Yahoo Finance Budget 2019 debate: Mahathir's comments on 'morally wrong' water deal a 'red herring', says Vivian Balakrishnan
Malaysian Prime Minister Mahathir Mohamad’s comments on his country’s “morally wrong” water deal with Singapore are a “red herring”, said Foreign Affairs Minister Vivian Balakrishnan in Parliament on Friday (1 March).
“I’m supposed to be diplomatic, but I think members of this House know that I call a spade a spade. This is a red herring,” Dr Balakrishnan said during the Ministry of Foreign Affairs’ (MFA) Committee of Supply debate.
Dr Balakrishnan was responding to a query from Member of Parliament Vikram Nair, who asked if the minister had a response to Dr Mahathir’s comments made on Thursday.
Speaking in Johor, the 93-year-old premier had accused Singapore of being a “rich country” that is “buying water from a poor country at an unfair price,” the Malay Mail quoted him as saying.Dr Mahathir also encouraged Johor residents to “speak up” over the issue.
A deal’s a deal
In his response, Dr Balakrishnan defended the 1962 Water Agreement in which both sides set the price of raw water that Singapore buys from Malaysia.
“The 1962 Water Agreement is not about who is richer or poorer. It is about the fundamental principle of respecting the sanctity of agreements,” he said.
Singapore’s stance – that neither side can unilaterally change the terms of the agreement – has been clear and consistent.
When Singapore separated from Malaysia in 1965, the Republic took the precaution of ensuring that the 1962 Water Agreement would be guaranteed by both governments, he added.
“(The 1962 Water Agreement) forms, in effect, part of our 1965 Separation Agreement. Any breach of the 1962 Water Agreement would call into question the Separation Agreement.
“And this…is the basis for our existence as an independent, sovereign state,” Dr Balakrishnan said.
“Therefore Malaysia and Singapore must fully honour the terms of the 1962 Water Agreement, including the price of water that is stipulated in it.”
No review requested in 1987
Dr Balakrishnan also reiterated how Malaysia had lost its right to renegotiate the water price when it did not ask for a review in 1987.
This was because Malaysia benefitted from the pricing arrangement under the 1962 Water Agreement, he noted, adding thatDr Mahathir had also been prime minister at the time.
According to Dr Balakrishnan, Mahathir had said in 2002 that the Malaysia did not ask for review in 1987 as it knew that any revision would also affect the price of treated water sold by Singapore to Malaysia.
Treated water sold subsidised
Dr Balakrishnan noted that Singapore continues to sell Malaysia treated water in excess of its obligation.
Under the 1962 Water Agreement, Singapore is obligated to sell Malaysia five million gallons of treated water per day. However, Singapore actually sells 16 million gallons of water treated water to Malaysia per day “at a fraction of the cost of treating that water”, said Dr Balakrishnan.
“For every gallon, we are subsidising,” he added, noting that national water agency PUB also receives occasional requests from Malaysia to provide additional treated water.
One such instance was between 2 and 4 January when Singapore supplied an additional 6 million gallons per day of treated water when Johor’s water plants experienced a disruption due to pollution.
Mutually beneficial water works
In 1990, while Malaysia was under Dr Mahathir’s first term of premiership, the PUB and Johor signed a deal to build the Linngiu Dam to increase the yield of the Johor River.
While Johor owns the Dam, Vivian noted that Singapore paid more than $300 million for its construction and operational costs. This sum also covered compensation for the land used in the project and the potential loss of revenue from logging activities, as well as a one-time payment for the lease of the land.
“If Malaysia had exercised the right to review the price of water in 1987, Singapore may well have made very different investment decisions on developing the Johor River.”
Overall, Singapore has spent more than $1 billion on water projects in the Republic, which have helped PUB’s and Johor’s water works, said Dr Balakrishnan. Singapore continues to provide Johor treated water at the state’s request even through dry spells, such as the one it is experiencing now, he added.
“We do so out of goodwill, without prejudice or legal rights under the Water Agreement. We are permanent neighbours and we want to be good neighbours,” said Dr Balakrishnan.
Observing how Singapore has “never shied away from difficult bilateral issues”, he noted that the Attorneys-General from Malaysia and Singapore have met to discuss whether Malaysia still has the right to review the price of water under the 1962 agreement.
While the AGCs’ meeting in December was overshadowed by other bilateral issues, both sides will continue to hold discussions, Vivian assured.
Singapore’s ‘different’ path of development
Dr Balakrishnan also spoke of Singapore’s “different and unique fundamental philosophy of development”, which it chose following its separation from Malaysia in 1965.
“Singapore has no natural resources… But Singaporeans have long internalised that no one owes us a living. We have provided a framework where all our citizens strive to do our best and achieve our potential by dint of our efforts,” he said.
Vivian also cited Singapore’s “zero tolerance policy towards corruption” and how its government “plans and invests for the long term”.
“We honour and fulfil our international agreements and commitments.” This longstanding position has given businesses the confidence to invest and grow in Singapore, Dr Balakrishnan said.
“On that note, I will let members of the House and fellow Singaporeans outside decide for yourselves whether we have been fair or, to quote Dr Mahathir, whether we have been ‘morally wrong’,” he said in conclusion.
“I think the answer is obvious.”
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