More than 30 years ago, back in the mid-1980s, a Malaysian friend who lives in Singapore told me that if Malaysia ever cuts off the water supply to Singapore, Singaporeans will not go thirsty (like in 1941 when the Japanese did that). Singapore has enough water although they may have to ban garden hoses and the washing of cars.
The reason this Malaysian-Singaporean friend brought up the subject was because not long after Tun Dr Mahathir Mohamad became Prime Minister in 1981 he went to war with Singapore regarding the price of water.
I met one very senior man in the Jabatan Bekalan Air of one of the states and he told me that Mahathir does not seem to know what he is talking about. No doubt Singapore pays only RM0.03 for 1,000 gallons of raw water, but then Singapore sells the treated water back to Malaysia for only RM0.50 whereas if Malaysia were to treat that water themselves it would cost far more than that.
Johor then sells the treated water to consumers at about RM4.00 per 1,000 gallons.
Take note that Malaysia buys treated water from Singapore for only RM0.50 and then sells it to the consumers for about RM4.00. If Malaysia treated its own water it will cost a few Ringgit, not just RM0.50. (The cost of treated water varies from place to place).
Johor is making millions every month (from poor Malaysians) by buying water from Singapore at RM0.50 and selling it back at RM4.00. And still Mahathir is not happy. If Johor were to treat its own water, its cost would multiply and it would actually be losing money rather than making a profit due to the 30-40% NRW.
From the business sense it is profitable to sell water to Singapore at RM0.03 and then buy it back at RM0.50. But Mahathir is still not happy and wants the selling price of raw water to be increased to RM0.50.
If Malaysia sells raw water to Singapore at RM0.50, then Singapore cannot sell treated water to Malaysia also at RM0.50. Singapore, too, would have to increase the selling price of treated water to, say, RM5.00. So what price will consumers now have to pay for treated water? RM10.00?
Actually, Mahathir’s anger with Singapore is not about profits. It is about ego — that Mahathir is not able to win the water-war with Singapore. Mahathir talks about what the selling price of raw water to Singapore should be. He never mentions what the buying price of treated water from Singapore will be because of that.
Or did it not cross Mahathir’s mind that when you increase your selling price, the other side would increase their selling price as well. And since you are making millions every month at the current price, why kacau the price and then start losing money? The problem is Mahathir does not mind how much money the country loses as long as it can feed his ego.