The multi-billion ringgit Kuala Lumpur-Singapore High-Speed Rail (HSR) project has been terminated as Malaysia and Singapore failed to meet the deadline to come to an agreement.

Due to the impact of the COVID-19 pandemic on the Malaysian economy, several changes to the HSR project were proposed by the government of Malaysia which led to a suspension and a lapse on December 31st, 2020.

Malaysia’s Prime Minister Tan Sri Muhyiddin Yassin and Singapore's Prime Minister Lee Hsien Loong came out with a joint statement to address the termination after the expiry of the suspension period.

“Both countries will abide by their respective obligations, and will now proceed with the necessary actions resulting from the termination of the HSR agreement,” said the statement, released in the first morning of the new year.

The construction of the project was estimated to cost around RM60 billion and now Malaysia is expected to pay RM300 million in compensation as a result of the termination. Singapore’s Transport Minister Ong Ye Kung’s then made a remark that Singapore spent more than S$270 million on the project including the costs for consultancy services and manpower.

However the Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed has said Malaysia should expect a lower compensation of less than S$270 million.

“The transport minister also said the compensation would not include land costs and we are made to understand that the Singapore government has acquired several pieces of land to implement the project. Therefore, we are confident that the compensation cost will be much lower than S$270 million. Anyway, the matter has not been finalised and will be discussed soon,” he said during the Agenda Awani programme on January 5th.

The compensation figure will not be disclosed to the public until the amount is finalised, Mustapa assured via Facebook. Elaborating further, he said Malaysia was still interested to continue the HSR project which was seen as beneficial to the economy but the current economic situation due to Covid-19 forced it to review the implementation model.

“According to a study, the benefits to the economy over 50 years would total about RM300 billion. The benefits are great, which is why we are still keen to implement the project.

“It’s only the model, or method, that we felt may not be appropriate, amid the Covid-19 situation. So we took another look,” he added.