LISTING OF SINGAPORE AS A HIGH-RISK COUNTRY

Dr Ong Chit Chung (Jurong): Sir, first, I want to thank the Minister for a very comprehensive answer. Very clearly, the twists and turns in the Malaysian position have made negotiations extremely difficult. Try as we must and try as we will. In this context, I want to ask the Minister what will happen next in our negotiations. Will there be further Senior Officials' Meeting or Ministerial Meeting? And what will be Singapore's position and approach in these future series of meetings?

Prof. Jayakumar: Sir, to answer Dr Ong Chit Chung, I would say that the ball is in Malaysia's court. Because at the Second Ministerial Meeting in Singapore in September, Foreign Minister Syed Hamid said that after the Senior Officials reported the outcome of the discussions to the two Ministers, both sides would then decide on a date for the next Ministerial Meeting which Malaysia would be prepared to host. He said this. But we have not heard from Malaysia on any follow-up meeting to discuss the water and other issues after the recent Senior Officials' Meeting in Johor Baru.

As far as Singapore is concerned, we stand ready to meet them to discuss the water issue further and to continue the negotiations. But I should stress that the negotiations cannot be on the basis that: please show your sincerity by caving in to our demands. If you want to talk about water, I think Malaysia has to be very serious. We understand Malaysia's priority is to increase the price of current raw water. That is why we have said that we are prepared to discuss the price revision of water, even though our stand is that they have lost the legal right. But they, at the same time, must show seriousness in discussing future water and not fob us off by saying that we can discuss this in 2059, just two years before the expiry of the 1962 Water Agreement. So I would say Singapore's position is that we are committed to seeking a solution to resolve the water issue and other bilateral issues but we cannot go by vague assurances from Malaysia that it is prepared to supply future water to Singapore because, as I have said, we must plan our long term water needs in advance. And we have to work out the details years before the expiry of the 2062 Agreement, issues such as water demand management and capacity building.

As to what our approach will be, from my main answer, it is quite clear that by abandoning the package, Malaysia has fundamentally changed the basis of the bilateral talks. Singapore's position has always been on the basis of a package approach and, in his letter of 14th October 2002, Prime Minister Goh made it clear that since Malaysia had decided to discontinue the package, each issue will have to be discussed on its stand-alone merits, and it is not possible to maintain our previous concessions.

So, in future, Singapore has no choice but to deal with the water and other issues individually on a stand-alone basis.

Mr R. Ravindran (Marine Parade): Could I ask the Minister what is Singapore's position with regard to a preposterous statement made by a Malaysian Minister by the name of Mr Rais Yatim, that Malaysia would enact a local law to make the Water Agreements null and void?

Prof. Jayakumar: I think honourable Members will recall that, last week, my Ministry actually issued a statement on those remarks by Minister Rais Yatim. The Ministry of Foreign Affairs statement pointed out that what Minister Rais Yatim said was not in accord with repeated assurances by Malaysian leaders that they would honour the 1961 and 1962 agreements until the date of expiry. These assurances actually date back many years ago and have been repeated very recently. In fact, in 1988, Prime Minister Mahathir said:

"We cannot set aside the treaty (referring to the water agreements) as it is an agreement between the two countries registered with the United Nations. We cannot break our word."

This is from Malaysia's Business Times of 23rd January 1988, also carried in Singapore's Straits Times.

Then, this year, Dr Mahathir said in the New Straits Times of 3rd May that Malaysia was "bound" by the water agreements and "cannot just break the agreements". Prime Minister Mahathir also said:

"The fact is, according to the agreements, we, Malaysia, must supply them with water. We will continue. We promise them that we will supply them with water."

And Foreign Minister Syed Hamid, in his opening statement at the talks held in Kuala Lumpur in July 2002, said:

"Malaysia has repeatedly said that it will honour the 1961 and 1962 agreements until their expiry in 2011 and 2061 respectively."

He also said:

"During the Separation of Singapore, Malaysia did not propose for the agreements to be reviewed. It continues to honour the agreements, and such commitment is further reinforced when Malaysia signed the Separation Agreement in 1965."

So, in answer to Mr Ravindran, I would say that these clearly are then legally binding agreements which were guaranteed by both governments under the 1965 Separation Agreement. And, as Prime Minister Goh said in Parliament in April this year, the Separation Agreement is fundamental to Singapore's existence as an independent nation and has been registered at the United Nations. So, any attempt to repudiate the guarantees set out in the Separation Agreement, any attempt to vary the terms of the Water Agreements without the express consent of both governments, will be a serious breach of the Separation Agreement.

On his specific proposal of enacting a law, let me say that Malaysia cannot enact a domestic law to avoid meeting its international treaty obligations. Actually, this is a very established principle of international law. If a country can get out of one treaty obligations through the use of domestic law, it signals to the world that it can and will do so for any other international agreements, and this will destroy the sanctity of all international agreements.

Mr Sin Boon Ann (Tampines): Will the Minister comment on our position in referring the water issue to international arbitration, as has been proposed by some Malaysian leaders?

Prof. Jayakumar: Indeed, Sir, I have noted that both Foreign Minister Syed Hamid and the Menteri Besar of Johor have referred to this. I believe that is what has prompted Mr Sin's question.

Foreign Minister Syed Hamid did say that if the talks on water ended in a stalemate, his government will refer the matter to the Permanent Court of Arbitration at The Hague. Johor Menteri Besar Abdul Ghani also said that the Water Agreements provided an option for Malaysia to refer the matter to the Permanent Court of Arbitration if the talks failed.

Sir, if both sides cannot agree through negotiations on the water issue, then we are ready to have the matter referred to the PCA for international arbitration.

Dr Mohamad Maliki Bin Osman (Sembawang): Can I ask the Minister if the price review clauses provided for a review after 25 years, have the Malaysians ever explained why they did not raise the issue of price review all these years and why have they only done so recently?

Prof. Jayakumar: They have not explained officially why they did not raise it before. I think honourable Members would have noted that they have publicly admitted that it was not a mistake and it was not an oversight but a deliberate move. Johor State Assembly Speaker, Zainal Abidin Mohd Zain, said in the State Assembly that the Johor State Government had not made a mistake in not pressing for a review in 1986. He said:

"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."

This was in the New Straits Times of 3rd July this year.

Dr Mahathir also said that Malaysia did not revise the water pricing when it was due then because it thought that Singapore would also revise the price of treated water supplied to Malaysia. This was in Bernama, 11th October this year. In other words, they had deliberately, as a matter of conscious policy, chosen not to review the price of water in 1986/1987. Actually, even up to the point of the 1990 Agreement concerning the Linggiu Dam and related matters being signed, Malaysia did not raise any issue concerning the price of 3 sen per thousand gallons of raw water. I think the reason was obvious. Johor was benefitting handsomely from the 50 sen it was paying to Singapore for treated water under the 1961 and 1962 Water Agreements.

Mr Low Thia Khiang (Hougang): In view of the twists and turns on the issue of the ongoing negotiations, I would like to ask the Minister what is his assessment on: 1) the overall current relations between Singapore and Malaysia; and, 2) what is the medium-term prospect of Singapore and Malaysia reaching a mutually beneficial agreement?

Prof. Jayakumar: Mr Speaker, Sir, the water negotiations or the package negotiations are only one of the facets of our overall relations with Malaysia. It is not the sum total of our relationship with Malaysia. As Deputy Prime Minister Lee Hsien Loong said the other day, we will persevere and try to have discussions going but, if we cannot agree, it does not mean the end of the relationship. There are other aspects of the relationship.

What is the medium-term prospect of resolving this? It is very difficult to predict. I have stated Singapore's readiness to continue. Like all Foreign Ministers, I think one has to be optimistic, whatever the obstacles and hurdles, and we will persevere as best as we can, but it must be on a certain basis. It must be on the basis of reciprocity, it must be on the basis of mutual benefit, and it cannot be on the basis of a one-sided approach to the negotiations.

Dr Warren Lee (Sembawang): Could the Minister comment on reports that Malaysian leaders have said that, yes, they are prepared to supply water to us, but only for human consumption and not for ships and industry?

Prof. Jayakumar: Actually, if one studied the Water Agreements, there is no such restriction stipulated in the Water Agreements. For today, I have brought along several quotes on various matters. I have a quote here which shows that Prime Minister Mahathir himself has admitted as much, because he said at a press conference with Senior Minister Lee on 4th September 2001 and I quote:

"Malaysia's policy is to supply Singapore with water for the needs of the people of Singapore, including the industries. We will not cut off water for so long as Singapore needs the water. Whatever may be the terms, we will negotiate the cost, the price and all that [he was referring to the negotiations on future water] but there will be no cutting off of water supply to Singapore."

Mr S Iswaran (West Coast): Mr Speaker, Sir, we seem to have accepted the unilateral decision by the Malaysians to discontinue the package negotiations, and the Minister's account of the negotiation on the water issue individually appears to sound intractable. The question is: is it worth our while perhaps to have a cooling-off period, giving the Malaysians time to reflect on the value of the package negotiations and the merits of that, and then to revisit the matter?

Prof. Jayakumar: As I said, the ball is in their court. Foreign Minister Syed Hamid did say at the conclusion of the last Ministerial talks that after the officials have reported, Malaysia is prepared to host the next Ministerial meeting. So, how quickly they respond to us will depend on whether they also want a cooling-off period or not.

Mr Ravindran: Sir, I would like to ask the Minister to confirm whether the Malaysians are buying more water than what they are obliged to buy under the existing Water Agreements with Singapore. Secondly, if so, what is the price, as well as the quantity that they are taking which is extra, ie, beyond what they are obliged to take? Thirdly, can the Minister confirm whether it is true that the Malaysians are actually buying treated water at 50 sen from Singapore and selling it to the Malaysian public at about RM4 and, in the process, profiteering at Singapore's subsidy, and then, at the same time, attacking Singapore that we are the ones profiteering at their expense?

Prof. Jayakumar: A lot of allegations have been made about Singapore profiteering, selling to industries, profiteering from the treated water. We have made the facts known before. The first point to realise is that what Malaysia does not say is that the raw water that we get from them is not drinkable as such. It has to be treated. And when it is treated, it is at the cost of RM2.40 per thousand gallons, and we sell it to Johor at 50 sen. Therefore, Singapore is really absorbing RM1.90 of the cost. Malaysia then sells this treated water at RM3.95 per thousand gallons. So, we can make the calculations.

In answer to the Member's question, Singapore is only obliged, under the Agreements, to sell 17 million gallons a day (mgd) of treated water. That is what we are obliged to. But Malaysia buys well above that amount. They buy 37 mgd of treated water, well above the amount that Singapore is contracted to provide and calculations make it clear as to why they are doing that.

Dr Mohamad Maliki Bin Osman: Sir, we know that there are a lot of accusations that the Malaysians have given. One of the things that the Malaysians had alleged is that the 3 sen price was fixed by the British in 1927 because they favoured Singapore. Can the Minister clarify whether there is any basis for such an allegation?

Prof. Jayakumar: Sir, there is no basis. We have also, at one previous occasion, rebutted this point. The Members are right. Malaysia has repeatedly said that the Water Agreements, including the 3 sen price, was settled by the British who favoured Singapore. Dr Mahathir, for example, had said that the Water Agreement drawn up by the British was in favour of Singapore because the British advised the Johor government then. This is not true. As we have pointed out in our own MFA press statement in January 2002:

"The Tebrau and Scudai Rivers Water Agreement and the Johor River Water Agreement were signed by the Johor State Government and the City Council of Singapore in 1961 and 1962 respectively. By then, Malaya was already an independent and sovereign nation. Singapore had achieved self-government. How could the British play any role in an independent and sovereign Malaya? Would the federal government of an independent and sovereign Malaya allow the Johor State Government to sign any agreement that was against Malaysia's national interest?"

Let me add two further points. Firstly, Malaysia had agreed in 1965, when we separated, to guarantee the observance of the Water Agreements, and this guarantee is enshrined in the Separation Agreement. Secondly, Johor confirmed the price of 3 sen in 1990 when it signed the agreement with PUB for the construction of the Linggiu Dam. Had Johor exercised its right to review the price in accordance with the agreement in 1986 and 1987, the PUB would have taken that revised price into account before proceeding to invest in the building of the dam and all ancillary works that actually amount to some S$1 billion. Therefore, it is simply ridiculous to claim that the British fixed these Water Agreements in favour of Singapore against the interest of Johor.

Mr Sin Boon Ann: Mr Speaker, I would like to go back to the earlier response by the Minister. I would like to ask the Minister whether or not we are selling the Malaysians, for the amount that is in excess of our obligations under the Water Agreements, treated water at a price of 50 sen per thousand gallons. If we are selling them at 50 sen per thousand gallons for the amount that is in excess of our obligations under the agreements, why are we not selling them at a price which is sufficient for us to cover our cost of treatment?

Prof. Jayakumar: Then we will be accused of profiteering, will we not?

Dr Wang Kai Yuen (Bukit Timah): I would like to ask the Minister whether in the treaty agreement between Singapore and Malaysia that was established by the British, were there any treaties that were biasedly in favour of Malaysia, for instance, the use of rail road land in Singapore where Singaporeans had no say whatsoever on the use of the land as long as it is used by Malaysian railway?

Prof. Jayakumar: That is a good point which I will consider using in future negotiations.

Mdm Ho Geok Choo (West Coast): I would like to ask the Minister whether he could clarify on the Water Agreement on the Linggiu Dam. Could he throw some light on it and whether this Water Agreement would have any impact on our future discussions?

Prof. Jayakumar: If the Member is interested in further information and details of the terms of the agreement, I would be happy to provide her with the facts later. I do not have the agreement with me here. On the second part of her question whether the agreement would have an impact on future discussions, no, because what we are discussing now are really agreements for supply of water after the expiry of the 1962 Water Agreement and the Malaysians on their part want to discuss the price review of current water under the 1961 and 1962 Water Agreements.

Dr Ong Chit Chung: Sir, I would like to ask the Minister whether the Malaysians are well aware of the development of NEWater and that it is now acceptable in Singapore and whether they have factored this into their negotiations. Also, have they taken note of our announcement earlier that when the first Water Agreement ends in 2011, we are prepared to let it lapse and not pursue further?

Prof. Jayakumar: Yes, they know of our plans. In fact, in the July talks in Putrajaya, we gave them a briefing on the whole NEWater process and so on. But whether they have factored it or not, we do not know. But the point is that their formula for current water is based on our formula, which is meant for future water. The answer to your question is, yes, we have given them a briefing on our NEWater plans.

Mr Inderjit Singh (Ang Mo Kio): Sir, since the Malaysians have made the unilateral decision to drop the package approach and we are also quite comfortable that we do not need the renewal of the 2011 supply, why do we not make a unilateral decision down here not to talk about water anymore with Malaysia? Because we are leading them on by making them think that there is room for price increase when actually that is not in our agreement. So we might as well end it down here and say that we will talk about other things but not water. Would the Minister consider that?

Prof. Jayakumar: So long as it is possible to continue the talks, I think my position would be: let us continue the talks. I do not think we have reached the position that Singapore should take the approach of not talking. For example, take the situation when Prime Minister Mahathir's letter came on unilaterally discontinuing the package. We could have decided and said that, in that case, we are not going to Johor Baru. But I think, in good faith, we showed that we are reasonable and went to Johor Baru to discuss both aspects of the water issue. This has been our approach, as Members would have seen in this whole saga, that although they said that we have been unreasonable and we have been delaying, the facts that I have unfolded today should make it clear to everyone that we have gone the extra mile. We have tried to accommodate their concerns. They are the ones who keep changing the goalposts, keep changing the parameters. The package - did not include the bridge, then it is included, then it is out; then never included raw water, price revision in; then water is out, and even when it is out, it is only price revision, and future water discussed after some of us or most of us are dead. So, the point I want to make is: as far as there is scope for discussions, my recommendation is we continue to talk. But it must be on a basis of reciprocity and with the objective of having a mutually beneficial pact.

Mr Arthur Fong (West Coast): May I ask the Minister, in view of the recent revelations that the Jemaah Islamiyah is actually playing on the sentiments of both countries and amongst them, the water issues and all that, with these constant flip-flops on the Malaysian Government side and the newspaper reports from time to time in Malaysia playing on this, is that not still playing into the hands of the larger Jemaah Islamiyah plans? Can the Government impress on the media to be more responsible?

Prof. Jayakumar: That is the ideal solution. In fact, that is the message which we have been giving, which Prime Minister Goh conveyed to Dr Mahathir that there are very major and serious issues confronting the region, confronting Malaysia and Singapore, and instead of keeping this on the boil and being unresolved, we should really join forces together with other countries in the region to address these bigger issues. Let us hope that this approach will also be a shared view by the leaders of that country.

Ms Irene Ng Phek Hoong (Tampines): The Minister has made it clear that the 12 sen figure being bandied about is not an offer put on the table by Singapore. But Malaysian leaders have said that Singapore has cut back its offer from 45 sen to 12 sen. I have two questions. First, does the Minister sense that there is a big communication gap between Malaysia and Singapore when it comes to negotiations? Second, is Singapore prepared to put an offer on the table for water if Malaysia is prepared to consider, for instance, future water?

Prof. Jayakumar: Some of these are hypothetical and I do not want to speculate too much. The answer to the second part of Ms Irene Ng's question is that we have made it clear what our position is on current water but we have also said that the two issues are linked - current and future water. But they will have to show that they are serious in discussing future water if we are to advance or make any progress. For so long as they say: future water, please take our assurance that we will continue to supply you water, but we can only talk about it in 2059, then it is really not practicable to talk on that basis.

Mr Ahmad Mohd Magad (Pasir Ris-Punggol): Sir, I would like to ask the Minister that upon lapsing of the first Water Agreement in 2011, what is the amount of treated water Singapore will remain obligated to supply Malaysia?

Prof. Jayakumar: That reminds me that I have forgotten to answer Dr Ong Chit Chung's question. Yes, we did indicate to them that, as far as the 1961 Water Agreement is concerned, we can let it lapse, if need be. When we talk about future water, that is the 1962 Water Agreement, which will be our basis of negotiations, then it is water after the expiry of 2062 deadline. The answer to your question is whatever are the provisions for supplying of water under the current agreements, after the 1961 agreement, we will continue to provide. We will keep our side of the bargain.

Dr Warren Lee: Would the Minister comment, if we pursue the question of negotiations and come to an agreement, whether such negotiations and agreements would not suffer the same fate as the 1990 POA? How sure would we be that any bargain struck would be kept?

Prof. Jayakumar: Mr Speaker, Sir, I would not want to venture into speculation as to "what if" and so on, because it does not really aid our discussions on this matter. We have to proceed on the basis, and that is the only basis that we can proceed, whether on this agreement or any other agreement, when an agreement is concluded, we must expect that it will be honoured and its terms fulfilled. We will fulfill our part of the bargain and we expect any other countries with which we have entered an agreement to observe the provisions of the agreement.

Mr Low Thia Khiang asked the Minister for Foreign Affairs whether and how will the Government respond to Singapore being listed as a high-risk country by the Australian Government after the Bali bomb incident on 12th October 2002.

The Minister of State for Foreign Affairs (Mr Raymond Lim Siang Keat) (for the Minister for Foreign Affairs): Mr Speaker, Sir, the Ministry of Foreign Affairs has raised the issue several times with the Australian government through its High Commission in Singapore and directly with the Department of Foreign Affairs and Trade in Canberra. We have asked the Australians to explain the basis on which they have concluded that Singapore is a country with high security risk.

The Australians have admitted that they do not have any new intelligence to suggest a greater security risk in Singapore. The information available is of a generic nature indicating that there is a greater likelihood of terrorist incidents in Southeast Asia in general. This was well known prior to the 12th October Bali terrorist attack. The Australian High Commissioner in Singapore has admitted that Australia did not have any information relating to a specific threat in Singapore.

After the Bali terrorist attack in which so many Australian citizens tragically lost their lives, the Australian government is politically compelled to be seen to be doing something. As Prime Minister Goh Chok Tong said, while he could "understand why the Australians do so, because they are looking at the whole region .... it is totally unfair to put Singapore on the list".

We are puzzled and disappointed that in the absence of specific intelligence on a threat in Singapore, the Australian government has reacted in such an undifferentiated way. We have told the Australians that this could be counter-productive. Terrorism is a global threat. Post 9/11, this global threat has certainly been enhanced. Indeed, the media has reported the presence of JI cells in some of Australia's major cities. We do not think that undifferentiated and alarmist assessments serve to advance our common commitment to fight terrorism.

We will continue to press our concerns home to the Australians. The Australian government has told us that they understand our concerns and they will keep the matter under review. We hope that the Australian government will correct its travel advisory as soon as possible.

Mr Low Thia Khiang: Sir, what would be the impact on Singapore in terms of perception by the other countries, because we are being listed by Australia as a high-risk country?

Mr Raymond Lim Siang Keat: Mr Speaker, Sir, in terms of the economic impact, I will leave it to Senior Minister of State Tharman as he will be answering after this and he will go into greater detail.

The short answer is that it is unhelpful. It creates greater uncertainty in the region. I think the war against terrorism is one that should be fought not just through guns but through butter. And it is important that one does not over-react and be alarmist about it, because it erodes confidence in the region. What is critical for the economy is confidence. And having an alarmist assessment of the security situation in this part of the world is, as I said, unhelpful.

Mr Low Thia Khiang: Sir, has the Australian government responded to our concern that we impressed upon them?

Mr Raymond Lim Siang Keat: As I said, they have taken note of our concern. What is important is for us to continue to press our concerns and to make it public that we think their assessment of the security situation in Singapore is unwarranted. I think there are two metrics here in which we can assess the security situation in a country. One is whether or not the security agencies are on top of it. And in our case, we believe that our security agencies have severely disrupted the JI network in Singapore. The other metric is the extent of the resident terrorist asset in Singapore, whether it is high or whether it is low, and this is related to the first metric. Our security agencies are effective and they have severely disrupted and crippled the terrorist network. And I would think that it is much safer than in a place which has not done so.