The water price issue between Singapore and Malaysia has been revived thanks to Malaysian Prime Minister Mahathir Mohamad who re-took office in May 2018.
The 1926 claim
Mahathir has on more than one occasion voiced his unhappiness about Malaysia selling raw water to Singapore at the price of 3 sen per 1,000 gallons, which he has repeatedly said was set in 1926.
For instance, he repeated this most recently in an interview with South China Morning Post (SCMP):
“Can you find any country selling 1,000 gallons of water at 3 sen, a price that was fixed way back in 1926?
What was sold at 3 sen in 1926 which is sold at 3 sen now?”
And he did so in January 2019 during a live session at Oxford Union.
“3 sen for 1,000 gallons since 1926” is false
However, the claim that the 3 sen per 1,000 gallons of raw water price was decided back in 1926 is not true.
This is because the price of 3 sen per 1,000 gallons of raw water was never set in 1926.
Rather, it was only introduced under the 1961 water agreement.
Setting record straight
Janadas Devan, the Chief of Government Communications at Singapore’s Ministry of Communications and Information (MCI), shed light on the issue in a Facebook post published on March 10.
Singapore did not pay Johor for water in 1927
Janadas first clarified the terms of the 1927 agreement that involved land and water, which was signed between Singapore and Johor, when both territories were still under British colonial rule at that time.
The terms are as follows:
- Singapore rents 2,100 acres of land in Gunong Pulai, Johor, for 30 sen per acre annually
- Johor can draw 800,000 gallons of treated water daily from Singapore at 25 sen for every 1,000 gallons
- But Singapore did not have to pay Johor for the raw water it drew from the area
So, while Singapore paid Johor for land rental, Singapore did not pay Johor for the water it drew.
This is why Mahathir’s assertion that Singapore has been paying 3 sen for every 1,000 gallons of raw water since 1926 is wrong.
“3 sen for 1,000 gallons” started in 1961
The 1961 agreement entitled Singapore to draw water within the designated land at Gunong Pulai, Sungei Tebrau and Sungei Scudai for 50 years up to 2011.
Singapore was to pay RM5 per acre for the land annually, and 3 sen for every 1,000 gallons of raw water it drew.
Under this agreement, the 1927 agreement was also declared void.
The 1961 agreement expired in 2011 and allowed Johor to acquire the facilities built by Singapore subsequently.
The price of 3 sen for every 1,000 gallons of raw water sold to Singapore remained the same under the 1962 agreement, which is set to expire in 2061.
The importance of the 1965 Separation Agreement
Both the 1961 and 1962 water agreements were guaranteed under the 1965 Separation Agreement.
This is why Singapore has been consistent in maintaining that breaching the 1962 agreement would also void the Separation Agreement, and would undermine Singapore’s independence and sovereignty.
Why prices are in ringgit?
And a helpful reminder about a joint currency: According to Janadas, 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.
There was probably little expectation back then decades ago for the Sing dollar to ever rise strongly against the Malaysian ringgit.
Singapore has been subsidising treated water to Johor
Janadas also clarified further about the amount of profit the Johor government makes by selling to its own residents the treated water Singapore supplies.
While both the 1961 and 1962 agreements allowed Johor to draw 15 million gallons per day (mgd) of treated water from Singapore, Johor has “consistently drawn more” — about 37 mgd, which is 22 mgd more than the amount it is entitled to.
Johor then sells to its residents at “an average price of RM3.95 per 1,000 gallons”.
Therefore, the Johor government makes a “clean profit of RM3.45 on every 1,000 gallons”, which works out to RM46.6 million per annum at the rate of 37 mgd that Johor receives from Singapore.
For Singapore, since it costs RM2.40 to treat 1,000 gallons of raw water, Janadas said the Singapore taxpayers have “subsidised Johor at the rate of RM1.90 per 1,000 gallons, or RM25.7 million per annum”.
Moreover, between 1990 and 2003, Singapore had invested more than S$1 billion on the Linggiu project, which is the Linggiu dam across the Johor River.
The Linggiu dam project came about as a result of the 1990 agreement.
This S$1 billion investment figure is important to note because Singapore might not have made such substantial investments if the price of raw water had been revised in 1986 and 1987.
You can read his entire post here:
Top image via LKYSPP, Mikhail Metzel/TASS via Getty Images