Three lessons Malaysia is teaching the world through how it is dealing with Singapore

By July 12, 2018Current

TL;DR – Not easy dealing with Malaysia.

Malaysia, under the new Mahathir administration, hasn’t been exactly friendly to Singapore. It’s brought back the issue of the price it sells raw water to Singapore. Dr Mahathir criticised the water supply deal between Singapore and his country, saying the price at which water is sold to the Republic is “manifestly ridiculous”.

Also, Malaysia has sort of said, but not officially so, that the High Speed Railway (HSR) project is to be scrapped, or postponed, or… something.

From the way that Malaysia is dealing with Singapore, it is teaching the world three very important lessons.

1. When dealing with Malaysia, you need to be a mind reader

Singapore had tried time and again to clarify Malaysia’s position on the HSR project. But Malaysia has yet to follow  through with any official communication to Singapore. Instead, Dr Mahathir has chosen to say things like this:

“We have not given them (Singapore) full notice yet but they know what we want to do”

Erm. If you don’t give us full and official notice, and you have been flip-flopping from cancelling to postponing, how do you expect us to know what you want? And now their finance minister Lim Guan Eng is saying the HSR project can be revived if costs can be halved.

So the lesson is that to deal with Malaysia, you need to have a few diplomats with Charles Xavier’s ability to read minds.

2. Best not to expect that Malaysia will honour their agreements

The HSR is just one example of an agreement that Malaysia isn’t honouring.

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There’s also the 1962 Water Agreement. It’s not that Malaysia didn’t have a chance to negotiate the price of raw water it sells to Singapore. The 1962 Water Agreement had a clause that gave Malaysia the right to review the price of raw water it sells to Singapore in 1987. Malaysia chose not to ask for a review in 1987. But now, when it suits them, they want to unilaterally change the terms of the agreement.

What’s this telling the rest of the world?

It’s telling the rest of the world that when you have any agreements with Malaysia, you better be careful. They may suka suka change the terms of the agreement unilaterally. So if you are thinking of striking a deal where you invest billions in Malaysia to build a manufacturing plant there, you better think twice. Because you never know whether Malaysia will suka suka change the terms of the deal to leave you saddled with all the costs but reaping none of the benefits.

Instead, better make deals with countries which you know will honour their agreements and keep their word. You know, countries like… Singapore.

3. Some Malaysian netizens show us why we should think win-win

When Singapore mentioned that it expects compensation for costs already incurred from Malaysia should it really cancel the HSR project, some Malaysian netizens expressed outrage. They turned back to the water issue, saying that we have been paying them “pittance” for the raw water that they sold us.

Some even went as far as to say that Malaysia should cancel the Water Agreement and cut off our water supply:

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Well. If we were to cancel the Water Agreement, it means that Singapore won’t be supplying treated water back to Malaysia. That means that Malaysia, or specifically Johor, will have to treat their own water. That will mean that Johoreans will end up paying more for clean, treated, drinkable water.

Why?

Because under the Water Agreement, Singapore supplies treated water to Johor at 50 sen per 1,000 gallons. But it costs Singapore RM2.40 to treat every 1,000 gallons of water. By selling it to Malaysia at 50 sen, Singapore is providing a subsidy of RM1.90 per 1,000 gallons. And this is with our technology and expertise. If Johor were to do it themselves, their costs are likely to be higher. So if Malaysia cancels the Water Agreement, they lose out.

And Dr Mahathir knows this. He’s acknowledged this publicly. In 2002, when Dr Mahathir was PM, he said that Malaysia did not ask for a review when it was due as Malaysia knew that any revision would also affect the price of treated water sold by Singapore to Malaysia.

So it’s not as if Malaysia isn’t gaining from the Water Agreement. In fact, Singapore has gone out of our way to be a good neighbour.

Under the Water Agreement, Johor is only entitled to buy up to 5 million gallons of water a day from Singapore. But Singapore has on several occasions supplied additional potable water to Johor for various reasons, following requests for assistance from the Malaysian state’s water regulatory body Badan Kawalselia Air Johor (BAKAJ).

The most recent of these occasions was during the especially severe drought season that Johor experienced in 2016. In fact, Singapore has been such a good neighbour that the Johor Crown Prince recently wrote a post to thank Singapore on the Facebook and Twitter pages of the Johor Southern Tigers, the football club he owns.

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In short, those netizens calling to cut off our water supply is cutting off the nose to spite the face. They aren’t thinking win-win. They are thinking lose-lose.

And that is a huge lesson to all of us – international relations and deals are often multi-faceted. We shouldn’t think about how we can hurt other parties. Because if we do, chances are, everyone will lose.

Thanks, Malaysia, for teaching us these lessons

These are important lessons for us. We shouldn’t expect that other countries respect international laws and agreements just because we do. And as much as we try to think win-win, we need to constantly remind ourselves that some people would rather think lose-lose. If we learn these lessons well, we should be better prepared to deal with countries like Malaysia.
 

 

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CRC

Author CRC

Working on a startup is a scary crazy process. To destress, I write random stuff.

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