The economy in Malaysia is really bad right now

Why Malaysia now has to buy water from Singapore for a lot of money, which it previously sold cheaply to Singapore

When the dry season comes in Asia, the struggle for the elixir of life begins. Then even Malaysia will have to import expensive water at times. From Singapore, of all places, to whom it previously sold the water cheaply.

Malaysia and Singapore agreed last week to review and, if necessary, adapt a water agreement dating from the 1960s. It is still open, however, whether the controversial contract of 1962, which regulates the supply of the city-state until 2061, will be revised. However, the case shows the importance of the precious resource due to population growth, industrialization and the galloping urbanization that preceded it. By means of huge pipelines, water is pumped from Malaysia around the clock over the 1056 m wide strait to Singapore.

In the past dirt cheap - today extremely valuable

When the two countries broke away from British colonial rule six decades ago, the whole of Asia was still largely agricultural, the population at that time was only about a third of what it is today, and climate change was still a long way off. The ridiculous price of 0.03 ringgit (rin.) Per 1000 gallons agreed at the time between Kuala Lumpur and Singapore - that is less than 1 cent. For a 4500 liter tank - reflected the supposedly inexhaustible supply of water in this region. In Johor, on the southern tip of tropical Malaysia, where, like Singapore, around 2500 mm of precipitation is measured per year, nobody could have imagined that there would be a shortage one day.

For twenty years now, Malaysia has been insisting on a revision of the bilateral treaty with its southern neighbor, which has been deposited with the UN in a legally binding manner. Back then, immediately after the severe Asian crisis, Kuala Lumpur pushed for a revision of the agreement, which now seems dirt cheap, mainly for financial reasons. In addition to price considerations, the issue of supply has recently also played a role: Since 2014, water levels in the Malaysian reservoirs have been falling regularly to previously unseen lows from February onwards. In dry seasons like now, Malaysia even has to import expensive water from Singapore. It is drinking water that is treated there, but ultimately comes from its own supplies; re-importing Malaysia costs 20 times more than exporting the country; this discrepancy also causes discontent again and again.

A regional challenge

The scramble for water is no exception, especially at this drought time of the year; it is likely to become the norm in Southeast Asia, where an El Niño effect is also emerging again, and could even worsen here and there. For example, there is currently an acute water shortage in the greater Manila area, where around 20 million people have to be supplied. The north and northeast of Thailand have also been suffering from a precarious drought for weeks. In Cambodia, where wet rice cultivation takes up three quarters of the agricultural area, almost all fields have dried up due to a lack of irrigation systems. In the two southernmost Mekong countries, Cambodia and Vietnam, concerns about growing thirst in China, Thailand and Laos and about the construction of dams that impair the water supply at the lower reaches of the vital river are growing every year.

Decades after the signing of the 1962 Water Agreement, the major differences in development between Malaysia and Singapore are evident not least in the way they handle water: On the one hand, there is resources, mineral resources and agricultural goods such as tin, crude oil, natural gas, rubber, palm oil and water Malaysia, which has mostly poorly managed these assets. That slowed down the country's development for decades. On the other hand, Singapore, which is poor in raw materials, has always relied on know-how and prudent management. Although its starting conditions were much worse back then, the economic output per capita here is now three times higher than the Malaysian average.

Higher consumption than in Europe

"Rich Singapore" can afford a much higher purchase price for water, the Malaysian Prime Minister Mahathir recently repeated in this context. It is an old demand that in the past had to be understood time and again as a threat in the small neighboring country. Malaysia will not dare to turn off the tap; the two countries are far too closely interwoven economically and accordingly dependent on one another. But the desire to adjust the water tariff, which is perceived as unjust, has been used again as a diplomatic lever since last year's change of government in Malaysia.

So far, Singapore has strictly rejected any amendment of the old treaty on fundamental grounds. A change in this attitude, with which certain counterclaims would be linked to Kuala Lumpur, can no longer be completely ruled out; in Singapore they know very well what a good deal they got back then. Nevertheless: Blackmail attempts by Malaysia are very badly received in this country. Resourceful observers even believe that there is a connection between the bilateral tensions that flared up and the decision made a few days ago to replace the air force with the most modern American F-35 fighter aircraft.

The import of water from Malaysia remains absolutely vital for the time being: Firstly, the demand has grown rapidly; Consumption has peaked at 150 liters per capita per day and is even above the average for most European cities. Second, the trauma of having to surrender to the Japanese invasion troops without a fight in 1942 due to lack of water still has an effect on the psyche of the small nation. Since then, the water supply has been regarded as the Achilles' heel of the republic. Every schoolchild is then taught how to brush their teeth while saving water.

The city-state has now invested heavily in water projects and reduced its dependency on imports from 70% to 50%. In the past few years, for example, four plants for desalination of seawater have been built. As part of the “New Water” project, wastewater has been treated since the turn of the millennium so that part of it can be reused as drinking water. There are also on the 715 km2 large island meanwhile a total of 17 retention basins, where a large part of the rain is collected. According to the government's vision, the country should be able to cover its water needs autonomously by 2061, i.e. without Malaysia if necessary.