Singapore won't renew Malaysia's water contract
Singapore won't renew Malaysia's water contract
Bloomberg, Singapore/Kuala Lumpur
Singapore will not renew one of the two contracts governing water
imports from Malaysia, instead tapping alternative sources such
as a planned downtown reservoir, Environment and Water Resources
Minister Yaacob Ibrahim said.
Under the contract, Singapore imports as much as 454,609 cubic
meters of raw water a day for 3,000 ringgit (US$789), according
to information released by the Singapore government. That
agreement will not be renewed when it expires in 2011, Yaacob
said in an interview.
"Once that particular source stops, we will have enough to
cover for the supply as we ramp up the different supplies of
water," he said. "As and when we need to scale up, we'll scale
up."
Singapore's reliance on Malaysia for about half of its fresh
water has been a source of concern to the island's politicians
since independence four decades ago. Singapore is spending more
than S$500 million (US$306 million) on a downtown reservoir and
plants to purify recycled water to increase its water supply,
Yaacob said.
Singapore, which will continue to import Malaysian water under
a separate contract expiring in 2061, has been trying to become
more self-sufficient. Arguments over the price of Malaysian water
have overshadowed relations between the two countries, which were
briefly united in a federation from 1963 to 1965, and hampered
efforts to solve other bilateral disputes.
Singapore decision not to renew the contract in 2011 has "no
significance" to bilateral relations, Malaysia's deputy premier
Najib Tun Razak told reporters today in Kuala Lumpur.
Ties between the two countries have warmed since Abdullah
Ahmad Badawi became Malaysia's prime minister in October 2002,
after Mahathir Mohamad's 22-year rule.
"There's been a clear improvement in relationships between the
Singapore and Malaysia governments but Singapore will try its
best to be self-sufficient," said Jay Moghe, chief executive
officer of Stork Capital Asia Pte in Singapore, which manages $25
million in its hedge fund.
The city is investing more to increase its water supply to
help maintain prices to draw investors such as Hewlett-Packard
Co. and STMicroelectronics NV, which use water in their Singapore
factories.
"Singapore may never be self-sufficient, but it has to assure
foreign investors of its water supply," said David Cohen,
director of Asian economic forecasting at Action Economics in
Singapore.
Water will not be priced higher than S$2 per cubic meter in
the next three-to-five years, and will be kept near the current
price of S$1.52, Yaacob said.
Water imported under the contract maturing in 2011 supplies as
much as a third of the 1.3 million cubic meters of water
Singapore currently consumes each day. Singapore also treats raw
water from Malaysia and exports it back to its neighbor.
While demand for water in Singapore will rise to 1.8 million
cubic meters over the next six years, supplies will come from a
new S$227 million downtown reservoir and from new purification
and desalination plants, Yaacob said.
A dam to contain water in the bay beside the financial
district will be built as early as 2007, creating a new reservoir
linked to the Singapore River, he said. The government will also
create more irrigation channels to capture as much as two-thirds
of the rain that falls on the city by 2011, up from about half
now, he added.
"Every drop of water that drops on to Singapore's soil, we'll
try to capture as much as possible," Yaacob said.
Singapore has already been increasing domestic production of
water. Hyflux Ltd., Singapore's biggest publicly traded water-
treatment company, already recycles waste water, and new
facilities under construction include a desalination plant that
will turn seawater into potable water.
Singapore, which at the time of its 1965 independence relied
on Malaysia for most of its water needs, was able to send 30,000
liters of water to Sri Lanka, Maldives and Indonesia after they
were hit by a tsunami on Dec. 26.