Malaysia, Johor say no to reviewing raw water rates with Singapore for now

SINGAPORE: Malaysia and its southern Johor state will not be renegotiating raw water rates with Singapore yet, according to a minister. 

“Following discussions in October 2024 with the Johor chief minister (Onn Hafiz Ghazi) and the ministry, it was decided that the review of raw water rates does not need to be negotiated at this time,” Malaysia’s Deputy Energy Transition and Water Transformation Minister Akmal Nasrullah Mohd Nasir told parliament on Monday (Dec 2). 

Mr Akmal was responding to a query from MP for Pasir Gudang Hassan Abdul Karim, who asked whether the government will discuss the possibility of revisiting the terms of the 1962 Johor River Water Agreement.

The agreement entitles Singapore to draw up to 250 million gallons a day (mgd) of water from the Johor River.

Singapore pays 3 Malaysian sen per thousand gallons of raw water and sells treated water back to Johor at 50 sen per thousand gallons, a fraction of the cost of treating the water.

While Johor is entitled to a daily supply of up to 5 mgd a day of treated water, which accounts for 2 per cent of the water supplied to Singapore, Singapore has been supplying 16 mgd of treated water to Johor at its request, as confirmed by Foreign Affairs Minister Vivian Balakrishnan in March 2019 and reconfirmed by Malaysia’s Mr Akmal on Monday (Dec 2).

In a New Straits Times report, Mr Akmal said the higher supply amount incurred an additional cost of approximately RM180,000 (US$40,313) annually for Johor. 

He also pointed out the costs savings for Malaysia in buying treated water from Singapore, citing how it's purchasing it at the cost of 50 sen per thousand gallons.

"For comparison, treating the same amount of water locally would cost around RM1.80 per cubic metre, while the treated water we buy from Singapore costs about 11 sen per cubic metre”, he added.

The deputy minister said that Malaysia needs to achieve a “net-zero dependency” by being capable of producing treated water in Johor before reviewing any new changes.

This was in response to another parliamentary question by MP for Rompin Abdul Khalib Abdullah who raised concerns about the economic impacts Malaysia faced due to the sale of raw water to Singapore at what is perceived to be a subsidised rate.

He also mentioned the long-term implications on Johor’s water resources should the agreement continue without any changes. 

“Johor will still need treated water from Singapore,” Mr Akmal told parliament. 

To reduce reliance on Singapore for treated water, the Malaysian government has launched the Zero Dependency project which includes building riverbank water reservoirs in the Johor River, as well as water treatment plants. 

“These projects aimed to boost water storage capacity, allowing Johor to meet its long-term water needs independently, but achieving zero dependency by 2030 may be challenging due to the growth of industries such as data centres and semiconductors,” Mr Akmal explained.

Malaysia had earlier announced that all water deals were under review, following officials’ concerns over “subsidies” to the Lion City.

In July, local media reported that Deputy Prime Minister Fadillah Yusof had said that the government would be reviewing all existing agreements related to the issue of raw water.

Mr Fadillah, who is also the Minister of Energy Transition and Water Transformation had reiterated former prime minister Mahathir Mohamad’s claims that the agreement had cost the government a significant sum, which he perceived as a “subsidy” to Singapore. 

“Whether Malaysia has been providing a subsidy (to Singapore) or not, we are reviewing all the existing agreements,” Mr Fadillah said on Jul 16.

A SOURCE OF TENSION 

The 1962 water agreement, along with an earlier water agreement in 1961 which expired in 2011, has been a constant source of public political wrangling over the years, especially when Malaysia’s longest-serving prime minister Dr Mahathir was in office.  

During his latest stint as prime minister in 2019, he had urged Johor to pressure Singapore on water supply agreements to achieve higher revenue.

“We need to fight for this. A rich country (like Singapore cannot be) buying water from poor countries at such an unreasonable price,” he said in a speech in Putrajaya in Feb 2019.

“If we are reasonable, we must say that this payment is unfair. They (Singapore) are growing rapidly because we are supplying them with water” he added. 

Meanwhile, Singapore has repeatedly held the position that both countries cannot change the terms of the 1962 agreement, which provided a right to review the price jointly after 25 years in 1987.

“Our longstanding position has been that neither Malaysia nor Singapore can unilaterally change the terms of this agreement between our two countries,” Dr Balakrishnan told parliament back in March 2019, in response to Dr Mahathir’s comments. 

“Malaysia lost the right to review the price of water under the 1962 water agreement. In fact, Malaysia has revealed that they chose not to seek a review in 1987 because they benefited from the pricing arrangement under the 1962 agreement,” he added.

At the Singapore-Malaysia Leaders’ Retreat last year, then-Prime Minister Lee Hsien Loong and PM Anwar Ibrahim agreed that both countries would resume discussions on the raw and treated water prices, “without prejudice to each other’s respective long-declared positions on the right to review the prices under the 1962 Johor River Water Agreement”.

Both sides also agreed to resume discussions on measures to safeguard the water quality, as well as increase the yield of the Johor River, to ensure its sustainable supply to the extent required by the agreement.

Malaysia is set to host the next leaders’ retreat by this year’s end.