S’pore and M’sia must work together based on respect for international law: Balakrishnan

SINGAPORE — While the Republic remains committed to engaging and cooperating with the new Malaysian government, Foreign Affairs Minister Vivian Balakrishan stressed that both countries must work with each other on the basis that “the sanctity of international agreements” are respected, and that any dispute be resolved peacefully “in accordance with international law”.

Responding to questions on the controversial remarks made by Dr Mahathir Mohamad recently on scrapping the high-speed rail (HSR) project and calling for a review of water prices, Dr Balakrishnan laid out three key principles of Singapore’s foreign policy in Parliament on Monday (July 9).

Upholding international law and respecting the sanctity of international agreements is a “critical principle” for a small state like Singapore, said Dr Balakrishnan, adding that they underpin relations between countries.

“They make it possible for countries to co-exist peacefully, build trust, and work together for the long-term, regardless of changes of governments or circumstances,” he added. “The alternative in which countries can unilaterally revise or abandon terms of agreements is manifestly a recipe for disaster.”

Should there be disputes between countries, these ought to be resolved based on international law, said Dr Balakrishnan, citing the case of Pedra Branca. It was resolved amicably, he noted, after Singapore and Malaysia followed due legal process and deferred to the International Court of Justice.

Central to the Republic’s foreign policy is upholding its reputation as a “credible, trusted, and consistent partner, and a country that abides fully by our international obligations”, said Dr Balakrishnan.

He added: “This reputation creates political and economic space for Singapore and Singaporeans. This is especially crucial as we are an international financial centre.”

Turning to the specific bilateral issues concerning Singapore and Malaysia, Dr Balakrishnan touched on the price of raw water imported by Singapore from Malaysia, which has become a hot topic after Dr Mahathir reportedly said that the current prices are excessive and should be reviewed.

Singapore buys water from Malaysia under water agreements signed in 1961 and 1962. The first expired in 2011 and the second will expire in 2061.

Dr Balakrishnan said the 1962 pact was guaranteed by both Singapore and Malaysia in the Separation Agreement that established Singapore as a sovereign state in 1965, which was in turn registered with the United Nations. He added that any breach would question the agreement, “which is the basis for Singapore’s very existence as an independent sovereign state”.

The core issue at stake is not the price that the Republic pays, but rather how the price revision is decided on, he stressed.

Singapore will “fully honour” the terms of the water agreement and expects Malaysia to do so, he noted, adding that “neither Malaysia nor Singapore can unilaterally change the terms of this agreement between our two countries”.

Moreover, he noted that Malaysia had itself acknowledged previously that it had consciously chosen not to ask for a review in 1987 “because they benefitted from the pricing arrangement” under the 1962 agreement.

In fact, he said Dr Mahathir, in his previous term as prime minister, had in 2002 said Malaysia did not seek a review when it was due as it knew that any revision would also affect the price of treated water sold by Singapore to Malaysia.

Johor currently buys treated water at 50 sen (S$0.17) per 1,000 gallons, which is a fraction of the cost to Singapore of treating the water.

This is why Johor buys more treated water from Singapore than it is entitled to under the 1962 water agreement, said Dr Balakrishnan, adding that Singapore sells these additional supplies at Johor’s request and at the same price, without prejudice to Singapore's rights under the agreement.

Under the 1962 Water Agreement, Singapore's national water agency PUB may draw 250 million gallons of raw water from the Johor River daily at 3 sen per thousand gallons.

In return, Johor is entitled to receive a daily supply of up to five million gallons of treated water - or 2 per cent of the water supplied to Singapore - at 50 sen per 1,000 gallons.

But the Republic has been regularly supplying Johor with up to 16 million gallons of water a day.

Singapore has said that the cost of treatment is in fact RM 2.40 per 1,000 gallons while Malaysia sells the treated water to Johor citizens at RM3.95 per 1,000 gallons.

Dr Mahathir also raised eyebrows recently, when he initially said that his Pakatan Harapan government has decided to terminate the HSR project, but later pulled back and said it has been postponed.

At the crux of this issue is the sanctity of international law and agreements, Dr Balakrishnan reiterated, saying that the HSR agreement was signed in 2016 in “good faith, after both sides had carefully negotiated and agreed to all the provisions, including those pertaining to the implementation of the project, as well as those dealing with the eventuality that the HSR is terminated”.

Singapore has sent a third-party note to the Malaysian government seeking  clarification on its position, and hopes to receive a response “soon”.

In the meantime, Singapore is incurring costs on the project as it continues to meet its obligations, and should Malaysia terminate the project, Dr Balakrishnan said Singapore will deal with the question of compensation for costs incurred in accordance to the bilateral agreement and international law.

“The Singapore Government has a duty to safeguard public funds by recovering these costs,” he added.

With regard to the 1MDB saga, Dr Balakrishnan said that Singapore has been “thoroughly investigating” 1MDB-related offences committed in Singapore since 2015.  Two banks have been shut down, while other institutions have been fined for regulatory breaches, while individuals found guilty of 1MDB-linked charges have been jailed and fined.

Between March 2015 and August 2016, Singapore has provided 1MDB-related information in over 30 exchanges with Malaysia during the period, which was acknowledged by Malaysia, said Dr Balakrishnan.

“We took these enforcement and regulatory actions not because of political calculations, but because it is in our national interest to reaffirm and protect Singapore’s reputation as a clean, transparent and trusted international financial centre,” he said.

Saying that Malaysia “will always remain our closest neighbour”, Dr Balakrishnan reiterated that “a stable and prosperous Malaysia is good for Singapore and for our region”.

“We have generally enjoyed a positive and constructive relationship with successive Malaysian governments and leaders, and we believe there is still much for us to achieve together,” he added.

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