ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Malaysia in transition

Mahathir says water sold to Singapore should cost 10 times more

Decades-old issue likely to be a bargaining chip for other negotiations

Pipes carrying water from Malaysia to Singapore run alongside the causeway toward the Woodlands Checkpoint in Singapore.   © Reuters

KUALA LUMPUR -- Malaysian Prime Minister Mahathir Mohamad said Monday the price of untreated water that Malaysia supplies to Singapore should be more than 10 times higher than it is now, reigniting a decades-old dispute between the two neighbors.

Mahathir's demand for a more than tenfold price increase was the first concrete number he has floated since returning to power in May. Some observers believe the comments are an effort to use the water issue as a bargaining chip in bilateral negotiations over other matters, such as a recently canceled high-speed rail project.

In an interview with The Associated Press, Mahathir said he will seek to raise the price of water sold to Singapore more than tenfold. "To [supply water to] a foreign country, we need to get more than that," he said without elaborating.

Under a 100-year agreement signed in 1962, Malaysia supplies untreated water to Singapore for a fee of 0.03 ringgit ($0.008) per 1,000 imperial gallons (4,546 liters). Singapore has the right to draw up to 1.136 billion liters per day and can sell 2% of the imported water in treated form to Malaysia for 0.50 ringgit per 1,000 gallons.

The agreement, whose terms are in theory fixed for a century, was one of the most contentious issues during Mahathir's previous stint as prime minister between 1981 and 2003. Malaysia had the opportunity to review the deal in 1987, but declined to do so because any change would have affected the price of treated water it buys from Singapore.

In the years that followed, both countries revisited the water deal. When Mahathir asked Singapore for a loan to support Malaysia's currency during the Asian financial crisis of 1998, Singapore's government asked for a long-term water supply guarantee in exchange.

Malaysia's Prime Minister Mahathir Mohamad listens during an interview with The Associated Press in Putrajaya, Malaysia, on Aug. 13.   © AP

The issue has remained unresolved, despite several attempts at renegotiation. Mahathir touched upon the issue in media interviews soon after his re-election, saying it was "ridiculous" to supply water at the previously agreed rate under current market conditions.

By quoting a price, Mahathir may be pushing for concessions from Singapore on a proposed high-speed railway linking Kuala Lumpur and Singapore. Citing a lack of finance and customer demand for the service, Mahathir canceled the project. But he may be seeking to revise the proposal made by the previous government of Prime Minister Najib Razak on more favorable terms.

Singapore says it will honor the terms of the 1962 deal and expects Malaysia to do the same. "We must work with each other on the basis that both sides will fully respect the sanctity of international agreements," said the city-state's Minister of Foreign Affairs Vivian Balakrishnan in July during a parliamentary debate.

Both Mahathir and the Singaporean government have been consistent in their take on the water issue. Singapore maintains that the dispute should be resolved in accordance with international law, while Mahathir is pressing for his richer neighbor to the south to offer better terms so that both countries will prosper.

"Mahathir does not like things that he perceives as unfair," said Oh Ei Sun, principal adviser at the Pacific Research Centre, a Malaysian think tank.

Malaysia is paying heavily to remain on good terms with Singapore, but "friends who have to be bought are not real friends," Mahathir wrote in his memoir, "A Doctor in the House."

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media