Mahathir's Singapore fetish and the story of the 3 sens water

Malaysia's ex-pm, Tun Mahathir Mohammed, recently posted in his blog a short article titled "The Modern Middle Kingdom".

The article can be summarised as his unhappiness that Singapore/LKY views itself as the centre of the universe; that Singapore's participation in the Iskandar development project will marginalise the Johorean Malays; that the Water agreements with Singpaore constitutes a grave injustice inflicted on Malaysia; and last but not least - that Najib is foolish for not carrying out his grand vision of a crooked bridge by forcing the demolition/replacement of the causeway.

Why did Mahathir agree to 3 sens per 1000 gallon during his time? (The period for the 2 windows for price reviews for the Water agreement fall during his 22 years term in office as PM). There are several good reasons, which he always conveniently leaves out whenever he beats the long dead horse of the Water agreements.

I posted a comment there too, but the blog's settings require comments to be approved - and its been more than 12 hours since the post count froze at 120. *edit* The comment went through, some posters took note of it, some others continued to ask "why 3 sens" - either they did not read other comments, or choose to ignore the points I put forth.

Below are my comments :

A few pointers lifted from an earlier posting in my blog :

1) The construction of the reservoirs, dams and pipe works to bring the water to Johor and to Singapore, as well as it's upgrading and maintenance is all paid by Singapore - over the years it came up to a cost of more than S$1 Billion.

2) Back then, for every 1000 gallons of water:

- Singapore pays 3 sen for the raw water from Malaysia

- Singapore pays RM2.40 to treat this water

- Malaysia pays 50 sen to buy this treated water from Singapore

- Malaysia sells this treated water at RM3.95 to Johor residents

Johor made a profit of RM128,000 every day by selling treated water bought at a much lower price from Singapore. That's a tidy net profit as the cost of construction is fully paid by Singapore (refer pt 1).

3) The two Water Agreements allowed for a price review after 25 years, that is in 1986 and 1987 respectively. But Malaysia did not ask for a review at that time. It was a calculated decision by Malaysia not to review. Johor State Assembly Speaker Zainalabidin Mohd Zain made this clear : "There was no point in doing so because Johor was dependent on Singapore for its treated water supply, and Singapore would have also increased its price of treated water sold to Johor." So, Malaysia did not ask for a price review then because it have benefited Malaysia more for the status quo to continue (refer point 2).

4) Despite Malaysia choosing not to review the prices during the periods where they could under the treaty (refer pt 3), Singapore is still open to a price review - if only the Malaysia government under Mahathir could make up his mind on the right price - Mahathir first agreed to the price of 45 sen for current water supply and 60 sen for future water supply in Sep 01. But in Mar 02, he increased their asking price to 60 sen for water sold from 2002 to 2006, and RM 3 for water sold from 2007 to 2011. Yet later, he increased the demand to RM6.25 for water from 2002. It can be quite hard to play football if the goal posts keep moving.

5)In Dec 98, Malaysia under Mahathir decided the drop the price reviews approach as a singular negotiation (refer pt 4), and requested to resolve all the outstanding bilateral issues as a package. Singapore agreed. Then the Malaysian government unilaterally called off the package approach.

So all this ‘package approach’ linking sand, air space etc to water price reviews originated from Mahathir - not Singapore. Thus, both Malaysians and Singaporeans have the dear Tun to thank for the ‘creative’ approach of bundling multiple issues together.