Malaysian Foreign Minister: Water sold to Singapore must match market rate

Putrajaya—According to Datuk Saifuddin Abdullah, Malaysia’s Foreign Minister, negotiations between Singapore and Malaysia over the price of water should aim for an equitable result for both parties. Moreover, he emphasized that the price of water needs to match the market rate.

At an interview on April 23, Tuesday, Mr Saifuddin said,

“It’s not a question of who wins and who profits more, but let this be fair. Meaning, the price must match the market rate.”

He added that if Malaysia and Singapore are unable to settle the issue, international arbitration would be the final resort, saying, “In the event we make no progress, then the possibility of arbitration arises. But we are not there yet.”

After the 9th Malaysia-Singapore Leaders’ Retreat held earlier this month, Malaysia’s Prime Minister Dr Tun Mahathir Mohamad announced that the two nations are now actively looking for an amicable resolution for the contentious water issue that arose again after he became Prime Minister last year. The solution, he said, could possibly include arbitration from the global community.

Dr Mahathir discussed this with Singaporean Prime Minister Lee Hsien Loong at the leaders’ summit in Putrajaya on April 8-9. The position of both countries under the 1962 Water Agreement was noted at the summit, and the Attorneys-General of both countries will be meeting to discuss the water issue.

Historical Roots

The binding water agreement between Singapore and Malaysia is the 1962 Johor River Water Agreement that is valid until 2061. This agreement allows Singapore to get 250 million gallons of water every day from the Johor River at 3 sen per 1,000 gallons. Singapore sells treated water back to Johor at 50 sen per thousand gallons.

Malaysia had had an opportunity to review the price of raw and treated water when the pact reached its 25-year mark in 1986 and 1987, but the country’s leaders had declined to do so.

Deeper issues than the price of water

For many Singaporeans, the water issue goes deeper than the money exchanged between the two nations. According to Singapore’s former Prime Minister Goh in April 2002, “Any breach of the Water Agreements would also call into question the Separation Agreement, and undermine our very existence.”

Goh had been referring to the Independence of Singapore Agreement (also known as the Separation Agreement) signed between Singapore and Malaysia on August 9, 1965. This guaranteed the water agreements from 1961 and 1962, and registered it with the United Nations.

Later that year, Mahathir took a firm stance and told the press, “Well, international agreements have been broken before. I have seen people go to war, even which is not by agreement.”

The following year, Singapore’s Minister for Foreign Affairs Jayakumar said in Parliament, “The 1961 and 1962 Water Agreements are … fundamental to our very existence as an independent nation. Neither Singapore nor Malaysia can unilaterally change them. This is the root of the dispute between us.

It is not a matter of money — the significance of the water price, to both countries, is Singapore’s existence as a sovereign nation separate from Malaysia, and the sanctity of the most solemn agreements which Singapore and Malaysia have entered into.”

By October 2003, Mahathir retired as Malaysia’s prime minister.

2018—Water issue revived

Shortly after returning to power in Malaysia when he won the General Election in May 2018, Mahathir began to call the 1962 Water Agreement “unfair” and even “unreasonable.” It has become an oft-repeated refrain with him.

In November he asked Singapore Prime Minister Lee Hsien Loong for discussions on the water issue to be again opened, to which PM Lee agreed./TISG

Read related: Economy vs Sovereignty: the Singapore-Malaysia water issue