Janadas Devan Explains Why Malaysia Was 32 Years Too Late In Changing Water Prices
Prime Minister Mahathir’s recent comments about how Singapore has been taking advantage of Malaysia with low & “ridiculous” water prices has drawn the ire of many local politicians.
The Straits Times reports that Dr Mahathir has also been rallying the people of Johor to speak up against what he deems as “morally wrong”.
Looking to shed light into the issue, Mr Janadas Devan, son of ex-President Devan Nair, shared his thoughts on Sunday (10 Mar) via a viral Facebook post.
His post clearly resonated with many Singaporeans, as it has received close to 700 shares at the time of writing. We summarise his detailed argument for Singapore’s side of the debate below.
Water determines Singapore’s survival
To begin his post, Mr Devan quotes a Malaysian official in the United Nations about the importance of our water treaties.
Without water agreements, Singapore will perish as we lack natural resources.
However, this isn’t the only reason why breaking the water agreements have such serious consequences.
Both countries’ leaders still abide by the agreement today
1965 was a turning point in Singapore’s history. Singapore was a new independent state after two years as part of Malaysia.
As part of the split from Malaysia, the 1965 Independence of Singapore Agreement was created.
Article 8 of the agreement states that both governments will abide by the terms and conditions of the 1960 water agreements.
If Malaysia decides to break the terms, it would mean that she does not recognise Singapore as an independent state.
Mr Devan points out that both reasons were so important that no country leader has challenged them till today.
“3 sens for 1,000 gallons since 1926” is untrue
PM Mahathir has repeatedly used the argument that Singapore has been buying water for S$0.01 (3 sen) for every thousand gallons since 1926. But Mr Devan says this figure is false.
Here is a summary of Mr Devan’s FB post on the 1927 water agreement.
- Singapore rents 2,100 acres of Johor land for S$0.10 (30 sen)/acre a year
- Johor draws treated water for S$0.08 (25sen)/1000 gallons a day
- Johor draws 800,000-1,200,000 gallons per day
In short, Singapore did not buy water from Malaysia in 1927 but rented land from Johor to produce clean water. We also paid for the equipment needed to produce clean water.
“3 sens for 1,000 gallons” introduced in 1961
It wasn’t until the 1961 and 1962 water agreement that Malaysia agreed to sell raw water for S$0.01 (3 sens)/1,000 gallons to Singapore.
Based on Mr Devan’s post, here are the summaries of the water accords of the 60s.
- Singapore pays S$0.01 (3 sen) /1,000 gallons of raw water
- Singapore pays a rental of S$1.66 (RM5) /acre of land every year
- Johor buys 12% of treated water produced for S$0.17 (50 sen)/1,000 gallons
After the agreement ended, Malaysia took back the land as well as the existing facilities built by Singapore.
- Singapore draws 250 million gallons of water from the Johor river
- Singapore pays $0.01 (3 sen) /1,000 gallons of raw water
- Singapore pays rent “at the standard rate applicable to building lots on townland”
- Johor buys treated water from Singapore at $0.17 (50 sen) /1,000 gallons
Malaysia could have increased price in 1986 & 1987
Back then, Malaysia was given the option to have a price review after 25 years for each agreement.
But Johor did not revise the price at either opportunity even with Dr Mahathir as the Prime Minister in 1986 and 1987.
The real cost of buying water from Malaysia
Mr Devan continues his post by calculating how much money is Malaysia is gaining from the agreements.
- S$1.31 (RM3.95)/1000 gallons is sold to Malaysians
- S$1.15 (RM3.45)/1000 gallons in profits for the Malaysian government
- S$15.5 million (RM46.6 million)/year total profits
- S$0.80 (RM2.40)/1000 gallons for PUB to treat water
- S$0.63 (RM1.90)/1000 gallons saved by purchasing water from Singapore
- S$8.5 million (RM25.7 million)/year subsides on treated water using Singapore taxpayers’ money
Essentially, Malaysia doesn’t seem to be losing out even with terms dating back to the 1960s. If you do the math carefully, that is.
1990 water agreement cost Singapore over S$1 billion
Here is a summary of Mr Devan’s post about the water agreement made in 1990.
- Singapore will construct a dam over Sungei Linggiu
- Singapore pays S$106 million (RM320 million) as the opportunity cost of the 21,600ha land
- Singapore pays S$5,975 (RM18,000)/hectare of land
- Singapore pays rent of S$10 (RM30)/1000 sq ft yearly
- Singapore bears the cost of building & maintaining the dam
- Johor would own the dam after its construction
Mr Devan continues to state that this agreement was supplementary to the 1962 agreement, reaffirming its conditions.
With the 1990 agreement, Malaysia had finalised her last chance to make any changes to the water prices.
Malaysia was 32 years too late
Mr Devan concludes his Facebook post by quoting our Foreign Affairs Minister S. Jayajumar.
If Malaysia had made up her mind about the price of water during the price review option back in the 1980’s, we may not have invested S$1 billion into developing a dam for them.
Clearly, Malaysia has had enough opportunities and time to change their minds about the prices, but they are now 32 years too late.
Featured image from South China Morning Post and Ministry of Communications and Information Singapore.