Lessons learned – 59th anniversary of the 1962 Johor-Singapore Water Agreement

29th September 2021 marks the 59th year anniversary of the 1962 water agreement entered between Johor and Singapore and its subsequent 1990 water agreement.

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Introduction

Malaysia and Singapore may have several rows, but nothing hit harder than water issues. 29th September 2021 marks the 59th year anniversary of the 1962 water agreement entered between Johor and Singapore and its subsequent 1990 water agreement. The two agreements will expire in 2061, giving 99 years of water rights for Singapore to use and supply water to its nation. It is an undeniable fact that the Independence of Singapore Agreement (also known as the Separation Agreement) signed between the governments of Singapore and Malaysia on the 9th of August 1965 guaranteed the sovereignty of Singapore.

Prior to the 1962 water agreement, there were two agreements entered between Johor and Singapore in 1927 and 1961 that are no longer in force.

1962 Agreement

The Johor River Water Agreement was signed on 29th September 1962 between the city council of the state of Singapore and the government of the state of Johor. The crux of the agreement gave Singapore the right to draw 250 million gallons of water per day from the Johor River. As a consideration to the agreement, Johor was entitled to a daily supply of treated water from Singapore up to 2% of the raw water it supplied.

On top of that, Singapore had to pay rent for the land it used “at the standard rate applicable to building lots on town land”. The water prices remained the same as in the previous agreement – 3 cents per 1,000 gallons of raw water supplied to Singapore and 50 cents per 1,000 gallons of treated water sold to Johor. After Singapore and Malaysia stopped using a common currency in 1973, the prices became denominated in Malaysian ringgit.

The 1962 agreement (also the 1961) provided for a price review after 25 years, with arbitration being the agreed course of action if bilateral price negotiations failed.

The 1990 Agreement

The 1990 agreement was signed on the 24th of November 1990 between the Public Utilities Board (PUB) of Singapore and the government of the state of Johor. It was acting as supplementary to the 1962 agreement and therefore, would also expire in 2061.

Under this agreement, Singapore was allowed to construct a dam across the Linggiu river, near a town called Bandar Tenggara to facilitate the extraction of water from the Johor River.

Singapore agreed to pay compensation for the permanent loss of use of the land and its associated revenue, in addition to a premium of RM18,000 per hectare (10,000 sq m) and an annual rent of RM30 for every 1,000 sq ft (per 92.9 sq m) for the land occupied by a water treatment plant and other ancillary permanent works. The cost of building and maintaining the Linggiu dam would be borne by Singapore.

As a consideration of Johor’s consent for the construction of the dam, Singapore was allowed to purchase treated water from Johor generated by the new dam. The price of this additional supply would be calculated based on a fixed formula: the weighted average of Johor’s water tariffs plus 50% of the surplus from the sale of this water by PUB to its consumers after deducting Johor’s price and PUB’s cost of distribution, or 115% of the weighted average of Johor’s water tariffs, whichever was higher.

The Water Conflicts

The conflicts started around late 2000 while Tun Mahathir was the fourth prime minister of Malaysia. Malaysia suggested several price increases for raw water to 45 cents per 1,000 gallons. On the 15th of August 2000, Tun Mahathir met with the late Mr Lee Kuan Yew and both agreed that Singapore would pay 45 cents per 1,000 gallons. The price review according to Malaysia is needed considering the inflation and to justify a fair share of water price.

In early 2001, Malaysia considered a 60 cent price tag per 1,000 gallons was fair and Singapore counter-offered that a 60 cent per 1,000 gallons could be ideal after 2011. Malaysia was adamant until March 2002, the conflict reached its peak. Malaysia planned to charge Singapore 60 cents per 1,000 gallons and wanted the price to be back-dated to 1986 and 1987. The price will be set at RM3 from 2007 to 2011 and onwards to be adjusted yearly for inflation. During that time, both Malaysia and Singapore officials were exchanging letters and official press statements stating their position until the 14th of August 2002, where the state government of Johor officially sent a notice to review the water price. PUB of Singapore subsequently replied to the state government and reserved its right to negotiate on this matter through a “mutually acceptable price package” between both governments.

In September 2002, Malaysia presented its price formula as part of the price package to Singapore while Singapore maintains its position that the price package by Malaysia is unfair. In early 2003, Singapore published in the media a series of official correspondence between leaders of the two countries over the water dispute after S. Jayakumar presented the documents in Parliament. In April 2003, Singapore Information, Communications and Arts Ministry published the 84-page book entitled Water Talks? If Only It Could, a Singapore’s interpretation and perspectives on Johor-Singapore water spat. Meanwhile, in Malaysia, they initiated a media campaign to rebut the allegations made by Singapore over the water issue until the resignation of Tun Mahathir on the 30th of October 2003.

The water issue has been kept under the radar after 2003, though the public perception on this matter was rather negative in Malaysia until Tun Mahathir’s return as a Prime Minister following an unexpected win of the 14th General Election in 2018. In 2019, Malaysia renewed calls for Singapore to co-operate in revising the water price from the 1962 water agreement due to the water reserve margin in the state of Johor has fallen to 4% and may reach zero by 2020.

Although the call for a water price review was made, the issue has since been not discussed properly between both officials until now. On 21st September 2021, Malaysia officials said in Parliament that the review of water prices will resume once the pandemic situation in both countries has “recovered completely”.

Is the water price review allowed under the 1962 Agreement?

Singapore claimed that Malaysia’s price review under the 1962 agreement has expired because of the 25 years review provision. Singapore contended that Malaysia can only review the water price in 1986 and 1987 respectively but did not do so.

After a careful review of the agreement, the 25 years provision was rather ambiguous. Clause 14 of the 1962 Agreement stated that:

“The provisions of paragraphs (1) and (2) of the foregoing clause of these presents shall be subject to review after the expiry of twenty five years from the date of these presents and shall be reviewed by the parties and the facts that are to be taken into account upon such review shall include inter alia any rise or fall in the purchasing power……”

Malaysia interpreted that the word “after the expiry of twenty five years” has a literal meaning and allows Malaysia to review the water price at any time after the twenty five years of the date of the agreement.

Singapore in its official statement was very clear that any breach of the water agreement would undermine the existence of Singapore as the provision of the water supply has been laid in the Separation Agreement. In a bold move, Tun Mahathir while speaking to the reporters on this issue stated that international law has been broken several times before and people go to war even, which is not by agreement.

What now?

It is a fact that the 1962 and 1991 agreements will expire in 2061. To reduce Singapore’s dependence on imported water, Singapore has built up water supply from non-conventional sources, namely NEWater (reclaimed water) and desalinated water (treated seawater), by setting up water treatment plants in various parts of Singapore. The plan is for Singapore to be self-reliant in water by 2061 if it needs to be.

As to the water price conflicts, in 2019, Malaysia officials considered taking this matter to international arbitration if no consensus are met. Recently in September 2021, Malaysia officials stated that the water talks will resume once the pandemic situation in both countries has “recovered completely”. For Malaysia, resolving the longstanding issue of water price review is a priority while Singapore has been consistent with its position to maintain the water price though several negotiations seemed to show that they are open to any possibility of revised water price.

Finding an amicable solution through negotiation as well as the possibility of dispute resolution through arbitration is important for both countries and therefore ending this issue once and for all.

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**The facts and views expressed are solely that of the author and do not necessarily reflect that of the editorial board.