Decision on Singapore-Malaysia railway land tax to be out soon

Singapore-KL dispute over fee submitted for arbitration

File photo of a KTM railway train in Singapore. A dispute between Singapore and Malaysia over a tax levied on parcels of former railway land will be resolved soon, with a decision by a London arbitration panel expected in a "few months". -- ST FILE P
File photo of a KTM railway train in Singapore. A dispute between Singapore and Malaysia over a tax levied on parcels of former railway land will be resolved soon, with a decision by a London arbitration panel expected in a "few months". -- ST FILE PHOTO

A dispute between Singapore and Malaysia over a tax levied on parcels of former railway land will be resolved soon, with a decision by a London arbitration panel expected in a "few months".

The fee, which was reported by Malaysian business weekly The Edge Review as $1.4 billion, is a development charge payable to Singapore.

Malaysia is opposing the payment.

The issue follows from the resolution in 2010 of a 20-year impasse between the two countries over a Points of Agreement (POA) that was signed in 1990 by Singapore's then prime minister Lee Kuan Yew with Malaysia's then finance minister Daim Zainuddin.

Under the agreement, the now-defunct Malayan Railway station was to be moved from Tanjong Pagar to Woodlands. But this was not implemented at the time, due to differing interpretations of a few clauses in the POA.

In 2010, however, a landmark land swop deal negotiated between Singapore Prime Minister Lee Hsien Loong and his Malaysian counterpart Najib Razak closed the matter, save for one outstanding issue. This was whether Malaysia had to foot the development charge bill for three parcels of the former Malayan Railway land in Tanjong Pagar, Kranji and Woodlands.

Singapore's Ministry of National Development has defined a development charge as a tax on the enhancement in land value resulting from the State approving a development with a higher value.

Both neighbours agreed to settle the matter amicably through arbitration, under the auspices of the Permanent Court of Arbitration at The Hague in the Netherlands. They have also agreed to accept the outcome as final and binding, and not to let the dispute affect any bilateral initiatives.

The Edge Review reported Malaysian government sources as saying that the closed-door arbitration hearings in London ended this month.

The magazine added that Singapore's former foreign minister George Yeo and Malaysia's former second finance minister Nor Mohamed Yackop had testified at the hearings.

When contacted, Singapore's Ministry of Foreign Affairs said in a statement yesterday: "The hearing for the arbitration has concluded and the decision of the arbitral tribunal is expected in a few months.

"As the decision of the tribunal has yet to be released, it would not be appropriate to comment further on the case."

The breakthrough 2010 swop involved three plots of former Malayan Railway land in Tanjong Pagar, Kranji and Woodlands, as well as another three in Bukit Timah.

The parcels in Bukit Timah were not covered in the POA, and Malaysia had agreed for M+S - a joint venture company owned by the investment arms of the two countries - to foot the development charges for these plots.

Malaysia's sovereign wealth fund Khazanah Nasional has a 60 per cent stake in M+S, while Singapore's Temasek Holdings owns 40 per cent.

In exchange for the six parcels of former railway land, the Singapore Government offered, for development by M+S, four parcels of land in Marina South, behind Marina Bay Financial Centre, and two parcels in Ophir-Rochor, next to the Kampong Glam historic district and across the road from the Gateway on Beach Road.

waltsim@sph.com.sg

Join ST's WhatsApp Channel and get the latest news and must-reads.