Singapore is expected to save at least S$3 billion following the shelving of the Kuala Lumpur-Singapore High Speed Rail (HSR). According to Singapore’s Transport Ministry, S$3 billion was allocated in the 2018 Budget for the HSR and Johor Bahru-Singapore Rapid Transit System (RTS).
The RTS is likely to be scrapped as well, as Malaysia Prime Minister Mahathir Mohamad revealed that the Malaysia government is in a RM1 trillion debt and that such cross border projects are too exorbitant. The Malaysian PM also said that they are “not going to earn a single cent” from these billion-dollar projects, which he also said is only an election carrot to boost the popularity of former dictator Prime Minister Najib Razak. Malaysia would have to pay US$125 million to Singapore for breaking the contract, but PM Mahathir said he is going to negotiate the amount.
Over in Singapore, the Transport Ministry was allocated S$13.7 billion in 2018 Budget, or about 50% higher than 2017. The Singapore government is also going into debt by borrowing from state-owned companies and statutory boards to fund the construction of several multi-billion projects like HSR, RTS, Terminal 5 and Tuas Mega Port.
Following the dissolution of HSR and RTS, the Singapore government now no longer need to raise GST by 2% in 2021.
According state media estimates, the 2% increase in GST is estimated to generate S$3.6 billion in tax revenue. With the S$3 billion pressure alleviated from the HSR and RTS, Singapore can also look at removal of Terminal 5 to save the people tens of billions in taxes.
Unfortunately for Singaporeans, reducing taxes for the masses is never in Lee Hsien Loong’s style of governance. While corporate taxes was slashed by S$2.7 billion in Budget 2018, the ruling party PAP government raised a wide range of taxes from water prices and carpark fees to GST. Like Najib Razak, Prime Minister Lee Hsien Loong fancies billion-dollar projects and had splurged billions on a garden, a stadium, a park and a casino.