Mustapa Mohamed, minister in the Prime Minister’s Department for economic affairs, has said that both Malaysia and Singapore could not agree on several issues.

Mustapa, often referred to as Tok Pa, said in a statement that the government had explored numerous alternative ideas aimed at reducing the cost of the project since late 2018 (when Pakatan Harapan took over), as the original structure of the project would have required substantial long-term government guarantees.

“The new project structure was expected to provide the government the flexibility in financing options, such as deferred payments, public-private partnerships and the possibility of accessing financing at favourable rates,” he said.

“The proposed changes to the project structure would have allowed us to leverage on the project to accelerate Malaysia’s economic recovery, by bringing forward the start of the construction phase by almost two years.”

He said that the severe impact the Covid-19 pandemic has had on the economy only increased the need to reduce the costs of the project.

Both governments were unable to come to a consensus on the proposals before the bilateral agreement lapsed on Dec 31, 2020.

Tok Pa said the government will now continue to explore alternative options, including the viability of a domestic high-speed rail project and the value it would bring to Malaysians.

He added that Malaysia would abide by the original terms and would begin the discussions with Singapore to determine the appropriate amount of compensation they will receive.

A well-placed source in Putrajaya had told FMT that Malaysia would have to pay Singapore around RM320 million in compensation.