TL;DR – Water Talks, if only it could.
By now you should know that the water issue between Singapore and Malaysia is in the spotlight. AGAIN.
We’ve addressed the issue of why Singaporeans pay so much more for water when we buy it for 3 sen per 1,000 gallons from Malaysia here, and now we want to walk you through the history of the Water Agreements.
There’s a very important booklet, Water Talks, that the Singapore government published in 2003. It made public the key correspondence between Singapore and Malaysia on the water issue and it also included Ministerial statements and other key info. You can also download it here.
Yes, that was then-and-now Prime Minster Mahathir’s response when Singapore made public the correspondence and details of the matter.
Although our then Foreign Minister Jayakumar had responded in a more politically correct manner, one Singaporean’s response back then was more of what most of us Singaporeans would want to say,
“Nice try, Dr Mahathir. It is more like the boyfriend, having corresponded constantly with his girlfriend and indicated his intention to marry her, chickened out when the marriage was due. It happened so many times that the exasperated girl calls off the relationship and tells everyone what an unreliable person the boy is!”
The four Water Agreements
Singapore and Malaysia have signed a total of four Water Agreements regarding the supply of water from across the Causeway and the water issue between Singapore and Malaysia was never really resolved ever since the ‘drama’ first erupted in 1998. These Water Agreements are the 1927, 1961, 1962 and 1990 agreements.
Now, here’s a simplified timeline:
The first Water Agreement was signed between the municipal commissioners of the town of Singapore and Sultan Ibrahim of the state and territories of Johor in 1927.
In this agreement, Singapore obtained water FREE from Malaysia. Singapore only had to pay rent for the land in the catchment and waterworks areas.
This agreement is no longer in force.
The Tebrau and Scudai Rivers Water Agreement was made between the city council of the state of Singapore and the government of the state of Johor and was officially signed in 1961.
This agreement gave Singapore the full and exclusive right to draw off all the water within the designated land at Gunong Pulai, Sungei Tebrau and Sungei Scudai for a period of 50 years up till 2011.
Singapore was to pay an annual rent for the land and a charge of 3 sen (SGD $0.01) for every 1,000 gallons of raw water it drew.
In return, Singapore also agreed to provide Johor with a daily supply of treated water, at a price of 50 sen (SGD $0.17) per 1,000 gallons.
This agreement had expired on 31 August 2011.
The Johor River Water Agreement was signed in 1962 between the city council of the state of Singapore and the government of the state of Johor. This agreement will be valid for 99 years till 2061.
The agreement gave Singapore the right to draw 250 million gallons of water per day from the Johor River. And in return, Johor was entitled to a daily supply of treated (and clean) water from Singapore up to 2% of the raw water it supplied.
The 1961 and 1962 agreements provided for a price review after 25 years, with arbitration being the agreed course of action if bilateral price negotiations failed.
Here’s how the deal works:
Singapore still pays the rent for using the land and purchase also the dirty raw water from Johor, Malaysia at 3 sen (SGD $0.01) per 1,000 gallons.
Singapore then sells the treated (and clean) water back to Johor at 50 sen (SGD $0.17) per 1,000 gallons.
You think Singapore’s got ourselves a good deal here?
Not at all. In fact, we are selling the treated water to Malaysia at a loss.
Real cost of the treated water – RM 2.40 (SGD $0.81) per 1,000 gallons.
If you do the math, we are absorbing RM 1.90 (SGD $0.64) per 1,000 gallons for Malaysia. And apparently, Malaysia is purchasing 37 million gallons of water a day from us, which means Singapore has been subsidizing Malaysia RM 70,000 (SGD $23,693) a day.
When it comes to making money, Malaysia definitely knows how to turn every opportunity into a cash cow.
Malaysia actually sells the treated water back to their own Johor citizens at RM 3.95 (SGD $1.34), which is at a hefty profit of 700% by the way.
So Malaysia is profiting at least a whopping RM 127,650 (SGD $43,205) a day just by doing nothing. Such easy money!
1965 – When Singapore gained Independence
When Singapore officially broke off from Malaysia on 9 August 1965, both the governments of Singapore and Malaysia signed the Independence of Singapore Agreement (also known as the Separation Agreement), which was registered with the United Nations.
This agreement also guaranteed the 1961 and 1962 water agreements.
Singapore and Malaysia stopped using a common currency in 1973, the prices of water became denominated in Malaysian ringgit.
1986 – 1987
The Johor government was supposed to revise the price as part of the 1961 and 1962 agreements. However, they chose not to revise the prices at both opportunities.
Malaysia has lost its legal right to ask for any price review after this date.
In 1990, the Public Utilities Board (PUB) of Singapore and the government of the state of Johor signed an agreement to construct a dam across Sungei Linggiu (Linggiu Reservoir) to facilitate the extraction of water from the Johor River.
This agreement supplemented the 1962 Water Agreement and would expire in 2061.
Singapore also paid for the full cost of constructing, operating and maintaining the dam (while the dam still rightfully belongs to Malaysia). These sums are on top of the compensation that Singapore has paid to Johor for loss of use of the land.
In 1998, when the water talks (turned drama) began.
Malaysia had asked to settle all the outstanding bilateral issues as a package. Part of this package includes the future supply of water to Singapore for 100 years after 2061.
However, the negotiations stalled because of Malaysia’s constant changes and new demands.
In August 2000, Malaysia decided to ask for a review on the prices (but remember they already lost their legal right to ask for any price review after they decided not to in 1961 and 1962?).
Nevertheless, Singapore tried to negotiate on terms acceptable to both sides as Singapore’s position has consistently been that neither Malaysia nor Singapore can unilaterally change the prices of raw water and treated water specified in the Water Agreements.
However, Malaysia repeatedly changed its mind on the price of water.
In February 2001, Malaysia finally agreed that 60 sen (SGD $0.22) is a “fair price” for selling Singapore its raw water from 2061.
Singapore accepted this price and in return, as a gesture of goodwill, Singapore agreed to pay Malaysia 45 sen (SGD $0.15) for raw water up until 2061.
Then Senior Minister Lee Kuan Yew and then Malaysian Prime Minister Dr Mahathir Mohamad both came to an agreement and the basic skeleton of an agreement on the package was forged in September 2001 (or so we thought).
Malaysia changed their mind AGAIN on the agreed prices and sent Singapore a totally different pricing proposal.
They raised their asking price to 60 sen (SGD $0.22) from 2002 to 2006, and RM 3.00 (SGD $1.02) from 2007 to 2011.
They later asked for the pricing to be raised to RM 6.25 (SGD $2.11) and wants to adjust the price yearly for inflation.
Finally, in October 2002, Dr Mahathir suddenly and unilaterally decided to discontinue the package approach without consulting Singapore and informed Singapore with just one letter.
Goh Chok Tong (then Prime Minister) informed Dr Mahathir saying Singapore would supplement the water agreements by producing its own Newater for the sake of good long-term relations.
However, Malaysia insisted that it will raise the price of water, with or without Singapore’s consent – to RM 6.25 (SGD $2.11).
Singapore made public its correspondence with Malaysia on this water issue, and stood on principle that the matter was not one of money but about Singapore’s existence as a sovereign nation separate from Malaysia.
Dr Mahathir stepped down as prime minister. Tun Abdullah Badawi took over.
The 1961 water agreement expired. Singapore returned all land and facilities, but made it clear that this would not affect the adequacy of the water supply to Singapore.
Prime Minister Lee Hsien Loong and then Malaysian Prime Minister Najib Razak reaffirmed the terms of 1962 agreement.
Dr Mahathir returned as second-time Prime Minister of Malaysia and decided to reopen the water talks as he thought that the 1962 water supply deal with Singapore was “too costly”.
But an agreement IS an agreement
The Water Agreements were guaranteed by the Government of Malaysia in the Separation Agreement signed in 1965 that established Singapore as an independent and sovereign state, and the Separation Agreement was registered with the United Nations.
If an agreement is not honored, how does it reflect on a nation and its leader’s credibility?