Monday, 16 July 2018

Water, Water, Everywhere...

While most Singaporeans defended SG against "threats" by Mahathir to review the water agreement or "suggestions" by the Chief Minister of Johor to re-price water, there were some Singaporeans who tried to be ... "reasonable" (to be generous) or were downright "disloyal" (from their comments).

This post addresses the implied question from the reasonable, or faithless, Singaporeans:

Why is Singapore such an arsehole when it comes to the water agreement with Malaysia?

There is so much uninformed comments on FB regarding this. But then again, that's one of the two things the internet is for - Uninformed comment. (The other thing of course is Porn, but that's another story).

Before you comment on anything related to the water agreements, first know your history. A quick primer would be Water Talks.

If you have not read it, I GUARANTEE you at some point you will make an ass of yourself. Those who do not know history, will inevitably make an ass of themselves when they try to be clever or original. Or think they have a solution that no one else had ever thought of.

Yes, you might dismiss it as pure propaganda on the part of Singapore (cos, faithless Singaporeans), but know that Malaysia NEVER rebutted the facts within the booklet. Mahathir was of course discombobulated, and said something about Singapore not being "nice" to publicised his "love letters".

Know also that recently, the Crown Prince of Johor has called SG a good neighbour and friend. Why? This article shows how we have been friends. And it shows that accusations that we were profiteering from supplying water to Johor is patently false. If the price were too high, would they buy more than they had contracted to? If the price is too high, shouldn't they find alternative options?

And for a summary (if I may toot my own horn or blogpost), I would suggest this blogpost. "Sui Pian" also has my speculation as to why MY kept shifting the goal posts, and why MY is losing money on the water agreement.

It also answers the first question-cluster:

Why don't Malaysia treat its own water so they don't have to depend on SG to provide treated water? Water Treatment is not difficult. Johor can do it themselves. SG can stop making a big deal about it and stop being smug about it like we discovered the cure for cancer or something.

Yes. Treating river water is not rocket science. In Aug 2011, the first water agreement (1961) expired. And SG handed over our water treatment facilities to Johor's PUB equivalent, Bakaj. We were drawing 100 mgd from the Tebrau-Skudai catchment. It was operational when we handed it over. Which means than Johor should have an additional 100 mgd capacity from Sept 2011. And would not need to buy water from SG...

They are still buying treated water, and buying more than contractually provided for.

So... are they using the Tebrau-Skudai water treatment facilities we handed over?


I dunno for sure. But before we speculate, let's see the facts.
  • FACT: In 2008, 14 out of 21 rivers in the Iskandar Malaysia zone had moderate pollution levels while five rivers in the Tebrau catchment exhibited more serious pollution. One river in the Pasir Gudang catchment experienced severe pollution caused by industrial and development activities. That was in 2008. Has the situation improved since then? Or more likely deteriorated? To the point where it is not possible to treat the water to potability?
  • FACT: SG handed over the Skudai and Gunung Pulai water treatment plants and two pump houses in Pontian and Tebrau. Presumably they are still in use, but it is NOT CLEAR. The Water and Sanitation system in Malaysia is poorly documented. I could not even find a list of water treatment plants in Johor, or any mention of the Skudai and Gunung Pulai water treatment plants after 2011 in English. If someone has information of a website in Malay, please help translate the information and share it here in the comments. Or at the very least confirm that the Tebrau-Skudai facilities are being used, and are those facilities still providing up to 100 mgd of treated water.
  • FACT: In 2003, it costs RM2.40 to treat 1000 gallons of river water. Johor can buy treated water from Singapore at 50 sen per 1000 gallons. And can buy up to 5 mgd contractually. And SG has agreed to allow them (on a goodwill basis) to draw (buy) up to 16 mgd on a permanent basis. And,
  • FACT: Every now and then, Johor (Bakaj) will ask to temporarily increase the water provision by 6 mgd on a temporary basis over and above the 16 mgd (permanent ongoing increase) for reasons such as drought in other parts of Johor, pollution (in the Johor or other rivers), and so on. Bakaj seems to treat SG (or PUB water works) as an emergency supply of water. So, what is more rational? Treat your own water for RM2.40, or buy treated water for 50 sen? You do the math.
  • FACT: The Crown Prince of Johor no less, had thanked SG for our help whenever Johor has had water shortages. That suggests that SG's provision of the extra water had been essential if not critical to overcoming the water supply problems.
  • FACT: Malaysia has a problem with "non-revenue water".
Malaysia announced that RM13 billion worth of investment in water distribution systems is required to reduce the share of non-revenue water to 25 per cent by 2020...
What is "non-revenue water"? Leakage. Or theft. So... MORE than 25% of water is "non-revenue"? That is... it would be shocking, except you have to remember, this is Malaysia. Malaysia Boleh!
AND... they are going to spend RM13 billion just to REDUCE the non-revenue water  and bring it down to 25%. They don't even DARE to tell you what is the current leakage/theft. (If I had to guess, a conservative answer would be "MORE than 25%"?)
So it is not just water treatment, it is the whole process of securing and preserving the resources (keeping your water source protected from pollution, drought, natural attrition etc), treating the water, and distributing the water efficiently.

Which brings me to a "side" question. It is an unthinking question.

Singapore buys water from Johor for 3 sen and sells it to Singaporeans for $1.20 per cubic metre (1000 litre). They are sucking money from Singaporeans, man!

I chose to let Phua Chu Kang reply:
"You want 3 sen water? Go drink lilect (direct) from the Johor river lah! You blardy goondu! Water no need to treat one ah? People work in the treatment plant work for free issit? No need to feed himself? No need to feed his family? No need to pay mortgage? And then what? The water just magically appear when you turn on the tap? No need to install pipes? No need to install water tanks? No need to install water pumps? No need to maintain pipes, water tanks and pumps issit? Next time it rains, just run outside, look up in the sky and open your mouth. FREE WATER!"
I actually used the above in reply to that specific stupid question. The questioner doubled down on his stupid question: "Pipes, pumps, water tanks all paid for by me, the tax-payer, what!"

Even PCK gave up on someone that stupid. I told him he won the argument, and he should take his water pipes with him as he leaves.

If you see him (or someone like him), please also assure him that his taxes also paid for trains and buses, so he need not pay fares, also his HDB flat, so he can stop paying his mortgage, and any other services provided by the ministries or statutory boards. And inform him that subsequently he will be invited to stay in the big house. Free of charge. As a guest of the state. Because his taxes already paid for it all.

[As an aside, usually if someone claims that he is a taxpayer, you should ask him how much tax he paid last year. Usually, the amount is really really low. Maybe even zero. It's the same as rich people. Really rich people don't go around telling people that they are rich. Similarly, people who pay tax don't go around telling people that they pay tax. Only those who have just started paying tax would say that they are a tax-payer, and because they are a new tax-payer, the sum the pay is usually very small.]

But Singaporeans generally have a sense of fair play and justice, and we want to be fair and reasonable. So some of us asked questions along these lines:

Just let them review the water agreement lah! It was agreed over 50 years ago, and really what is 3 sen? Why is SG being so legalistic and forcing Malaysia to sell us cheap water. We are so rich, MY is... not so rich ("so poor" is kinda condescending), must learn to give and take. Otherwise how to make friends? Forcing Malaysia to sell us water at a low price using an outdated (ancient) agreement is really no class!

This is... such a nice Singaporean fair-play question, that it is hard to take offence at it. So are we being overly legalistic and using an outdated agreement ("Ancient document") to hold poor Malaysia hostage?

First, let us agree that water is a necessity for life. We are not talking about a luxury or a privilege.

Even cacti and camels need water now and then.

Therefore it is not about forcing another to sell us water at a low price, but securing water for our basic needs. In fact, from our perspective it is not exactly "nice" for Mahathir to use water as a leverage or to profiteer from our basic needs (more on this later). Mahathir will toss up the example that HK pays China RM8 for water, but ignores the fact that China built the infrastructure, laid the pipes and and the pumps to do so. In our situation we paid for the infrastructure, and for the 1990 Linggiu Dam agreement, we build the dam at our expense, and instead of running a pipe from the dam to our water treatment plants (which would be the most efficient way of using the water from the dam - which we PAID FOR), we actually use the Linggiu reservoir water to flush the Johor River. Why? And in 2061, when the lease expires, everything we built will be handed over to Johor.

And from this link (about SG providing water to Johor at crucial times), the arrangement SG has with Johor is mutually beneficial.

We get raw water, and we provide Johor with subsidised treated water. And when there is a drought or other water crisis, Johor can depend on SG to provide water on an emergency basis.

It's win-win.

Second, from this news article:
"Malaysia has the highest per capita water usage in South-east Asia, with a daily water consumption of 280 litres, compared with 155 litres in Singapore, 175 litres in the Philippines and 130 litres in Indonesia."
Of course, about 25% of that "usage" is non-revenue water.

Actually, this is irrelevant to the point. I just needed a place where I could point out that Malaysia is water rich. That at 280 litres per person per day they use twice as much as Indonesia, and 80% more than Singapore.

But let's just say that Malaysia is not happy. And wants a review.

The water agreements provided for a review of each agreement at the 25th year of the agreement. That would be in 1986 (for the 1961 agreement) and 1987 (for the 1962 agreement). Malaysia (or more specifically, Johor), let the review year pass because they rightly concluded that a review of the price for raw water would also mean a revision of the price for treated water. 

They knew better than to rock the boat. They knew they had a good thing going.They knew they could get good cheap water for 50 sen.

But Mahathir wanted a review in 1998. Even though there was no provision in the agreement to do so after 1986/7. We agreed to a review. Because we thought, we can sit down and discuss this like civilised people.


No need to be so legalistic and hold to the letter of the agreement, right? Show some class. Friend-friend, right? So LKY went to talk to Mahathir.
 

In brief, LKY and Mahathir agreed to an immediate increase to 45 sen for raw water in Aug 2000. AGREED. Not "suggested for consideration". Not "considering the proposal". AGREED. Yea! Game over! That was quick and easy! Talking like civilised people works! Win-win!

Six months later (Feb 2001), Mahathir backtracked and asked for 60 sen. This surprised us, but ok, still can talk right?

We offered a compromise: 45 sen immediately, 60 sen after 2011. MY mulled over it for a long while.
 


One year later (Mar 2002) MY asked for 60 sen, and also to backdate the price to 1986/7 until 2007. Then RM3 from 2007 to 2011. And after 2011, price would be adjusted yearly for inflation.

Their latest "demands" shocked us and we thought, we should talk face to face. In Sept 2002, we met. They again had a new proposal: RM6.25

At that point, we decided that Mahathir was not negotiating in good faith. And being unreasonable. And trying to take advantage of SG. For RM6, we could desalinate seawater and it would be cheaper.


The back and forth of the review was eventually published in Water Talks, which is why it is essential reading. If Singaporeans read it, they would know that SG had tried to be... reasonable.

And Mahathir took advantage of it. 

So the short answer to "why not just review lah? After all 3 sen is really nothing today!" is, because Mahathir would take advantage of the negotiations to "stir shit". And he is a professional shit-stirrer.

Jayakumar the Foreign Minister then, recounts:
We became even more concerned when Dr Mahathir and several Malaysian politicians stoked up ground feelings by making serious allegations about the Water Agreements. These included:
  • That the Water Agreements had been drawn up by the British in favour of Singapore when it was about to join Malaysia in the 1960s;
  • That Singapore buys water from Malaysia at 3 sen and sells to ships at S$20 or RM40, thus making enormous profits of up to RM700 million annually;
  • That Singapore profits by buying water from Malaysia at 3 sen and selling it back to Johor at 50 sen;
  • That Hong Kong buys water from Mainland China at RM8 per thousand gallons;
  • That the Water Agreement is only 'an ancient piece of paper' and Malaysia can raise the price anytime it wants;
  • That Malaysia can pass its own laws to make the Water Agreements null and void.
This barrage of statements seemed intended to make the public case that the Water Agreements had been foisted on Malaysia by the British and were intrinsically unfair to Malaysia and that Singapore had profiteered at Malaysia's expense.
They appeared to be laying the ground for unilateral action.
In December 2002, FM Syed Hamid even said publicly that 'Singapore has two choices. If it refuses to compromise, go to war'.
That was then.

So now they want a review (AGAIN!) and some Singaporeans are swayed by the argument of the low price of 3 sen, and say, let them review lah.

Of course we could agree to a review and waste our time trying to deal with demagogue not treating in good faith and who just wants an opportunity to rile the nation or rally the people by scapegoating Singapore.


Our time is valuable. We got things to do, money to make. Lists to be number 1 of.

Mahathir's time is cheap... and running out. 


Mahathir is a football team trying to play out the time. We've got goals to score. 

If they want a review, perhaps we will have to set clear parameters. 

First, we should set the corresponding price for treated water. Say the cost of treating river water is say RM3 per 1000 gallons. Whatever the price decided for raw water, Treated water will be RM3 more to account for the cost of treating river water. So if raw water is raised to 10 sen, treated water will be RM3.10 to correctly reflect the cost of treating the water. i.e. no more 50 sen treated water.

If we DON'T agree on a new price, then the current water agreement with 3 sen and 50 sen for raw and treated water stands, until the end of the agreement in 2061.This is not a bad deal. Malaysia still gets treated water at a subsidised rate.

Second, say the cost of NEWater for SG is RM3.60. Less the cost of treating river water of RM3, raw water cannot be higher than 60 sen, otherwise river water would be more expensive than NEWater. Nor can it be 60 sen, otherwise it is no different from NEWater. There should be a significant discount, say no more than 50 sen.

Malaysia will therefore have two options.

1) leave the agreement as it is - 3 sen and 50 sen for raw and treated water respectively.
2) Revise the prices up to 50 sen for raw water and RM3.50 for treated water. This option is very variable. Malaysia can decide on 4 sen and RM3.04 up to 50 sen and RM3.50.

Any proposal for raw water over 50 sen will not be acceptable to SG, and if both parties cannot agree on a revised price, then the agreement defaults to the original terms as written in 1962.

Other terms of the agreement can also be negotiated. The water agreement could be extended beyond 2061. However based on the dwindling water levels in Linggiu Reservoir, the frequent need to flush the Johor River, I personally doubt that there is any point in extending the agreement beyond 2061.


In 2000, LKY offered to carry out works to improve the water yield for Johor River and even offered to pay the investment costs. When talks broke down it took that offer with it. Since then we have invested in water treatment in SG to renew water. This makes more sense than building infrastructure for Johor (IMHO).


And while I met quite a few faithless Singaporeans, I also found some gems of Singaporeans. One of them pointed out that
It's unislamic and haram to sell raw water (e.g. profiting directly from riverwater rainwater...) in of itself, let alone unreasonably inflate it.
This was a Singaporean Muslim responding the Johor's Chief Minister's suggestion to increase the price of raw water by 16 times.

Another Singaporean pointed out that in a commercial contract that would extend over decades, it would be the norm to peg the price to some comparable commodity to account for inflation or price fluctuations due to changes in demand or value. 

But the water agreement does not have such price pegging, regular reviews, or deflator.

That suggests that either a) the drafters of the agreement were legal and commercial idiots; or b) it was never intended to be a commercial agreement.

This was my response to the Singapore Muslim pointing out that it was haram to sell river water:
I believe, it was the intent for the water to be given. As you noted, it is riverwater, rainwater from nature or God. But because the agreement was made by lawyers (or people with legal training) it was written as a contract and to make it binding they included a very low consideration - 3 sen per 1000 gallons. And it was intended that the beneficiary (SG) should reciprocate by providing MY with treated water at a reasonable rate (50 sen).

If your point is that this should be a humane and friendly transaction, and was not intended to be crass commercial transaction, I believe you are correct. Otherwise, the contract should include inflation, or price adjustments regularly or regular review.

Instead there was just one provision for review after 25 years.
And the review (as provided for in the agreement) MUST be based on "the rise or fall in the purchasing power of money". I'm not sure what that means, but from Jayakumar's memoir:
We pointed out that, according to the provisions of the Water Agreements, the review of the price of raw water must be based on the rise or fall in the purchasing power of money.
This would result in a price of not more than 12 sen for raw water in 2002.
This suggests that the agreement was not for commercial purpose, that the price of water was not intended to reflect the commercial value, that the agreement and water was invaluable and that Malaysia and Singapore knew that. At that time. That Malaysia (or rather Johor) was being reasonable and had good intentions for Singapore to survive and understood that water is a necessity and not to be profited from.

Fast forward to present day, and we have abandoned common decency and common sense. Mostly.

Singapore continues to provide treated water way in excess of what was agreed, without reservation, terms or conditions. It is the implicit understanding that water is life, water is a necessity, and should not be profited from, nor be used as political or commercial leverage.

Mahathir, that paragon of Islamic virtue, does not seem to understand that.

Nevertheless if it were just an agreement for Johor to GIVE the water to SG, it is not a contract. And if it is not a contract, Malaysia can stop giving at any time. But if it is a contract, neither party can stop it without legal repercussions. Thus the law-trained administrators (British) drafted the agreement as a contract with consideration (i.e. payment).

Thus it is clear that the honourable Mahathir is shamelessly using all means moral or immoral to pursue his agenda, which seems to include some sort of vendetta against Singapore.

As Ng Eng Hen said recently, we don't need to respond to every media statement and interview. Most of the time, they are just talking. Malaysians, especially Malaysian politicians are good at that. It makes them thirsty. Then they drink our 50 sen water.

We just have to say to them, "This is the water agreement. Please show us the basis for your proposal to review the water agreement."

And if they choose to respond militarily, we have two choices.

1) React rapidly giving them NO TIME to counter our gambit, or 
2) Sit back and watch Johor secede from the Federation.

We can do (2) because we have sufficient water production capacity to withstand a "water siege".

NEWater production can provide 170 mgd. Desalination capacity is 130 mgd. Our daily requirement is about 430 mgd. Local catchment can easily meet the the other 130 mgd required, even if Johor vacillates and takes time to decide if they will secede.

However, our intelligence analysis MUST be quite clear as to whether Johor will secede. If there is a good chance that it will, then it behooves us to treat them as a potential ally, and not invade them.

War is the last resort. If we can help Johor to secede, if we can secure our water by other means, it may be a better option.

However, this is an outside fantasy and speculation. I would LIKE to see Johor secede from the Federation, and begin negotiations to join with SG. But there will be implications (which is another long post, so I'll just stop here.)






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