S'pore, KL look ahead as rail land tax issue is settled

S'pore, KL look ahead as rail land tax issue is settled

THE issue of taxes on land formerly owned by Malayan Railway has been amicably settled - and cited as an example of how disagreements between countries ought to be handled.

In its decision, an international tribunal said the Malaysia-Singapore joint venture company, M+S, need not pay a development charge on three parcels of former railway land.

The Singapore and Malaysian foreign ministries announced the decision - delivered by the arbitral tribunal on Thursday - in a joint statement yesterday. Both said they would abide by the outcome.

Both sides sent the matter for arbitration when they could not agree on whether the charge had to be paid for three plots of former railway land in Tanjong Pagar, Kranji and Woodlands.

These plots, and three others, were swopped for six new land parcels in downtown Singapore in 2010. The new plots are being jointly developed now by M+S.

Prime Minister Lee Hsien Loong said yesterday morning that Singapore fully accepted the tribunal's decision. He said: "It allows us to put this matter behind us. I am happy that Singapore and Malaysia have been able to resolve this dispute in this impartial and amicable way.

"The full and successful implementation of the Points of Agreement (POA) in 2011 has paved the way for joint development projects and closer collaboration between Singapore and Malaysia. These include links in transport connectivity, and trade and investment. I look forward to making progress on them, and working with (Malaysian) PM Najib (Razak) bilaterally, and in Asean, to benefit both countries," he added.

In Kuala Lumpur, Malaysian Foreign Minister Anifah Aman told The Straits Times: "We believe this is the way forward in dealing with disputes."

Observers said the mature manner in which the issue was settled was a model for how others could handle international disputes.

The issue was left over from the 1990 POA between the two sides, under which Malayan Railway's station would be moved from Tanjong Pagar to Woodlands.

But this was held up over differing interpretations of POA clauses until 2010, when a landmark land swop deal between Mr Lee and his Malaysian counterpart, Datuk Seri Najib, broke the 20-year impasse.

Under the deal, railway land plots in Tanjong Pagar, Kranji and Woodlands - and three other plots in Bukit Timah - would be exchanged for four land parcels in Marina South and two parcels in Ophir-Rochor.

A new company, M+S, was formed to develop the new plots. M+S is owned by both countries' investment arms. Malaysia's Khazanah Nasional has a 60 per cent stake and Singapore's Temasek Holdings, the other 40 per cent.

These developments saw the last train leave Tanjong Pagar station in 2011 as part of the POA's implementation.

Malaysia also agreed for M+S to foot development charges for the Bukit Timah plots. Still, an outstanding issue remained: the development charge for the parcels in Tanjong Pagar, Kranji and Woodlands.

Singapore levies the tax for projects that increase the land value, and argued that the levy had to be paid for these plots. Malaysia argued otherwise.

Both sides agreed to settle the matter amicably through the Permanent Court of Arbitration at The Hague in the Netherlands.

Malaysian regional publication The Edge Review recently put the development charge at $1.4 billion, but this has not been officially confirmed.

In their statement, both ministries said their countries "have demonstrated our common commitment to settling disputes in an amicable manner, in accordance with international law".

zakirh@sph.com.sg


This article was first published on Nov 1, 2014.
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