Malaysia’s PM Dr Mahathir brings water dispute with Singapore back into the spotlight, says the ongoing deal is ‘too costly’

Dr Mahathir described the 1962 Water Agreement as “too costly” and something that needs to be settled with Singapore among other issues.

Malaysia’s Prime Minister Tun Dr Mahathir Mohamad has revealed his intention to renegotiate a water supply agreement with Singapore after criticising its lack of economic value to Malaysia.

In an interview with Bloomberg Television, Dr Mahathir deemed the water supply deal signed in 1962 “too costly” and is one of the issues with Singapore “that we need to settle”.

Under the 1962 Water Agreement, Singapore is given the full and exclusive right to draw up to 250 million gallons of water per day from Malaysia’s Johor River. It was guaranteed by the Government of Malaysia in the 1965 Separation Agreement that established Singapore as an independent and sovereign nation.

While Singapore buys water at 3 sen per 1,000 gallons, Malaysia buys back a portion – specifically 12% – of treated water at 50 sen ($0.12) per 1,000 gallons.

The agreement will expire in 2061.

The 1962 Water Agreement isn’t the only such deal signed by the two countries. The first one dates back to 1927 and is no longer in force. Two other pacts were signed in 1961 and 1990 with the former already expired in August 2011.

Water supply deals have long been a source of public political contention and belligerence.

Both countries had in the past published full-page ads in regional newspapers to air their grievances and at one point, former Singapore Prime Minister Lee Kuan Yew threatened Malaysia with armed conflict should it intentionally cease supplying.

Nonetheless, Dr Mahathir expressed interest in dealing with the issue amicably.

“We will sit down and talk with them, like civilised people,” he said.

Dr Mahathir added that he would remain friendly with Singapore and other nations while committed to striking fair and balanced deals.

He said: “I think we can benefit from each other. We need the expertise of Singapore. Lots of Singapore people invest in Malaysia because it’s much cheaper here.”

His disclosure of plans to renegotiate the water supply agreement followed an earlier announcement regarding the cancellation and subsequent postponement of the Kuala Lumpur-Singapore High-Speed Rail project, potentially escalating tensions between the two nations.

It also came in the wake of a Mahathir-led mass review of expensive mega-projects initiated by the former Barisan Nasional government which include the East Coast Rail Link and a scandal-laden gas pipeline project.

“We will have to slow down, defer and things like that, simply because we do not have the money,” said Dr Mahathir.

“I want to turnaround the economy to grow once again, to achieve developed country status within the shortest possible time. Whether people appreciate me or not, is not relevant. Once I’m dead, they will say nasty things anyway.”