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International relations

Singapore vexed by water dilemma as Malaysia seeks price hike

Leaders fail to bridge gap while Hyflux drowns in debt

A water fountain near Marina Bay in Singapore. Under a 1962 agreement, the city-state draws water from Malaysia's Johore River at less than a penny per 1,000 gallons.   © Reuters

SINGAPORE -- Singapore is stuck in a dilemma over its water supply as neighbor Malaysia demands higher prices while local water treatment company Hyflux faces liquidation.

Singaporean Prime Minister Lee Hsien Loong and Malaysian counterpart Mahathir Mohamad discussed the water issue at a summit outside Kuala Lumpur Tuesday.

"The leaders also noted the differing positions of both sides on the right to review the price of water under the 1962 agreement," said a joint statement following the meeting. The statement mentioned the possibility of international arbitration if a solution is not found.

In 1962, Kuala Lumpur and Singapore signed a 99-year agreement that would let the city-state draw water from Malaysia's Johore River at less than a penny per 1,000 gallons. Mahathir has criticized the deal since returning to power last May, saying that a wealthy nation like Singapore should not be paying such a cheap rate.

In a joint press conference after their summit, Lee said that it would be difficult to review the agreement soon, whereas Mahathir called for a quick settlement.

Malaysian Prime Minister Mahathir Mohamad, right, speaks next to Singaporean counterpart Lee Hsien Loong after their summit Tuesday. Singapore is largely reliant on its neighbor for potable water.   © AP

For Singapore, water security is an important national security issue. The island has improved its self-sufficiency with water treatment technologies but is still dependent on imports from Malaysia.

Singapore's desalination efforts have also been a process of trial and error. Desalination facility operator Hyflux is facing liquidation with a court-ordered moratorium on its debt ending April 30. With the replacement of water quality equipment frozen, the government is planning to seize a desalination plant owned by the company later this month.

Lee and Mahathir also discussed other concerns. Malaysia said that it will keep studying ways to reduce costs for a high-speed rail project connecting the two countries, which they agreed to suspend until May 2020.

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