KUALA LUMPUR – While his political rivals are busy trying to gain leverage over him on petty matters, embattled Economic Affairs Minister Dato’ Seri Mohamed Azmin Ali apparently had other things on his mind– like saving Malaysia’s economy.
On September 5, Malaysia and Singapore had finally reached an official conclusion on suspending the Kuala Lumpur-Singapore High Speed Rail (HSR) project to May 31, 2020.
The bilateral agreement made headlines, mainly focusing on Malaysia bearing SGD15 million (roughly RM45 million) of abortive costs due contractual delays which needs to be paid by Jan 2019.
These are not compensation to be paid to Singapore as many have misinterpreted, but instead existing provisions in contracts that incur some costs for delays, where the amount is the cost for the two year deferment.
It was explained that postponing the project will require a change in the business model, where an escalation of the project cost will incur, on top of maintaining confidence in investors.
In fulfilling the HSR bilateral agreement, Malaysia will also have to bear the agreed cost incurred by Singapore, should the HSR project did not proceed come May 31, 2020.
However, what many didn’t realise from the joint signing of the bilateral side letter with Singapore, was that Azmin had managed to spare Malaysia from the burden of financial commitment of RM120 billion over the next two years.
According to Azmin’s Policy Officer, Yin Shao Loong, the RM120 billion breaks down to a combination of RM55 billion estimated capex for the core project and RM65 billion estimation in government guarantees for train procurement, maintenance as well as train systems maintenance over 30 years.
Therefore, with the new HSR deal, the Malaysian government had managed to avoid making these big financial commitment for the coming two years.
The deal was sealed after Singapore Coordinating Minister for Infrastructure and Minister for Transport Khaw Boon Wan and Azmin had exchanged legal documents to vary the HSR Bilateral Agreement based on the new understanding.
The historic event was witnessed by Prime Minister Tun Dr Mahathir Mohamad, Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail and Singapore Deputy Prime Minister and Coordinating Minister for National Security Teo Chee Hean.
The seemingly relieved Azmin in a joint press conference afterward said that such mutual understanding between the two nations could not have been possible without the spirit of bilateral cooperation.
However, it was clear that such agreement would not have been made possible without hard work, the right negotiation skills and economical insight poured by Azmin and his team.
Renowned American diplomat, politician and activist Robert Sargent Shriver Jr once said that “My parents had always preached the virtues of hard work. But hard work is one thing, economic struggle is another.”
This can be seen through the tireless negotiations between Azmin and his team with Singapore, which had went back and forth for weeks.
Azmin shared with reporters, his first encounter with Khaw in Singapore, in Aug 11, where he had presented the mandate of the Malaysian Cabinet.
It was revealed that the Cabinet had initially seeked to postpone the project between three to four years, based on the current economic condition of the country.
Azmin said Khaw and his team had viewed Malaysia’s situation positively, which then lead to a second meeting in Kuala Lumpur that took place just a week later.
Khaw had returned with a proposition where Singapore was willing to consider postponing the HSR project for a period of only a year.
With that, Azmin then brought the matter to be discussed with the Cabinet before having to go back to Singapore afterwards, in an attempt to appeal that the Republic nation consider postponing the project for a longer period of time.
Ultimately, both nations had managed to meet in the middle, agreeing to the win-win deal of deferring the 350km project for two years.
With the new deal, the HSR Express Service is expected to commence for public use by Jan 1, 2032 instead of the original commencement date of Dec 31, 2026.
Azmin previously announced that the estimated project cost was actually revealed to be at RM110 billion, after discovering numerous ‘hidden costs’ which wasn’t made public by the previous government.
The amount varies significantly compared to Barisan Nasional (BN) administration’s previous estimated cost of between RM54 billion and RM74 billion.
