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Friday July 14, 2006 (Source)

Govt: Declassified documents ‘put the record straight’ on bridge issue

PRESS STATEMENT ON DECLASSIFIED DOCUMENTS PERTAINING TO THE CROOKED BRIDGE 

The Government has declassified several relevant confidential documents and extracts to allow Malaysians to understand why it has reached the decision to abort the bridge project to replace the Johor Causeway. 

And in doing so, it has put the record straight on a string of allegations raised by the former Prime Minister, YABhg Tun Dr. Mahathir Mohamad, namely that: 

 

The Singapore government accepted Malaysia’s proposal to build a crooked bridge. 

 

The bridge was not part of the package of outstanding bilateral issues. 

 

Malaysia is a “half past six country with no guts” by not going ahead with the crooked bridge project. 

 

Malaysia put the issue of selling sand and allowing the Republic of Singapore Airforce to use its air space on the negotiating table. 

This is only the second time in recent history that information protected by the Official Secrets Act 1972 has been declassified and approved for public consumption – an indication of the Government’s seriousness in wanting the people who voted it into power to have the full facts, so that they can appreciate why the Government decided to abort the bridge project. 

In the package of documents released are correspondences between Tun Dr. Mahathir Mohamad and two of Singapore’s former prime ministers, Mr. Lee Kuan Yew and Mr. Goh Chok Tong. 

Also made public are extracts of the record of the meeting between Prime Minister Dato’ Seri Abdullah Ahmad Badawi and Mr. Goh Chok Tong in Kuala Lumpur in March 2005. 

The contents of these documents contain three key facts: 

1. Discussions with Singapore on the airspace issue are not new and were not mooted by the current Government under Prime Minister Dato’ Seri Abdullah Ahmad Badawi. 

Tun Dr. Mahathir Mohamad himself included this issue as a trade-off and as part of the package of issues to be resolved with Singapore during negotiations from 1998 to 2002. This is evident from Tun Dr. Mahathir Mohamad’s letter to Senior Minister Mr. Lee Kuan Yew on March 4 2002. 

This same issue was raised by Senior Minister Mr. Goh Chok Tong during a meeting with Abdullah on March 1 2005. 

This fact nullifies the suggestion by Tun Dr. Mahathir Mohamad that it was the present administration that offered RSAF jets use of Malaysian airspace. 

2. The sale of sand to Singapore was raised by the Republic during a meeting between Prime Minister Dato’ Seri Abdullah Badawi and Prime Minister Goh Chok Tong on March 1 2005.  

This nullifies argument that the Government put the issue on sand on the negotiating table. 

3. Comprehensive advice by the Attorney General’s Chambers showed that Malaysia should not proceed to build a bridge unilaterally without complying with our legal obligations.  

In particular, Malaysia had obligations under the Johor-Singapore water agreements 1961 and 1962, the Wayleave Agreements and the Separation Agreement 1965. 

The main obstacle was that the construction of the crooked bridge will involve the demolition of the Malaysian side of the Johor Causeway. The said demolition would directly affect the water pipeline located inside the Johor Causeway and water pipelines straddling the Johor Causeway in which the ownership thereof vests with the Public Utilities Board of Singapore. 

The Attorney General’s Chambers also stated that under the 1961 and 1962 Johor-Singapore Water Agreements, “Malaysia is required to obtain approval of PUB in relation to the alteration of water pipelines as a result of the construction of a full straight bridge or a scenic half bridge.”  

The 1961 and 1962 Johor-Singapore Water Agreements are guaranteed under the 1965 Separation Agreement. The water pipelines located inside the Johor Causeway is governed by the 1961 Johor Singapore Water Agreement. 

Therefore, the provisions of the Wayleave Agreements which is applicable to the water pipelines straddling along the Johor Causeway is not applicable to the water pipeline located inside the Johor Causeway. 

These facts nullify the allegation that the water pipeline located inside the Johor Causeway could be relocated unilaterally after giving six months notice to Singapore. 

Taking into consideration these facts, the present Government had to make a firm decision to reject Singapore’s quid-pro-quo proposal on sand and airspace as it would have compromised Malaysia’s national sovereignty.  

It had to make the political decision to abort the bridge project as this was consistent with the sentiment of Malaysians and the interest of Malaysia. 

In conclusion, the issue boils down to one simple fact – Malaysia wanted the bridge, and Singapore did not want it. 

The full straight bridge that was proposed by Malaysia would have been a symbol of friendship and would have benefited both countries. Nevertheless, the responsibility for achieving this aim does not lie with Malaysia only. 

Note: Please refer to Appendix A for further information. 

***** 

APPENDIX A 

Former Prime Minister, YABhg Tun Dr. Mahathir Mohamad has raised several allegations on the Government’s decision to abort building a bridge to replace the Johor Causeway. 

Below, the Government sets out facts and sketches the historical backdrop in which this decision was reached: 

The Allegation: That the Singapore Government accepted Malaysia’s proposal to build a crooked bridge to replace the Malaysian side of the Johor Causeway. 

The Facts: On March 4 2002, Tun Dr. Mahathir wrote a letter to Senior Minister Lee Kuan Yew regarding Malaysia’s proposal on the package of outstanding bilateral issues. 

Among other things, he proposed to build a new bridge on the Malaysian side at its own cost while Singapore would build the bridge on the Singapore side at its own cost. Once the bridge was completed, the Johor Causeway would be demolished. 

Tun Dr. Mahathir further proposed that if Singapore did not build a bridge on its side, Malaysia intended to build a bridge on its side. Once this bridge was completed, the Johor Causeway on the Malaysian side would be demolished. 

On April 11 2002, Prime Minister Goh Chok Tong replied and agreed, although his preference was for a full bridge. 

However, that proposal was made in the context of the package approach for the outstanding bilateral issues which would be further discussed at ministerial and senior officials’ level. 

On October 7 2002, Tun Dr. Mahathir informed Prime Minister Goh Chok Tong that Malaysia had decided to discontinue discussions on the outstanding bilateral issues as a package and to give the highest priority to resolving the long delayed water issue, particularly the price review of raw water supplied to Singapore. 

This move came because there appeared to be no agreement in resolving the issues as a package. 

On October 14 2002, Prime Minister Goh Chok Tong agreed to discontinue discussions on the outstanding bilateral issues as a package. 

Singapore withdrew its agreement on the crooked-bridge in the context of the package and stated that its earlier agreement to the bridge project was now not applicable. 

Prime Minister Goh Chok Tong wrote: “… I had been prepared to make concessions in varying the Points of Agreement (POA) with extra pieces of land, allowing early withdrawal of Central Provident Fund (CPF) deposits and building our part of the bridge to replace the Causeway at our expense, as trade offs, so that you give us airspace and future water at a fair price… Since you now want to deal with the water issue separately and discontinue the package approach, these trade offs are no longer possible.” 

In effect, this letter signalled a return to a status quo position. Prime Minister Goh’s statement was not challenged by Tun Dr. Mahathir. In fact, there was no reply to Prime Minister Goh’s letter by Tun Dr. Mahathir. 

Singapore reiterated its position in a diplomatic note on November 29, 2004 while the Customs, Immigration and Quarantine (CIQ) Complex in Bukit Chagar was being built.  

It said: “ … These negotiations on a package basis were unilaterally terminated by the then Prime Minister of Malaysia Tun Dr. Mahathir Mohamad on 7 October 2002.” 

With the termination of the negotiations on the package of issues, Singapore’s agreement for the construction of the crooked-bridge no longer exists. 

Conclusion: It is incorrect to say that Singapore accepted Malaysia proposal to build a crooked bridge within its own territory. Singapore’s acceptance for Malaysia to build a crooked bridge was at most a reluctant acceptance based on the package approach. 

***** 

The Allegation: That the letter from Prime Minister Goh Chok Tong on April 11 2002 was the final commitment by the republic on the bridge proposal by Malaysia. 

The Facts: During negotiations between the two countries, there was an understanding that any proposal would not become final unless it was concluded in an agreement signed by leaders of Malaysia and Singapore. 

This was explained in a letter by Senior Minister Lee Kuan Yew to then Minister of Special Functions & Minister of Finance, Tun Daim Zainuddin on August 24 2000. 

The letter read: “To make it easier for us to write to each other, to test various options, all notes or letters I send to you or Mahathir, or vice-versa, will be treated as Without Prejudice: that there is no agreement until all points are agreed and signed by the two PMs.” 

Conclusion: It is incorrect to say that Prime Minister Goh Chok Tong had given a commitment on the bridge in his letter on April 11 2002. There was no signed agreement between the PMs of Malaysia and Singapore on building the bridge. 

***** 

The Allegation: That the bridge was not part of the package of bilateral issues. 

The Facts: At first, the outstanding package of issues only covered four areas – water, Central Provident Fund, airspace and the relocation of KTM’s CIQ complex in Singapore. This was agreed to by both countries in Hanoi on December 27 1998. 

But later, the bridge project was inserted into the package of issues. Tun Dr. Mahathir did so in a letter to Senior Minister Lee Kuan Yew on March 4 2002 and the bridge issue became one of five issues in the package titled “MALAYSIA-SINGAPORE PACKAGE OF FIVE ISSUES – MALAYSIA’S PROPOSALS” 

Conclusion: The bridge became part of the package of unresolved bilateral issues as a result of Tun Dr. Mahathir’s letter. 

***** 

The Allegation: That the government’s decision to abort the bridge project will cause billions of ringgit in losses. 

The Facts: The total cost of building the CIQ, the crooked bridge and the new KTM line across the Johor Straits was RM2.379 billion. 

At this moment, the Government is still working out compensation payment to Gerbang Perdana Sdn Bhd. But the fact is that the decision to abort the bridge was not an economic decision. 

Once it became clear that Malaysia could not build the bridge unilaterally or accede to Singapore’s requests, calling off the plan to build the bridge was the most financially responsible decision to make. 

Conclusion: It would not have been advisable to spend RM1.13 billion on a structure and be stuck in limbo over its use. 

***** 

The Allegation: That Malaysia is a “half past six country with no guts” by calling off the bridge project. 

The Facts: Simply put, the Government had to make the right decision, taking into account the interest of Malaysians. It revisited the unilateral proposal by Tun Dr. Mahathir to build the crooked bridge but came to a finding that this was not an ideal solution. 

A crooked bridge is not a legacy to leave for future Malaysians. In coming to its decision to abort the bridge project, the Government studied not only the Wayleave Agreements but also the Johor-Singapore Water Agreements 1961 and 1962, the Separation Agreement 1965 and took into consideration advice by the Attorney General’s Chambers. 

This is what the Attorney General’s Chambers said: “ … the construction of the scenic half bridge to replace the Malaysian side of the Johor Causeway must be studied in a holistic manner in view of the fact that the scenic half bridge would have international legal implications in particular environmental impact to Singapore in and around the Straits of Johor. 

“Apart from the above, the construction of the scenic half bridge will involve the demolition of the Malaysian side of the Johor Causeway. The said demolition would directly affect the water pipeline located inside the Johor Causeway and water pipelines straddling the Johore Causeway. In this regard, legal implications thereof would have to be studied based on the 1961 and 1962, Johor-Singapore Water Agreements, Wayleave Agreements and Separation Agreement 1965. 

“Malaysia as a sovereign and independent state has complete power and authority over its territory and in exercising the said power and authority, no other state may interfere with its affairs. Nevertheless Malaysia cannot take unilateral action without taking into consideration international law principles and requirements, amongst others, taking into account the rights and interests of its neighbouring states.” 

Conclusion: With so much uncertainly, it made sense for the Government to take a step back and do the right thing. 

Running the government is not about scoring points or engaging in brinkmanship. It is about weighing the pros and cons and reaching a decision that is good for Malaysia. 

***** 

The Allegation: That Malaysia offered its airspace and sand to Singapore. 

The Facts: The issue of allowing use of Malaysian airspace has been on the negotiating table between 1998 and 2002. 

Tun Dr. Mahathir himself inserted this issue in a letter to Senior Minister Lee Kuan Yew on March 4 2002. 

He offered it as a trade-off during negotiations on the package of unresolved issues. With the de-packaging of the bilateral issues, the proposal made by Tun Dr. Mahathir is no longer relevant. 

Singapore used to enjoy five flight privileges until 1998. It sought all those rights to be re-inserted but the Government of the day was only prepared to offer Search and Rescue and the Northern Transit Corridor rights on terms and conditions to be mutually agreed upon. 

The rights of Search and Rescue was offered on the basis of reciprocity and is consistent with international practice. As for Northern Transit Corridor, it only allows RSAF jets to transit over the South China Sea. The jets will not be allowed to roam the Malaysian airspace. 

Conclusion: The use of Malaysian airspace was raised by Prime Minister Goh Chok Tong during a meeting with Dato’ Seri Abdullah Ahmad Badawi on March 1 2005 in Putrajaya. 

Singapore said that this issue was of importance to them and said that it would make selling the bridge idea to Singapore more palatable. 

Remember, as far as the Republic was concerned, it did not see the need for a bridge to replace the Causeway. It wanted something in return for agreeing to the bridge deal and requested for sand and the use of airspace. 

But once it became clear that the Malaysian public was strongly opposed to selling any sand or allowing RSAF jets to use its airspace, the government moved firmly and made the only acceptable decision – it aborted the plan to build the bridge. 

Going ahead to satisfy the two conditions the Republic put forward would have meant going against the wishes of many Malaysians. 

The Government has always stated that its decision is a political decision, based on the sentiments, sovereignty and integrity of the people of Malaysia. 

PRIME MINISTER’S DEPARTMENT
PUTRAJAYA

 

Spot Light: What they wrote in the four letters (Source)

16 Jul 2006

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THE Government yesterday released four letters between Tun Dr Mahathir Mohamad and two former Singapore prime ministers, Lee Kuan Yew and Goh Chok Tong. The letters, written in 2002, reveal details of bilateral discussions on a range of issues, including the bridge to replace the Causeway. These confidential documents were declassified to allow Malaysians to understand why the Government reached the decision to abort the bridge project to replace the Causeway. And in doing so, it has set the record straight on a string of allegations raised by Dr Mahathir, namely that:

- The Singapore Government accepted Malaysia’s proposal to build a half- bridge.

- The bridge was not part of the package of outstanding bilateral issues.

- The Malaysian Government was "half past six" and lacked guts by not going ahead with the crooked bridge project.

- Malaysia put the issue of selling sand and allowing the Republic of Singapore Air Force to use its airspace on the negotiating table.

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Context: It was in this letter that Tun Dr Mahathir Mohamad set out the package of issues to be discussed between Malaysia and Singapore. He also says that Malaysia may consider allowing the Republic of Singapore Air Force use of its airspace. This nullifies the allegation that airspace was mooted by the current government under Prime Minister Datuk Seri Abdullah Ahmad Badawi.

MALAYSIA-SINGAPORE PACKAGE OF FIVE ISSUES

MALAYSIA’S PROPOSALS

1. WATER

1.1 1961 Water Agreement

Under Clauses 4 (II) and 8 of the 1961 Agreement, Singapore has the full and exclusive right and liberty to draw off, take, impound and use all (raw) water from the Tebrau River and Skudai River with payment of 3 cents for every 1,000 gallons.

Clause 17 of the 1961 Water Agreement provides for a price review of (raw) water 25 years after signing of the Agreement.

1.2 1962 Water Agreement

Under Clause 5(i) of the 1962 Agreement, Singapore has the full and exclusive right and liberty to draw off, take, impound and use the (raw) water from the Johore River up to the maximum of 250 million gallons per day with a payment of 3 cents for every 1,000 gallons.

Clause 14 of the 1962 Water Agreement provides for a price review of (raw) water 25 years after signing of the Agreement.

1.3 New Water Agreement

The 1961 and 1962 Agreements will be allowed to expire in 2011 and 2061 respectively.

There will be a new agreement effective from 1 January, 2002 and valid for 100 years, incorporating all the terms & conditions as mentioned in paragraphs 1.4, 1.5, 1.6, 1.7 and 1.8. This new agreement will be allowed to run concurrently with the 1961 and 1962 Agreements.

1.4 Composition

After the expiry of the 1961 Agreement in 2011, the supply of raw water from Sungai Skudai and Sungai Tebrau will cease. Instead, Malaysia will supply 100mgd. treated water from Sungai Sedili.

After the expiry of the 1962 Agreement in 2061, the supply of 250mgd. of raw water from Sungai Johor will cease. Instead, Malaysia will supply 150mgd. of treated water and 100mgd. of raw water from Sungai Sedili.

1.5 New Price of Raw Water

Effective 1 January 2002, the new price of raw water under the 1961 and 1962 Water Agreements will be 60 sen per 1,000 gallon until 31 December 2006. This new price of raw water under both agreements should commence from 1 September 1986 and 29 September 1987 respectively.

Effective 1 January 2007, the new price of raw water under the 1961 and 1962 Water Agreements will be RM3.00 per 1,000 gallon until 31 August 2011.

Effective 1 September 2011, i.e. after the expiry of the 1961 Agreement, the price of raw water to be supplied under the 1962 Agreement will be based on the following formula:

Price in 2011 = Price in 2010 x(1 + A2010)

Price from 2012 to 2061 = Price in 2011 x (1 + A2011) to price in 2061 = 2060 x (1 + A206O)

Where, A2010 = Average Inflation rate of Malaysia and Singapore (opl) in 2010

A2011 = Average Inflation rate of Malaysia and Singapore (opl) in 2011

Three years before the expiry of the 1962 Agreement, i.e. in 2058, Malaysia and Singapore should negotiate and agree to a new formula for the supply of raw water to Singapore taking into account the circumstances then.

1.6 Treated Water

Under Clause 14 of 1961 Agreement, Singapore shall supply to Johore upon receiving written notice from Johore treated water amounting to 12 percent of the total quantity of (raw) water supplied to Singapore.

Under Clause 11(i) of 1962 Agreement, Singapore shall supply to Johore upon receiving written notice from Johore treated water amounting to 2 percent of the total quantity of (raw) water supplied to Singapore.

Johore is currently purchasing treated water at 0.50 sen per 1,000 gallon.

1.7 New Price of Treated Water

Effective 1 January 2002, the price of treated water purchased by Johore will be RM1.00 per 1,000 gallon.

Upon the expiry of the 1961 Agreement, Johore will supply 100mgd. treated water from Sungai Sedili to Singapore based on the following formula:

Ptw2011 = JWAT2001 + {50% (SWAT2001 - JSP2001 - SDCAT2001)} [1_A2001] [1_A2002]…..[1_A2011]

Where:

Ptw 2011 = Price of Treated Water in year 2011

JSP2001 = Johor Selling Price of Raw Water in year 2001

JWAT2001 = Johor Weighted Average Tariff in year 2001

SDCAT2001 = Singapore Distribution Cost and Administration Cost in year 2001

SWAT2001 = Singapore Weighted Average Tariff in the year 2001

A = Average inflation rate of Malaysia and Singapore

i.e. (CPIm + CPIs)/2

CPIm = Malaysian consumer price index

CPIs = Singapore consumer price index

Malaysia and Singapore should negotiate and agree to a new formula for the supply of treated water to Singapore once every 20 years taking into account the circumstances then.

1.8 Related Issues

The new agreement may consider incorporating but not limited to the following terms:-

i) all installations at Gunung Pulai, Sungai Tebrau and Sungai Skudai will revert to Malaysia on the expiry of the 1961 Agreement in 2011;

ii) all installations at Sungai Johor will revert to Malaysia on the expiry of the 1962 Agreement in 2061;

iii) Malaysia will bear the cost of the construction of water pipelines from Sungai Sedili to connect to the Singapore water pipelines;

iv) after 2011, the supply of 100mgd. of treated water will be undertaken by a Malaysian owned company; and

v) after 2061, the supply of both raw and treated water will be undertaken by a Malaysian owned company.

BRIDGE AND RAIL

2.1 Bridge

A new bridge will be built to replace the Causeway. Malaysia will build the bridge on the Malaysian side at its own cost while Singapore will build the bridge on the Singapore side at its own cost. The bridge will connect at the common boundary in the Straits of Johore. Once the bridge is completed, the Causeway will be demolished.

Should Singapore decide not to build the bridge on its side, Malaysia intends to build the bridge on the Malaysian side at its own cost. The new bridge will join the remaining Causeway on Singapore’s side. Once the bridge is completed, the Causeway on the Malaysian side will be demolished.

2.2 Rail

Malaysia will build a new railway bridge across the Johore Straits. This railway bridge will include a railway swing bridge on the part of the Johore Straits that will be deepened for navigational purposes.

Should Singapore decide not to build the bridge to replace the Causeway on its side, Malaysia will build a railway bridge on its side in the Johore Straits. This railway bridge will include a railway swing bridge on the part of the Johore Straits that will be deepened for navigational purposes. The new railway bridge will join existing railway track on the remaining Causeway on Singapore’s side.

The Malaysian Government will continue to operate the train service to Tanjung Pagar. The service staff for ticketing and management of train service will remain in Tanjung Pagar.

Should the Singapore Government request the Malaysian Government to terminate its train operations at Kranji, the following terms will apply:i) Malaysia will be adequately compensated for the three pieces of land identified under the Points of Agreement (POA) i.e. Land at Keppel, Kranji and Woodlands and all Railway lands belonging to the Malaysian Government in Singapore not mentioned in the POA. The compensation will be based on the current market value of the land; andii) valuation of land will be conducted by consultants as agreed by both sides.

2.3 Water Pipelines

New water pipelines on the Malaysian side will be installed by Malaysia and will reconnect with the Singapore water pipelines under the new bridge.

Should Singapore decide not to build the bridge to replace the Causeway on its side, the new water pipelines on the part of the Johore Straits that will be deepened for navigational purposes will be buried under the seabed and will reconnect with the Singapore water pipelines.

3. CUSTOMS, IMMIGRATION AND QUARANTINE (CIQ)

The Malaysian rail CIQ currently in Tanjung Pagar will be relocated to Johor Baru.

4. CENTRAL PROVIDENT FUND (CPF)

The Singapore Government will amend the relevant legislation to enable workers regardless of age, from Peninsular Malaysia who have returned to Malaysia to withdraw their CPF deposits within the period of two years.

Malaysians currently working in Singapore will receive similar treatment as other foreigners with regard to their CPF withdrawals.

5. AIRSPACE

Malaysia may consider providing appropriate facilities for the use of its airspace by the Singapore Air Force

4 March 2002

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Context: Singapore Prime Minister Goh Chok Tong replies to Dr Mahathir’s letter to Senior Minister Lee Kuan Yew. In it, he says that he prefers the idea of a straight bridge instead of a half-bridge. He also sounded confident that progress could be made on the use of Malaysian airspace and the withdrawal of Central Provident Fund savings. But all in the context of negotiating the issues as a package.

11 April 2002

YAB Dato’ Seri Dr Mahathir bin Mohamad

Prime Minister

Malaysia

Dear Mahathir,

I refer to your letter of 4 March 2002 to Senior Minister Lee Kuan Yew, and his reply of 11 March.

Before Kuan Yew visited KL in August 2000, he suggested that he discuss the outline of an agreement with Daim, which both of us could later consider and endorse. He hence addressed his letters to Daim. However, since you wrote to him, he corresponded and negotiated with you with my approval.

I have now decided to handle directly our discussion on the bilateral package.

I have taken some time to mull over my reply to you, because I wanted to find the best way forward from here to secure for the long-term, a stable, win-win relationship for our two countries.

I have discussed with my Cabinet colleagues the proposals contained in your letter, and have the following comments.

1. Bridge

Between a new bridge to replace the entire Causeway, and one to replace just the Malaysian side of the Causeway, I like the former better.

Once the new bridge is completed, the Causeway can be knocked down, which I prefer to be done after 2007.

But if you wish to proceed immediately to replace just your side of the Causeway with a bridge, I shall accept it, though I think this is not ideal.

2. Railway

I note that you have decided to relocate your CIQ to Johor Baru.

You also indicated that you would continue to operate the train service to Tanjong Pagar.

Under the 1990 Points of Agreement (POA), Malaysia had to agree to move the KTM railway station from Tanjong Pagar to Bukit Timah.

I recall, however, that you had proposed at our meeting in Hanoi in 1998, to relocate your railway station to Kranji. I agreed to this proposal in my meeting with Abdullah Badawi when he visited Singapore in February last year. I confirm here that Singapore is prepared to accommodate such a variation to the POA within the bilateral package.

You had later also proposed a railway tunnel from Johor to Singapore. But I read from your letter that you have now decided on a railway swing bridge because of the high cost of constructing the tunnel. I can go along with this proposal.

Since you intend to operate an electric train in the future, I suggest you revisit your Kranji station proposal. You could run your train in an underground tunnel from the Singapore end of your railway swing bridge to the KTM station in Kranji. This will take care of the problem of unsightly overhead catenaries. If you are concerned about the cost of constructing this tunnel, Singapore can help defray a portion of it.

3. Water

I do not want our bilateral relations to be always strained by the issue of water. I am saddened by the constant emotional rhetoric in the media over Malaysia’s supply of water to Singapore.

For the sake of good long-term relations, my colleagues and I have decided that Singapore will produce as much water by ourselves as we can, to supplement the existing Water Agreements.

We have just called a tender for a 30mgd desalination plant, which will be ready by 2005.

We have also been operating a 2.2mgd plant to produce NEWater (reclaimed water) using membrane technology for two years now. It has proven to be successful and economical. We have therefore decided to ramp up our programme to produce NEWater, to replace the supply of water under the 1961 Water Agreement when it expires in 2011.

But we will be happy to still buy from Johor a modest quantity of treated water, say, 10mgd or 20mgd, from 2011, after the expiry of the 1961 Water Agreement, to 2061, if Johor remains keen to sell.

As for water after 2061 when the 1962 Water Agreement expires, I accept your offer of 100mgd of raw water and 150mgd of treated water.

However, your proposal for a new water agreement to run for 100 years from 1 January 2002, means, in effect, a water agreement of only 40 years, since the 1962 Water Agreement will expire only in 2061. Our discussions have always been on the basis of an agreement for the 100 years from 2061.

On pricing, in your letter of 21 February 2001 to Kuan Yew, you had proposed that raw water be priced at 60 sen, which Johor considered a fair price. Singapore offered a revision from 3 sen to 45 sen for raw water under existing agreements, and accepted your proposal of 60 sen for raw water under a new agreement. I note that you have not accepted this counter-offer from us. May I explain that this counter-offer took into account our concessions in the other parts of the package, for example, the additional 12 parcels of Malayan Railway land.

You have now proposed another pricing arrangement where, among other things, a new formula for the price of raw water after 2061 is to be negotiated in 2058, and the formula for the price of treated water is to be renegotiated every 20 years, taking into account the circumstances then. Having reflected further on this matter of pricing, I agree that it would be difficult for us to fix now, the price of water to be supplied many decades in the future.

However, we need a definite basis for all future price revisions throughout the period of the agreement. Otherwise, there will be no certainty in the agreement, and it will be difficult for our negotiators to agree on the price revision when the time comes. We will periodically be locked in dispute over water, in spite of a new agreement.

I propose therefore a pricing mechanism that can stand the test of time. I propose that we peg the price of treated water from Johor (water after 2061, as well as the modest quantity from 2011-2061 mentioned earlier in the letter) to an agreed percentage of Singapore’s cost of alternative sources of water ("peg-price").This is similar to the way we price natural gas that Singapore purchases from Malaysia, where the price of gas goes up or down with the price of alternative fuel, i.e. oil.

The price of raw water after 2061 can be calculated by deducting Singapore’s cost of treating the raw water (including abstracting the water from the river and delivering it to Singapore etc) from the agreed peg-price.

To work such a pricing mechanism, Singapore will disclose independently-audited accounts of its cost of alternative sources of water. This cost will, of course, vary with the price of fuel oil, technology etc. For example, when the price of fuel oil goes up, the peg-price will go up too.

Our Foreign Ministers and officials can discuss both your pricing formula and my counter-proposal when they meet.

4. CPF and Airspace

They should be able to make progress on these two issues as part of the package.

Basis for Further Discussion

Your letter of 4 March and my reply here can form the basis for further discussion between our Foreign Ministers and officials. They can proceed to set the dates of their meeting.

Should they run into roadblocks, I would be happy to meet you to help remove the blocks.

I hope we can now make progress in wrapping up this package of bilateral issues.

Yours sincerely,

Goh Chok Tong

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Context: Dr Mahathir writes to Singapore PM to signal Malaysia’s intention to stop trying to resolve outstanding bilateral issues as a package. These issues include water supply and the use of Malaysian airspace.

7 October 2002

His Excellency

Mr Goh Chok Tong

Prime Minister

Republic of Singapore

Dear Chok Tong,

I am writing in regard to the decision that we reached on 27 December 1998 in Hanoi for Malaysia and Singapore to resolve, once and for all, the outstanding issues between our two countries in a package.

These issues include water supply; railway-related issues and Customs, Immigration and Quarantine (CIQ); Central Provident Fund (CPF) and the use of Malaysia’s airspace.

As you are aware, since our above decision, several meetings, both at Ministerial and officials levels, had been held on the package of issues.

Regrettably, three rounds of talks at the senior officials level in 1999 and two Ministerial-level Meetings in 2002 did not meet with any success.

In addition Senior Minister Mr Lee Kuan Yew also had several sessions with me discussing the same package but no agreement could be reached.

I think we have now come to a point where it would be important for us to prioritise our discussions. The approach that both sides had adopted so far in dealing with the outstanding issues in a package, has not yielded any meaningful results.

In view of this, Malaysia has now decided to discontinue the package approach and to give the highest priority to first resolving the long-delayed water issue, particularly the price review of raw water.

Once this issue is satisfactorily and amicably resolved, I am confident that Malaysia and Singapore would be able to move forward much faster in finding solutions to the other outstanding issues that stand in the way of our bilateral relations.

Public expectations in both our countries are very high that our two Governments would quickly find a solution to the water issue.

I am therefore hopeful that significant progress would be made on this issue at the forthcoming meeting of our senior officials from 16-17 October 2002 in Johor Baru and to be followed by the Ministerial Meeting at a later date.

Both our countries will then be in a more comfortable position to deal expeditiously with the other issues.

With best regards,

Sincerely,

Dr Mahathir bin Mohamad

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Context: After learning that Malaysia wants to stop resolving outstanding issues as one package, Singapore Prime Minister Goh Chok Tong replies to Dr Mahathir. He says that he had been prepared to make concessions, including building part of the bridge to replace the Causeway, as trade-offs.

But since Malaysia now wanted to deal with the water issue separately and discontinue the package approach, these trade-offs were no longer possible. In short, all bets were off and it was back to the status quo position. Letter nullifies Dr Mahathir’s contention that the republic had agreed to bridge project.

14 October 2002

YAB Dato’ Seri Dr Mahathir bin Mohamad

Prime Minister

Malaysia

Dear Mahathir,

I refer to your letter of 7 October 2002, conveyed via a Wisma Putra TPN dated 9 October, and sent to our High Commission in Kuala Lumpur on 10 October.

When we met on 8 October at Putrajaya, you said that the most important issue for Malaysia was water. If the water issue was resolved, all the other issues could be resolved. You also mentioned that Malaysia wanted to decouple the water issue from the other issues in the package.

I replied that all the issues were tied up because the price Singapore could offer for present water would depend on the price for future water (i.e. water after 2061), and on the concessions it would have to make on the other issues like the POA. We did not come to any agreement on which approach to take.

Towards the end of our meeting, you said that we should try to resolve the water issue, and the sooner it was done, the better. I agreed, and said that we should get our officials to resolve it. Accordingly, upon my return, I instructed my officials to make as much progress as possible on the water issue at the 16-17 October meeting as part of the package, even though my Attorney-General had advised that Malaysia had lost its right to review the price of water under the current Water Agreements.

I therefore did not expect to receive, on 10 October, your letter of 7 October, wherein you stated that "Malaysia has now decided to discontinue the package approach and to give the highest priority to first resolving the long-delayed water issue, particularly the price review of raw water". Had you, at our 8 October meeting, told me that you had already written and signed this letter on 7 October, I would have elaborated on the pros and cons of your new approach. We would then have jointly decided on the basis upon which our officials would negotiate.

s you wrote in the opening sentence of your letter of 7 October, you and I had reached a decision "on 27 December 1998 in Hanoi for Malaysia and Singapore to resolve, once and for all, the outstanding issues between our two countries in a package". In other words, we had agreed to trade off, in a package, the benefits to each other from the various items, namely, water, POA, airspace, CPF, and the bridge to replace the Causeway.

I had been prepared to make concessions in varying the POA with extra pieces of land, allowing an early withdrawal of CPF deposits, and building our part of the bridge to replace the Causeway at our expense, as trade-offs, so that you could give us airspace, and future water at a fair price. Regarding water, you had written in your letter of February 2001 that Johor believed that a fair price for raw water was 60 sen. (The revision of the price of raw water under the current Water Agreements was not in the package we decided in Hanoi in 1998, until you raised it with Senior Minister Lee in August 2000 in Kuala Lumpur.)

Since you now want to deal with the water issue separately and discontinue the package approach, these trade-offs are no longer possible. And as the package deal is off, I have instructed my officials to deal with water and the other issues individually and separately, on their stand-alone merits, and no longer as a package.

I hope our officials can make some progress at their coming meeting with your new approach.

With Best Regards,

Yours sincerely,

Goh Chok Tong

Four letters shed light on issue (Source)

BY IZATUN SHARI

PETALING JAYA: The Government has made public the full contents of correspondence between former premier Tun Dr Mahathir Mohamad and two of Singapore’s former prime ministers on outstanding issues involving the nations, including the aborted bridge project. 

Copies of two letters from Dr Mahathir to Lee Kuan Yew and Goh Chok Tong and two replies from Goh in 2002 were released via Bernama’s website under the heading “Correspondence between Tun Dr Mahathir and former Singapore Prime Ministers.” 

The first letter dated March 4, 2002 is Dr Mahathir’s reply to Lee’s letter of Dec 10, 2001. 

It outlines Malaysia’s proposals on the package issues – the bridge project to replace the Causeway, sale of water to Singapore, use airspace by the Singapore Air Force, the Malaysian Customs, Immigration and Quarantine complex and Central Provident Fund. 

In the letter, it is evident that Dr Mahathir included the bridge project as a trade-off and part of the package issues to be resolved with Singapore. 

The second letter is one from Goh to Dr Mahathir dated April 11, 2002, which referred to the March 4 letter and Lee’s reply on March 11. 

In it, Goh indicated that Singapore preferred the proposal of a new bridge to replace the entire Causeway rather than one to replace just the Malaysian side of the Causeway. 

However, he added, if Malaysia wished to proceed with a bridge replacing just its side of the Causeway, he would accept it though he thought it was not ideal. 

In Dr Mahathir’s letter to Goh dated Oct 7, 2002, he ended the package approach with Singapore, saying that Malaysia had decided to give highest priority to resolving the long-delayed water issue. 

Goh’s reply on Oct 14, 2002 stated that since Malaysia wanted to deal with the water issue separately and discontinue the package approach, the trade-off was no longer possible.