News: Compensation For Cancelled HSR Project May Be Below S$270mil, Says Mustapa

Jan 5, 2021

Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed expects the compensation to be paid to Singapore after the Kuala Lumpur-Singapore High Speed Rail (HSR) project’s termination to be lower than S$270 million (RM821.93 million).

Mustapa made the statement in reference to the remarks of Singapore’s Transport Minister Ong Ye Kung, who said that Singapore spent over S$270 million on the HSR project including the costs for manpower and consultancy services, reported Bernama.

“The transport minister also said the compensation would not include land costs and we are made to understand that the Singapore government has acquired several pieces of land to implement the project,” said Mustapa.

“Therefore, we are confident that the compensation cost will be much lower than S$270 million. Anyway, the matter has not been finalised and will be discussed soon.”

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Singapore and Malaysia jointly announced on 1 January 2021 the termination of the 350km rail line project, citing failure to reach an agreement on the proposed changes by 31 December 2020 deadline.

Mustapa explained via Facebook that the compensation amount for the project’s cancellation could not be disclosed since there is a confidentiality clause in the agreement signed by the two countries.

Nonetheless, he assured that the government will announce the compensation amount once it is finalised.

He added that the government will see a 30% cost savings if it would not use the services of Asset Company (AssetCo).

It was previously announced that the AssetCo would design, build, finance and maintain all rolling stock as well as design, build, finance, operate and maintain all rail assets like track work, signalling, power and telecommunications for the HSR project.

“The Malaysian government had given a 30-year guarantee to AssetCo amounting to RM60 billion, or about RM2 billion annually,” said Mustapa.

“The guarantee would mean that if the payments to AssetCo were less than RM60 billion, the government must pay by using other revenue to cover the gap. This is also a form of savings.”

He added that while Malaysia was still interested to push through with the project, the current economic situations brought about by the COVID-19 pandemic forced it to re-evaluate the implementation model.

“According to a study, the benefits to the economy over 50 years would total about RM300 billion. The benefits are great, which is why we are still keen to implement the project,” said Mustapa.

“It’s only the model, or method, that we felt may not be appropriate, amid the COVID-19 situation. So we took another look.”

 

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Nelson Yap
Senior Real Estate Negotiator
REN: 02313
Midas Properties
nelsonyyc@gmail.com
(+60) 16-3328637