KUALA LUMPUR (Sept 5): Singapore and Malaysia on Wednesday signed an agreement to defer the high speed rail link connecting the two countries for almost two years.

Construction of the rail link will be suspended until May 31, 2020, according to a Singapore-Malaysia joint statement.

The rail link is now expected to be operational in January 2031, four years after the original launch date.

Kuala Lumpur, which requested the halt, will pay a penalty for pausing works and will bear “agreed costs incurred by Singapore” if construction does not resume after May 2020.

In July, Singapore’s foreign minister Vivian Balakrishnan said the republic had so far spent $250 million on the project.

Reuters reported Malaysia's economic affairs minister Azmin Ali today told a press conference that Malaysia will pay Singapore about $15 million for the deferment of the high speed rail project.

The delay marks a reversal by Malaysia’s Prime Minister Mahathir Mohamad who earlier this year said he would scrap the project due to excessive costs.

Since taking office in May, Mahathir has reviewed several mega infrastructure projects initiated by the previous government and put some on hold to reduce his country's debt.

“During the suspension period, Malaysia and Singapore will continue to discuss on the best way forward for the HSR project with the aim of reducing costs,” the statement added.