Why does Malaysia keep buying treated water from Singapore when Mahathir keeps complaining about unfair water agreements?

TL;DR – Because they make a whopping 700% profit.

Some people in Malaysia, including their Prime Minister Mahathir and their Foreign Minister Saifuddin Abdullah, have been complaining about how unfair for Malaysia to supply water to Singapore at 3 sen per 1000 gallons. Those people say that Singapore is making enormous profits from getting raw water from Malaysia at that price and selling it for a whole lot more.

Of course, anyone who truly understands the facts know that Singapore pays Malaysia more than just 3 sen per 1000 gallons.

Also, whatever price Singaporeans pay for the water needs to include the price of treating the water. So Singapore doesn’t make supernormal profits selling water.

But you know who does?

Malaysia.

Massive profits for Malaysia

Under the 1962 water agreement, we get raw, untreated water from Malaysia. We then treat the water, and use most of that water ourselves. We are contractually obliged to supply 5 million gallons per day (mgd) to Johor.

In practice, we have been supplying 16 mgd of treated water to Johor at their request. Yes, more than three times than we’re required to.

Malaysia pays us 50 sen per 1000 gallons for those 16 mgd of water. It costs Singapore RM2.40 to treat every 1000 gallons of water.

You know how much Johor sells water to its citizens? RM3.95 per 1000 gallons.

That’s right. Singapore subsidizes Johor RM1.90 per 1000 gallons of treated water. And Johor makes a profit of RM3.45 per 1000 gallons. That’s a whopping 700% profit.

Given how much treated water Singapore has been supplying to Johor, it means that Johor makes a profit of RM46 million a year.

And we supply more when Johor requests

Not only that, every so often, when Johor needs more water, Singapore will come to Johor’s aid.

For instance, between 2 and 4 January 2019, we have supplied a further 6 mgd of treated water (above the 16 mgd of treated water) to Johor when it needed more water because its water plants experienced pollution. Similarly, last year, we supplied additional water in excess of the usual 16 mgd for 20 days at the request of Johor.

A neighbour and a friend.

Thank you to the Singaporean Government for helping Johor during the drought seasons & when we had our water crisis. We have always helped each other. May the close ties & friendship forged hundreds of years ago last forever.

HRH Crown Prince of Johor pic.twitter.com/ENsRQhbt8l

— JOHORSouthernTigers (@OfficialJohor) June 28, 2018

Like that still not good enough?

You would have thought that with such a good deal, and with Singapore being such a good neighbour, consistently going to the aid of Johor, Malaysia wouldn’t keep kicking up a fuss about water. But… evidently it doesn’t pay to be a good neighbour these days.

So… if Malaysia wants to raise the price of the raw water they sell us, then they should accept that we would raise the price of the treated water we supply to them. Will they?