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.