is merely speculation," he added.