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Singapore will honour 1962 Water Agreement, expects Malaysia to do the same: Vivian

SINGAPORE will fully honour the terms of the 1962 Water Agreement with Malaysia, including the price of water stipulated in it, and expects Malaysia also to do so, Foreign Minister Vivian Balakrishnan said on Monday.

Responding in Parliament to a question about bilateral relations with Malaysia, Dr Balakrishnan said the 1962 deal is "not an ordinary agreement".

"The 1962 Water Agreement was guaranteed by both Singapore and Malaysia in the 1965 Separation Agreement, which in turn was registered with the United Nations," he said.

"Any breach of the 1962 Water Agreement would call into question the Separation Agreement, which is the basis for Singapore's very existence as an independent sovereign state."

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Water has been in the spotlight in recent weeks as an issue that could affect bilateral ties, after Malaysian Prime Minister Mahathir Mohamad criticised the water supply deal between Singapore and his country, saying the price at which water is sold to the Republic is "ridiculous".

An agreement signed between Singapore and Malaysia in 1962 allows Singapore to draw up to 250 million gallons of raw water from Johor daily at three sen (1.01 Singapore cents) per 1,000 gallons.

Johor's Menteri Besar Osman Sapian also commented on the issue last week, saying the state hopes it can raise the price to 50 sen per 1,000 gallons.

In Parliament on Monday, Dr Balakrishnan noted that previous foreign ministers have stated Singapore's position on this issue comprehensively - Professor S Jayakumar in 2003 and Mr K Shanmugam in 2014.

"As was stated then, the core issue is 'not how much we pay, but how any price revision is decided upon'," said Dr Balakrishnan,who said it was worth reiterating this point.

"Neither Malaysia nor Singapore can unilaterally change the terms of this agreement between our two countries."

Malaysia lost its right to review the price of water under the 1962 agreement in 1987 and in fact, Malaysia has previously acknowledged that they themselves chose not to ask for a review in 1987 as they benefited from the pricing arrangement under the deal, he added.

Johor currently buys treated water from Singapore at 50 sen per 1,000 gallons, as provided for under the 1962 Water Agreement. This is a fraction of the cost to Singapore of treating the water, Dr Balakrishnan noted.

"Hence, in 2002, then-PM Dr Mahathir 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."

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.

Having bought treated water, Johor then sells it to its people at RM3.95 per 1,000 gallons, earning a profit of RM3.45 per 1,000 gallons, or RM46 million a year.

Dr Balakrishnan added that if Malaysia had exercised the right to review the price of water in 1986 and 1987, Singapore might have made different investment decisions on developing the Johor River and its water catchment areas.

For example, he noted, in 1990, Singapore's national water agency PUB and Johor signed an agreement to construct Linggiu Dam to increase the yield of the Johor River to enable reliable extraction of PUB's full entitlement of 250 million gallons daily of water.

Johor owns the Linggiu Dam, but Singapore paid for its construction and operation costs.

These sums are on top of the RM320 million (S$208 million at 1990 rates) paid to Johor in 1990 as compensation for the land used for the Linggiu Reservoir project and for the potential loss of revenue from logging activities, and as a one-time payment for the lease of that land for the remaining tenure of the 1962 Water Agreement, he said.

THE STRAITS TIMES