Malaysia lost its right to review water price after choosing not to do so in 1987: Shanmugam

Malaysia lost its right to review water price after choosing not to do so in 1987: Shanmugam

SINGAPORE - Singapore thus welcomed the Malaysian Foreign Minister Anifah Aman's recent statement that they would honour the 1962 Water Agreement and that any review of water pricing is possible only if Singapore also agreed to it, Foreign Affairs Minister K. Shanmugam said.

Get the full story from The Straits Times.

Below is the transcript of Mr Shanmugam's reply to a parliamentary question by Ms Ellen Lee (Sembawang GRC), who had asked whether the existing water agreement signed between Malaysia and Singapore allows for Malaysia to raise the price of raw water sold to Singapore at any time before its expiry in 2061:

Ms Ellen Lee had asked whether Malaysia had the right to review the price of raw water sold to Singapore. We have stated our position on this issue and also conveyed it officially to the government of Malaysia on several occasions.

As I mentioned in my COS speech yesterday, neither Malaysia nor Singa­pore can unilaterally change the price of raw water sold to Singapore. Indeed, neither party can unilaterally change any of the terms of the 1962 Water Agreement. This is no ordinary agreement. It was guaranteed by both Governments in the Separation Agreement in 1965, which was registered at with United Nations. Both countries have to honour the Water Agreement and the guarantee in the Separation Agreement. Any breach of the Water Agreement would also be a breach of the Separation Agreement and of international law.

Singa­pore's position is that Malaysia has lost its right to review the water price. The Water Agreement provided for the review after 25 years. Specifically, there was a right to review the price of water jointly in 1987. However, Malaysia consciously chose not to review the price. It had good reasons for this.

Malaysia benefits greatly from the current pricing arrangement. Johor buys 16 million gallons per day of treated water back from us at 50 sen per 1000 gallons. 50 sen per 1000 gallons is only a fraction of the true cost to Singa­pore of treating the water, which includes building and maintaining the entire infrastructure of the water purification plants.

Malaysian leaders have acknowledged that Malaysia benefits from the current arrangement, and explained that indeed that was why Malaysia made a carefully considered decision not to review the water price in 1987.

Then-Malaysian Prime Minister Dr Mahathir Mohamad said in 2002 that Malaysia did not revise the water pricing when it was due because they thought Singapore would also revise the price of treated water supplied to Malaysia. One can refer to a Bernama report on 11 October 2002.

Then-Johor State Assembly Speaker Zainal Abidin Mohd Zain said that the Johor Government had not made a mistake in not pressing for a review in 1986 and said, "there was no point in doing so because Johor was dependent on Singapore for its treated water supply, and Singapore would have also increased its price of treated water sold to Johor" (New Straits Times, 3 July 2002).

Under the Agreement, after Malaysia decided not to review the water price in 1987, there is no longer any right to review the price of water.

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