Why is Malaysia maintaining the 1962 Water Agreement rate with Singapore?

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Malaysia Maintains 1962 Water Agreement Rate with Singapore Due to Reciprocal Benefits and Cost Implications

Malaysia is maintaining the existing provision in the 1962 Water Agreement concerning the raw water rate to Singapore. This decision considers the implications on the cost of purchasing treated water from Singapore and acknowledges a perceived reciprocity in the current arrangement. The government has indicated that any change to the raw water rate would need careful consideration of its impact on national interests and the cost of water supply.
Reciprocal Economic Benefits in Water Exchange

The current arrangement involves Malaysia selling raw water to Singapore at a rate of three sen per 1,000 gallons. Concurrently, Johor, a Malaysian state, purchases treated water from Singapore. Records from the Johor Water Regulatory Body (BAKAJ) show that Johor buys an average of 16 million gallons of treated water daily at a rate of 50 sen per 1,000 gallons. This significantly exceeds the five million gallons of treated water entitlement stipulated in the agreement.
Cost Comparison of Water Treatment

When comparing the cost of treating water domestically, the average cost for Johor to treat the same volume of water is approximately RM1.80 per cubic metre. Translating this to the rate at which Singapore supplies treated water, which is 50 sen per 1,000 gallons, equates to about 11 sen per 1,000 gallons when buying from Singapore. This cost comparison highlights that the rate at which Johor purchases treated water from Singapore is considerably lower than its own domestic treatment costs, indicating a form of economic benefit.
Pursuit of Zero Dependency and Future Considerations

Malaysia is actively pursuing a Zero Dependency project aimed at reducing its reliance on Singapore for treated water. Projects such as the Riverside Water Reservoir (TAPS) and the construction of a dam at Sungai Sedili Besar, along with new water treatment plants, are underway to enhance water storage and treatment capacity within Johor. However, the initial target of achieving zero dependency by 2030 may face delays due to the rapid growth of industrial sectors. Consequently, the supply of treated water from Singapore remains essential to meet Johor's current and future water demands.
Current Stance on Rate Review

Following discussions in October 2024 between the Menteri Besar of Johor and the relevant ministry, it was concluded that there is no immediate need to review the raw water rate for Singapore. This decision underscores a cautious approach to ensure that any potential changes do not negatively impact the public or national water security. The government prioritises careful consideration and stakeholder views before proceeding with any potential renegotiations.

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Why is Malaysia maintaining the 1962 Water Agreement rate with Singapore?

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