Between 1998 and 2003, both countries engaged through a series of letters and 4-eyed meetings to revise the price of water sold to Singapore

By ALIFAH ZAINUDDIN / Pic By BERNAMA

FROM the time Malaysia and Singapore went separate ways, the two countries seem to have always found a way to poke, jab and slap one another whenever the opportunity arises, and for the longest time, the supply of raw water across the Causeway would always be at the heart of tit-for-tat arguments.

That was until Prime Minister (PM) Tun Dr Mahathir Mohamad, who was in his first term as PM, stepped down in 2003.

It might be safe to say that Malaysia and Singapore seemed to have enjoyed “friendlier ties” when Tun Abdullah Ahmad Badawi and Datuk Seri Mohd Najib Razak were at the helm.

There were less confrontations (although we still fight over laksa), with Abdullah telling Malaysians that we cannot blame Singapore entirely for our woes.

Meanwhile, Najib’s tenure as PM is often described as a period of warm relations which is exemplified by his dovish remark that the fraught relationship of yesteryears was “an era Malaysia want to forget”.

As a result, contentious bilateral issues such as raising the price of water supplied to Singapore and constructing a new bridge to replace the Causeway were put on the back burner.

Malaysia and Singapore were living happily ever after. Or, so it seems.

Fast-forward to May 9 this year, the wind of change in Malaysia brought about the return of an old face. Now at 93, with his mind still as sharp as ever, Dr Mahathir is wasting no time to pick up where he left off with the southern neighbour — starting with water.

Going Back to the Facts

The whole Malaysia-Singapore water saga dates back to the British colonial era in 1927 where the municipal commissioners of Singapore and Johor’s Sultan Ibrahim Iskandar agreed to a deal.

Archives from the National Library Board of Singapore described that the agreement allowed the city state to rent 8.5 sq km of land in Gunung Pulai for the purpose of supplying raw water from the area to Singapore.

An annual rent of 30 sen per acre (0.4ha) was payable on the land, but the water was free.

This arrangement was later declared void and was replaced by three other agreements signed in 1961, 1962 and 1990.

The 1961 agreement spanned for a period of 50 years, allowing Singapore to draw water within the designated land at Gunung Pulai, the Tebrau and Skudai rivers. To do this, Singapore had to pay an annual rent of RM5 per acre for the land and a charge of three sen for every thousand gallons (4,546 litres) of raw water it drew. The deal was not renewed after it expired in 2011.

The 1962 Water Agreement, on the other hand, gave Singapore the right to draw 250 million gallons of water each day (mgd) from Sungai Johor until 2061. In return, Johor was entitled to a daily supply of treated water from Singapore up to 2% of the raw water it supplied.

The water prices were kept at the same rates as in the previous agreement — three sen per 1,000 gallons of raw water supplied to Singapore and 50 sen per 1,000 gallons of treated water sold to Johor.

In 1990, another agreement was signed between the Public Utilities Board (PUB) of Singapore and the state of Johor to supplement the 1962 pact. This would also expire in 2061.

The deal was to construct the Linggiu Reservoir to increase the yield of Sungai Johor to enable reliable abstraction of PUB’s full entitlement to 250 mgd of water.

Singapore agreed to pay a RM320 million compensation for the permanent loss of use of the land, a premium of RM18,000 per ha and an annual rent of RM30 for every 1,000 sq ft of the land. The cost of building and maintaining the dam would also be borne by Singapore.

In return, Singapore could purchase treated water from Johor generated by the new dam. This would be above the 250 mgd of raw water that it was allowed to draw from Sungai Johor under the 1962 agreement. The price of this additional supply would be calculated based on a fixed formula.

Water Talks

Dr Mahathir, who took a hardline stance towards Singapore during his initial 22-year premiership, has always viewed the three sen per thousand gallons price tag as unreasonable.

Between 1998 and 2003, Malaysia and Singapore engaged through a series of letters and four-eyed meetings to revise the price of water sold to Singapore. Contrary to popular belief, the Lion City was open to reviewing the water price.

In an 85-page booklet issued by Singapore’s Ministry of Information, Communications and the Arts, letters exchanged between the two countries showed Singapore’s readiness to pay a higher fee for water, if there could be give-and-take on other issues.

The letters, which were dated from August 2000 to October 2002, unveiled Malaysia’s proposal to raise the price of water from 45 sen to 60 sen, and finally at RM6.25 per thousand gallons over the period.

Since negotiations were done in a packaged approach, Singapore’s agreement to pay more for raw water would mean that Malaysia is in agreement to supply water after the 1962 Water Agreement expires in 2061, in addition to allowing the republic’s air force to use the country’s air space.

However, talks of these bundled deals fizzled just before the end of Dr Mahathir’s first term.

This time, leading under the “New Malaysia” banner, Dr Mahathir once again is seeking to restart negotiations on the price of water.

During Dr Mahathir’s two-day visit to Singapore, he said Singapore PM Lee Hsien Loong was willing to listen to the new government’s stand on the water deal.

Although Singapore did not provide any immediate response to the proposal, Dr Mahathir said he was happy that Lee was open to pay attention to Malaysia’s views on a new water arrangement.

Time to Get Over This Fraternal Drama

To date, both sides have each claimed to pay billions in subsidies each year to provide water for the other. Singapore has also taken every opportunity to remind Malaysia that it has spent over RM3 billion (US$726 million) on water work upgrades in Johor within the last couple of decades.

While this fraternal drama can go on and only complicate matters between the two countries, there is no way to get around it. Time is ticking away and Singapore is not the one with the bargaining power.

The Lion City’s decades-old water treaty with Malaysia ends in 2061, approximately 43 years from now. By then, it is estimated that Singapore’s water use will double from its existing rate.

The city state can boast about its innovative NEWater (recycled sewage water) and desalinated water technologies to increase its local water supply and reduce its reliance on imported water.

But, unless there is a way to keep electricity tariffs unchanged, higher dependency on desalination plants to produce more than one-third of the country’s current water demand would see utilities prices go up a few folds as these plants consume great amounts of electricity.

This would translate into higher living costs and result in many unhappy citizens — a scenario that the present Singapore government would not want to deal with.

The fact that Malaysia is looking to renegotiate the terms of the 1962 Water Agreement is something Singapore will eventually have to accept.

Should the island republic remains adamant to deny Malaysia’s request for a higher water selling price, the question that begs to be asked is — if Malaysia is not supplying the water, who else would?