KUALA LUMPUR - Malaysia believes Singapore's acceptance of an international Arbitral Tribunal's decision that their joint development venture is exempted from a tax on three parcels of former railway land in Singapore paves the way for closer cooperation.
Foreign Minister Anifah Aman told The Straits Times on Friday that this mutual respect for the judgment delivered on Thursday would ensure there is no negative impact on warming relations between the two neighbours.
"The understanding between both prime ministers is very good and this is a strategic partnership between our nations. We believe this is the way forward in dealing with disputes," Datuk Seri Anifah said.
The agreement to abide by the Arbitral Tribunal's finding that the joint development venture, M+S, need not pay a development charge brings to close a dispute dating back over two decades.
A development charge is a tax levied on the enhancement in land value when planning permission is granted.
The Foreign Affairs ministries of Singapore and Malaysia announced the news of the award in a joint statement on Friday. They said that both countries were satisfied with the arbitral process, and agreed to abide by and fully implement the tribunal's decision.
Malaysia newspaper, The Edge Review, has put the development charge at some S$1.4 billion. But the amount has never been confirmed.
The matter was left over from the Points of Agreement (POA) signed in 1990 by Singapore's then prime minister Lee Kuan Yew and Malaysia's then finance minister Daim Zainuddin. Under the pact, the Malayan Railway station would be moved from Tanjong Pagar to Woodlands.
But the POA was not implemented at the time, due to differing interpretations of a few clauses.
However in 2010, a landmark land swop deal negotiated between Prime Minister Lee Hsien Loong and his Malaysian counterpart Najib Razak broke the 20-year impasse.
Under the swop, three plots of railway land in Tanjong Pagar, Kranji and Woodlands, and another three plots in Bukit Timah, would be exchanged for four parcels of land in Marina South and two parcels of land in Ophir-Rochor.
A new company, M+S, was formed to develop these latter plots. It is owned by both countries' investment arms, with Malaysia's Khazanah Nasional having a 60 per cent stake and Singapore's Temasek Holdings the other 40 per cent.