A short preface from SgOkay:

TLDR; Singapore used to get water for Malaysia for free (1927 – 1960), paying M’sia only for the land used. S’pore has paid M’sia a huge sum of money upfront (320 million ringgit+), and the Johor administration continues to turn a 25 million ringgit profit every year by reselling treated water to her residents.

I like to think that the water agreement has been beneficial to both parties, and both the water, and the money have been vital to each country’s growth, and Dr Mahathir’s claims that M’sia is at the losing end unfairly make Singapore the scapegoat for the failings of Malaysia’s past and present administration.

(This article below is a direct reproduction of a Facebook post made by Janadas Devan, Chief of Government Communications at the Ministry of Communications and Information of Singapore. See original source at bottom of page)

“Some treaties might be so fundamental to the very existence of States that they simply could not be dispensed with, whatever political differences might arise. For example, the new island State of Singapore was dependent on Malaysia for its water supply; the treaty under which Malaysia had to supply a certain quantity of water daily to Singapore could not be terminated or suspended between the two states for any political reason.”

THERE is no more succinct statement defining the unique centrality of the water agreements between Singapore and Malaysia than the above. Astonishingly enough, the statement was made not by a Singaporean, but by a Malaysian official — Mr M.O. Ariff, at the United Nations Conference on the Law of Treaties in 1968.

Since then, there have been four Malaysian and two Singaporean prime ministers. Significantly, not a single one of them has ever contradicted, in either word or deed, the import of Mr Ariff’s statement.

To understand why, one needs to consider not only the water agreements themselves, but also their unique place in the Republic’s founding document, the 1965 Independence of Singapore Agreement, as well as in Malaysia’s Constitution.

In the wake of the Singapore Government’s Jan 25 release of documents, including copies of the water agreements, our senior writer JANADAS DEVAN pored over the material to find out what they say.

 – – –

THERE have been four water agreements – in 1927, 1961, 1962 and 1990, with the last three still in force. The first is now a historical curiosity, the second and third were guaranteed in the Separation Agreement and lodged with the United Nations, and the fourth concerns the building of the Linggiu dam and Singapore’s purchase of treated water from Johor.

The 1927 agreement

THIS was between the municipal commissioners of the town of Singapore and the Sultan of Johor. Both Singapore and the Malayan states were then British colonies or protectorates.

The agreement allowed the municipality of Singapore to rent from Johor 2,100 acres in the Gunong Pulai area, for 30 cents per acre annually.

In addition, Johor set aside about 65 sq km, promising not to alienate any part of this land without the consent of the Singapore commissioners. On their part, the commissioners were to give notice to Johor if they wished to reserve any part of this larger plot for drawing water, paying $5 per acre annually.

Johor was entitled to draw 800,000 gallons of treated water daily from the Singapore municipality, and paid 25 cents for every 1,000 gallons. The municipality, however, did not pay Johor for the raw water it drew.

So Malaysian politicians, such as Prime Minister Mahathir Mohamad, who claim that Singapore has been paying 3 sen per 1,000 gallons of raw water since 1927 are wrong. Johor did not charge colonial Singapore for the water. It collected only the rental on the land the municipality used. In return, Johor paid nothing to build or maintain the waterworks, dams, pipelines or reservoirs which supplied it with 800,000 gallons of treated water a day.

The 1961 agreement

THIS was between the City Council of Singapore (the predecessor of the Public Utilities Board) and the Johor Government. By then, Singapore was a self-governing country, with Mr Lee Kuan Yew as its Prime Minister, and the Federation of Malaya was a fully independent state, with Tunku Abdul Rahman as its Prime Minister. Contrary to what Malaysian leaders often claim, the British had nothing to do with this or later water agreements.

The agreement set aside land in Gunong Pulai, Sungei Tebrau and Sungei Scudai for a period of 50 years, giving Singapore ‘the sole and absolute right to draw off and take all water available in under or upon any part of the land’ or ‘any river in under or upon’ the specified area till 2011.

Singapore agreed to pay a rental of $5 per acre per annum for the land, and a charge of 3 cents for every 1,000 gallons of raw water it drew. (Singapore and Malaya then had a joint currency, but when the currency was split in 1973, these sums became denominated in Malaysian ringgit and sen.)

Johor could draw from Singapore at least ’12 per cent of the total quantity of water supplied to Singapore’. It could draw more if the 12 per cent proved ‘inadequate’ to meet the needs of Johor – a provision the state has taken full advantage of, as we shall see shortly.

Johor agreed to pay 50 cents (later 50 sen) per 1,000 gallons of this treated water.

Clause 2(ii) of the agreement states specifically that Johor ‘shall not at any time do any act or deed which might in any way prejudicially affect the interest’ of Singapore under the terms of agreement.

Clause 7 gave Singapore the full power to ‘occupy and use the said land’ to construct and maintain waterworks, reservoirs, dams, tanks, pipelines, aqueducts, filters and any other necessary building or plant.

On expiry of the agreement in 2011, none of these facilities will be demolished, and Johor can presumably acquire them.

The 1962 agreement

THIS resembles the 1961 agreement in many respects, including in the key provision that Johor ‘shall not at any time do any act or deed which might in any way prejudicially affect the interests’ of Singapore under the terms of the agreement.

The chief differences are that it specifies a longer time period – 99 years, expiring in 2061 – and a new source: the Johor River.

Singapore was required to pay rent on the land it used ‘at the standard rate applicable to building lots on town land’, and it was given ‘the full and exclusive right and liberty’ to draw up to a maximum of 250 million gallons per day (mgd) from the river, at 3 cents (later 3 sen) per 1,000 gallons.

Johor could purchase 2 per cent of this total for its own use, paying 50 cents (later 50 sen) per 1,000 gallons of treated water.

In all, the 1962 plus 1961 agreements entitled Singapore to draw about 350 mgd of raw water from Johor, which, in turn, was entitled to purchase about 15 mgd of treated water from Singapore.

Johor, however, has consistently drawn more – on average about 37 mgd, or about 22 mgd more that its entitlement – which it then sells to its residents at an average price of RM3.95 per 1,000 gallons.

This means the Johor government makes a clean profit of RM3.45 on every 1,000 gallons. At the rate of 37 mgd, this profit works out to RM46.6 million per annum.

On Singapore’s part, since it costs PUB about RM2.40 to treat 1,000 gallons of raw water, the Singapore tax-payer has in effect subsidised Johor at the rate of RM1.90 per 1,000 gallons, or RM25.7 million per annum.

The 1990 agreement

THIS was supplementary to the 1962 agreement, and will also expire in 2061. The agreement was between the PUB and the Johor state government, but both the Malaysian and Singapore governments guaranteed it.

Dr Mahathir was Malaysia’s Prime Minister when this occurred, while Mr Lee was still Singapore’s.

Significantly, the 1990 agreement reaffirmed the 1962 deal, since it refers in its preamble to Singapore’s right to draw water from the Johor river ‘subject to the terms, provisions, conditions and stipulations’ of the earlier agreement.

In effect, when Kuala Lumpur guaranteed the 1990 agreement, it reaffirmed, among other things, the prices stipulated in 1962.

The 1990 agreement allowed Singapore to construct, ‘at her own cost’, the Linggiu dam across the Johor River. ‘In consideration’ of this, Singapore was allowed to buy from Johor treated water generated by the dam and its ancillary works, over and above the 250 mgd of raw water that it was already entitled to draw from the river under the 1962 arrangement.

The 1990 agreement specifies a formula to determine the price of the treated water. Singapore would pay whichever of the following was higher:

  • ‘The weighted average of Johor’s water tariffs plus a premium which is 50 per cent of the surplus from the sale of this additional water by PUB to its consumers’ after deducting Johor’s price and the PUB’s cost of distribution, or
  • 115 per cent of the weighted average of Johor’s water tariffs.

Under the terms of the agreement, Johor owns the Singapore-constructed Linggiu dam, while the PUB owns the water treatment plant and ancillary works, until such time as the agreement expires in 2061, when everything built under this agreement will revert to Johor.

Johor set aside land totalling approximately 21,600 ha for the project. The PUB agreed to a premium of RM18,000 per hectare and an annual rent of RM30 for every 1,000 square feet.

In addition, it paid Johor RM320 million as compensation for loss of use of the land, as well as a ‘one-time up-front payment’ for the leasing of the land, ‘inclusive of rentals for the remaining tenure of the 1962 Johor River Water Agreement’.

According to Foreign Affairs Minister S. Jayakumar, Singapore has spent more than $1 billion on the Linggiu project. It might not have done so if the price of raw water had been revised in 1986 and 1987.

The original post:

More than 16 years ago, when we were arguing with the Malaysian govt about the water agreements, I wrote many articles…

Posted by Janadas Devan on Sunday, March 10, 2019