What are the economic returns for Malaysia from the current water agreement?

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Malaysia's Economic Returns from the Current Water Agreement with Singapore

Malaysia derives economic returns from the existing 1962 Water Agreement with Singapore, primarily through the sale of raw water at a rate of three sen per 1,000 gallons. This provision, despite its low rate, offers financial benefits when contrasted with the costs associated with treating water domestically and the price Malaysia pays for treated water from Singapore.
Revenue from Raw Water Sales

The agreement stipulates a price of three sen per 1,000 gallons for raw water supplied to Singapore. While this figure appears minimal, it represents a direct revenue stream for Malaysia under the terms of the 1962 pact. This established rate forms the basis of the economic exchange concerning raw water.
Cost Comparison of Treated Water

Malaysia's economic position is further illustrated by its purchase of treated water from Singapore. Johor currently procures an average of 16 million gallons of treated water daily at a cost of 50 sen per 1,000 gallons. In contrast, the estimated cost for Malaysia to treat an equivalent volume of water itself is approximately RM1.80 per cubic metre, which translates to about 11 sen per 1,000 gallons. This comparison highlights a favourable economic outcome for Malaysia in its current arrangement for treated water.
Reciprocity in Water Supply

The existing water agreement demonstrates a degree of reciprocity that benefits Malaysia economically. The cost of purchasing treated water from Singapore (around 11 sen per 1,000 gallons when adjusted) is lower than Malaysia's domestic treatment cost for the same volume. This dynamic underscores the rationale behind the government's cautious approach to altering the raw water rate, as any change would need to consider the impact on the cost of treated water purchased from Singapore.

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What are the economic returns for Malaysia from the current water agreement?

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