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Malaysia pays Singapore S$102.8m compensation in terminated HSR project

Out-Law News | 01 Apr 2021 | 3:48 am | 1 min. read

Malaysia has paid over S$102.8 million ($76.3m) in compensation to Singapore for the terminated Kuala Lumpur-Singapore high speed rail (HSR) project.

The payment is to cover the costs Singapore incurred in the HSR project and for an extension of its initial two-year suspension, according to a joint statement by Singapore’s transport minister Ong Ye Kung and Malaysia’s minister in the prime minister’s department Mustapa Mohamed.

Benjamin Tay of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said: “The termination payment received by Singapore would ordinarily be considered insufficient, being less than half of the actual costs incurred by Singapore, but in the context of the geo-political backdrop, it bodes well in that it leaves the door open for future collaboration in transport and infrastructure projects on a government to government level.”

Ong had said in Singapore's parliament that it had incurred costs of S$270m ($200.4m), including costs for consultancy services, design of infrastructure and labour to deliver the project.

The 350 kilometres rail project began in 2013 and was planned to be built by 2020, creating a line from Bandar Malaysia in downtown Kuala Lumpur to a terminal in Jurong East. Once operational, the rail would have cut travel time between Kuala Lumper and Singapore to 90 minutes.

Both countries signed a contract in December 2016 and in 2018 both agreed to suspend the project for two years with Malaysia’s paying Singapore S$15m ($11.4m). The project got another suspension for seven months in May 2020.

It was officially terminated in January after the two failed to reach an agreement by the deadline on 31 December 2020.