Malaysia pays Singapore $76mn over rail cancellation

SINGAPORE: Malaysia has paid Singapore over $76 million compensation following the cancellation of a controversial high-speed rail line between the neighbours after years of stop-start negotiations, officials said Monday.

The 350-kilometre (217-mile) railway was expected to cut travel time between the city-state and the Malaysian capital Kuala Lumpur to 90 minutes from the four or more hours by car currently.

But the neighbours scrapped the project in December after failing to agree on changes proposed by a new Malaysian government, which had taken power after the fall of a short-lived reformist administration.

The countries have had fractious relations since Malaysia expelled Singapore from a federation in 1965, ending a brief and stormy union of the former British colonies.

Malaysia paid Sg$102.8 million (US$76.3 million) to Singapore to reimburse costs incurred for the project, both governments said in a joint statement.

They said the amount "represents a full and final settlement in relation to the termination of the bilateral agreement" to develop the line.

Singapore signed the deal to build the bullet train line in 2016 with the government of then prime minister Najib Razak, but its fate was thrown into doubt after Najib was defeated in elections two years later.

The new prime minister, Mahathir Mohamad, said he wanted to scrap the project as part of an effort to review major infrastructure projects approved by his scandal-tainted predecessor in a bid to cut the country's debt.

Construction was then suspended for two years at Malaysia's request and the project was finally axed after the collapse of Mahathir's coalition government last year.