The pact was a capstone of sorts to the energetic efforts of Singapore’s Prime Minister Lee Hsien Loong and his then-counterpart, Najib Razak, to overcome an acrimonious past that included disputes over everything from water supply to outcrops in the sea, airspace, and land that belonged to Malaysia before Singapore split off to become an independent nation.
Najib at the time envisioned the US$25 billion (S$33 billion) project as a key part of a plan for the two countries to put their historical baggage behind them and make Malaysia’s southern Johor region a New Jersey to Singapore’s Manhattan.
With the deal unravelling at the stroke of midnight on Jan 1 – following months of unsuccessful wrangling over Malaysia’s demands for changes to the legally binding 2016 pact – commentators on both sides of the Causeway have been considering the implications for bilateral ties.
In Malaysia, Prime Minister Muhyiddin Yassin’s decision to unravel Najib’s carefully laid plans is seen as likely to have domestic political ramifications.
Najib, who was ousted in Malaysia’s 2018 election and is facing jail time following corruption convictions, remains a major political force and has assailed the prime minister for the cancellation.
He has been joined by opposition leader Anwar Ibrahim, who like other critics has questioned Muhyiddin over Singapore’s revelation that the pact fell through because of Kuala Lumpur’s insistence on doing away with a jointly managed “assets company” that would act as steward and operator of the rail link.
Najib and others have insinuated the Perikatan Nasional alliance led by Muhyiddin had hoped to remove an open tender for the assets company, awarding the project instead to “cronies”. The Malaysian government has denied this.
Malaysia’s unilateral action means it owes Singapore an undisclosed cancellation fee above the $15 million “abortive costs” it paid the city state in 2019 to give itself more time to deliberate on the future of the project.
The delay was requested by the Pakatan Harapan government that was in power after the 2018 polls until it was ousted in a political coup by Muhyiddin in March last year.
The cancellation fee is spelt out in the 2016 bilateral agreement and is believed to be well over $100 million but not above the $270 million Singapore says it has spent so far.
Nonetheless, there are others who say Muhyiddin made the right choice to cancel a deal that would have diverted billions of ringgit to a project that had the potential to end up as a white elephant.
Francis Hutchinson, a close observer of Malaysia affairs at Singapore’s ISEAS-Yusof Ishak Institute, cited the Covid-19 pandemic as one of the likely considerations for the Muhyiddin government’s rethink.
“It is a large, complex and expensive project – estimated at around 60 to 65 billion ringgit (S$19 to 21 billion], excluding land acquisition … economic contractions caused by the coronavirus pandemic have shifted energy and resources away from projects such as the HSR,” he said.
The changes in Malaysia’s administration – and accordingly, policy priorities – in 2018 and again last year also contributed to the slowdown of the project, he added.
“The Pakatan Harapan and Perikatan Nasional administrations inherited quite a challenging fiscal situation from the Najib Razak administration,” Hutchinson told This Week in Asia.
“This included several large-scale projects and schemes that incurred high debt levels, such as 1MDB and the East Coast Rail Link. These absorbed large quantities of resources, making the implementation of a project such as the HSR more difficult.”
The project, if it had materialised, would not just have been a symbol of an enduring entente between the once constantly feuding neighbours, according to its key proponents such as Najib.
It was conceived in 2013, three years after Lee and Najib struck a separate, historic accord over various disputes between the neighbours. The blueprint signed in 2016 had the rail link terminating in the Jurong district in Singapore’s western region and just outside Kuala Lumpur in Malaysia.
Door-to-door travel time between Singapore and Kuala Lumpur would have been reduced to two-and-a-half-hours, with the actual travel time being 90 minutes. In contrast, the current door-to-door travel time is about three-and-a-half hours by air – on the world’s second-busiest flight route – and five hours by road.
While there had been trepidation over whether commuters would choose high-speed rail travel over a flight, the 2016 agreement followed detailed analysis of future travel patterns by both sides.
Expectations had been that commuters would eventually gravitate towards the rail link, making it the preferred mode of travel, in the same way similar links are the centrepiece of travel between France and Britain, or Hong Kong and Guangzhou.
So why did the project once touted by Lee as a “game changer” for bilateral ties come to its demise? In spelling out why it was aborted, the two countries differed in the language used but made it clear that they had divergent opinions over what was agreed in 2016.
Singapore’s Transport Minister Ong Ye Kung told Parliament that Malaysia’s demand for the removal of the assets company – deemed a “fundamental departure from the HSR bilateral agreement” – was unacceptable to the city state.
In Malaysia, Mustapa Mohamed, a key Muhyiddin lieutenant, said a key consideration for the government was to avoid the state having to grant a 30-year 60 billion ringgit (US$14.8 billion) guarantee to the project – which would have been required with the original assets company plan.
Both sides have pledged to be transparent about future deliberations, and have suggested they could come to an agreement on publicising the actual cancellation fee amount even though it is bound by confidentiality rules according to the 2016 agreement.
Malaysia-based transport planning and traffic management analyst Tai Tuck Leong is among the experts in his country breathing a sigh of relief over the project’s cancellation.
Tai said he believed the project would have exacerbated the development gap between Malaysia and Singapore, instead of narrowing it.
“The HSR will be used mainly by Malaysians going to Singapore. Singaporeans coming to Malaysia is a very seasonal thing. More people living in Malaysia fly to Singapore as well, as Singapore is a key transit hub. The HSR will just become a feeder system for Singapore,” said Tai.
“The fact of the matter is that we aren’t as strong as Singapore. If we have this link into Singapore, we are doing ourselves a disservice. Our financial sector will move there, our economic hubs will shift and we will simply bring our resources into Singapore faster – which is not something we should be doing,” Tai said.
“If we build this, Johor Bahru [the southern Malaysian city bordering Singapore] will forever be neglected, an appendix to Singapore. We would consolidate the unequal relationship between us and an island of 6 million people.”
Tai said he hoped authorities would focus more on domestic connectivity – and gave his nod to Mustapa’s suggestion that a high-speed rail link could be built between Johor Bahru and Kuala Lumpur.
Opposition politicians have criticised that plan but Tai said such a move would “strengthen the economic belt along the south”.
Analysts believe a diplomatic fallout following the cancellation of the deal appears unlikely, going by public statements.
In announcing the project’s termination on Jan 1, Lee and Muhyiddin pledged that their governments were committed to maintaining “good bilateral relations” and would continue cooperation in all fields including connectivity.
Both countries are going ahead with a metro link between Singapore and Johor Bahru.
Hutchinson, who coordinates the ISEAS-Yusof Ishak Institute’s Malaysia Studies programme, said bilateral ties at present were “very deep” and “multifaceted”.
“The economies of the two countries are deeply intertwined, and the flow of goods between Singapore and Malaysia continued uninterrupted during the pandemic – which is a testament to the high levels of capacity and commitment to trade on the part of both countries.”
Even if Malaysia’s fractious administration were to make way for a new government, it seems unlikely that the rail will be revived. “Given the Covid-19 pandemic, it is likely that the current and any future administration will concentrate their attention and finances on that, rather than new large-scale projects,” said Hutchinson.
This article was first published in South China Morning Post.