Shanmugam: Sending railway land issue for arbitration was right step

Sending the issue of whether development charges were payable on former Malayan Railway land for third-party arbitration was the right step, Foreign Minister K Shanmugam said. -- ST PHOTO: STEFFI KOH
Sending the issue of whether development charges were payable on former Malayan Railway land for third-party arbitration was the right step, Foreign Minister K Shanmugam said. -- ST PHOTO: STEFFI KOH

SINGAPORE - Sending the issue of whether development charges were payable on former Malayan Railway land for third-party arbitration was the right step, Foreign Minister K Shanmugam said.

"The process, and the way we did it, is the right way to do these things," he said yesterday of the move. An international tribunal gave its decision on the matter last week.

Singapore accepts the decision and it will move on, said Mr Shanmugam of the arbitral tribunal’s decision that a Malaysia-Singapore joint venture company will not have to pay taxes on these three parcels in Tanjong Pagar, Kranji and Woodlands.

"We have developments now, joint ventures in Iskandar, and they have (projects) here, all being done together. It encourages people-to-people movement, more commercial activities," he said.

"The two countries (are) such close neighbours, we have to find sensible ways of moving forward."

His comments on Sunday came two days after both the Singapore and Malaysian foreign ministries announced the tribunal's decision on Friday.

The issue of development charges for the three parcels of former railway land at Tanjong Pagar, Kranji and Woodlands was left over from a 1990 Points of Agreement (POA) between both sides. The implementation of the agreement was held up over differing interpretation of its clauses until a landmark 2010 land swop deal.

Under the land swop deal, the three plots of railway land and three additional plots in Bukit Timah would be exchanged for four land parcels in Marina South and two parcels in Ophir-Rochor. A new Malaysia-Singapore joint venture company, M+S, was set up to develop the new plots, with Malaysia's investment arm Khazanah Nasional owning a 60 per cent stake and Singapore's Temasek Holdings, the other 40 per cent.

Malaysia agreed for M+S to pay development charges - taxes levied by Singapore government when permission is given to develop land that appreciates in value - for the three Bukit Timah plots, but not the original three parcels.

The matter was sent for arbitration in 2012. The tribunal made its ruling on Thursday that M+S will not have to pay the $1.47 billion in levy that the Singapore Government sought.

Mr Shanmugam was speaking to reporters at the sidelines of a community event at Nee Soon GRC, when he is the anchor minister.

The active aging carnival drew some 1,200 residents who took part in activities like mass exercises and tree planting. Five seniors age between 62 and 77 also received awards for being role models for volunteering in community activities.