WATER POLITICS

Earlier in November, Malaysia renewed calls for Singapore to co-operate in revising a 1962 water supply agreement. According to Malaysia’s Natural Resources Minister, Xavier Jayakumar, the water reserve margin in the state of Johor has fallen to four per cent and may reach zero by 2020. The recommended margin is ten per cent. Under the 1962 Water Agreement, Singapore may extract 250 million gallons (946 million litres) a day from the Johor River. Singapore pays three sen ($0.01) for every thousand gallons (3785 litres) of raw water and sells treated water back to Malaysia at 50 sen ($0.18) per thousand gallons. The agreement expires in 2061.

Comment

The 1962 Water Agreement is among the most contentious obstacles to good relations between Singapore and Malaysia. Following his return as Prime Minister last year, Mahathir Mohamed announced that the arrangement between the two countries was ‘manifestly ridiculous’ and that the deal would need to be renegotiated. Singapore, meanwhile, contends that Malaysia lost the right to re-negotiate the price of water under the terms of the Agreement when it failed to do so in 1987. It claims that it effectively subsidises the cost of treating the water it sells back to Malaysia.

For Malaysia, there are several reasons for its position on the Water Agreement. The country’s level of debt became more manageable this year, but remains high. The Malaysian Government hopes to boost revenue by renegotiating the terms of the Agreement and increasing the price of water sold to Singapore (it is likely that if this does happen, Singapore will move to increase the price of treated water).

There are also suggestions that other domestic concerns have influenced Malaysia’s position. To return to government, Mahathir formed a coalition with former political opponents. Provoking nationalist sentiment helped the government to appear unified and allowed Mahathir to distance himself from the policies of the previous Prime Minister, Najib Razak (who enjoyed good relations with Singapore).

Singapore, meanwhile, views the water dispute as an existential issue. The Water Agreement was formalised in the 1965 Separation Agreement and Singapore views any breach of this agreement as a threat to its sovereignty. Furthermore, Singapore is highly reliant on Malaysia for its water, receiving nearly half of its water supplies from its neighbour. Singapore has tried to diversify its water sources, by increasing the quantities of rainfall caught in reservoirs, recycling water and desalination. Nevertheless, its reliance on Malaysia and the impacts of climate change have put Singapore among the countries most likely to be water-stressed by 2040. In addition to this, water prices have particular political significance in Singapore, where an increase in water prices last year led to rare protests against the government.

Malaysia and Singapore have extensive and complex levels of economic interdependence. Both countries count the other as one of their largest trading partners and movement of people between the two countries is high. Singapore is also the second-largest contributor of foreign direct investment to Malaysia. Both countries are also tied by their commitment to the Five Power Defence Arrangement.

Considering the interdependence between Singapore and Malaysia, it is unlikely that tensions over the Water Agreement will escalate much further than harsh words. As both countries seek to placate domestic interests, however, those tensions are likely to continue to strain their relationship.