Parliament: PUB not obliged to pay land assessment tax on Johor Water Works, says Shanmugam

Mr Shanmugam himself had also raised the issue directly with his counterpart Foreign Minister Anifah Aman.
Mr Shanmugam himself had also raised the issue directly with his counterpart Foreign Minister Anifah Aman. PHOTO: NEW PAPER FILE

SINGAPORE - Under the 1962 Water Agreement, PUB is not obliged to pay the land assessment tax which the Kota Tinggi District Council has sought to impose, Foreign Minister K Shanmugam told Parliament on Tuesday.

Responding to a question by Mr Sitoh Yih Pin (Potong Pasir), Mr Shanmugam revealed that the Council had issued a notice in late 2014, which sought to "double the rate of land assessment tax imposed on the water works".

Singapore's national water agency PUB owns Johor River Water Works, which is located in the Kota Tinggi district of Johor.

"The revised rate was more than double that of the next highest rate in the entire Kota Tinggi district. The water works' assessed property value was also increased. The new rate was applied to a category which was created solely for the PUB," he added.

The water works extracts and treats water from the Johor River, in accordance with the terms set out in the 1962 Water Agreement.

This water agreement, which was signed between Singapore and Johor, is valid till 2061 and is guaranteed by both governments in the 1965 Separation Agreement.

It gave Singapore the right to draw water from Johor River up to a maximum of 250 million gallons per day, or 1.14 million cubic metres a day. In return, Johor was entitled to a daily supply of treated water from Singapore up to 2 per cent of the raw water it supplied.

Mr Shanmugam explained that this agreement governs what PUB has to pay, "and PUB is not obliged to pay the land assessment tax which has been sought to be imposed".

"There is some additional background on the Johor authorities imposing such taxes in the past. For present purposes I do not propose to go into what had happened in the past," he added.

With regard to the latest tax assessments, Mr Shanmugam told MPs that Singapore has registered its concerns with Malaysia's foreign affairs ministry through two Third Person Notes.

PUB has also got in touch with the Kota Tinggi District Council on the matter.

Mr Shanmugam himself had also raised the issue directly with his counterpart Foreign Minister Anifah Aman twice - in April this year and also on August 4.

Prime Minister Lee Hsien Loong had also spoken to Malaysian Prime Minister Najib Razak on the subject when they met in May this year.

"Malaysia is aware that the issue of PUB's rights under the water agreement is critical and sensitive for us. The Malaysian federal government has guaranteed in the Separation Agreement that Johor would abide by the 1962 Water Agreement," Mr Shanmugam said.

"The agreement does not require a payment of this land tax."

He told Parliament that the federal government has indicated that it would work with the Johor state government to address Singapore's concerns.