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S’pore-M’sia land dispute: M’sia will not have to pay tax on ex-railway land

SINGAPORE - Malaysia will not have to pay development charges on three parcels of former railway land involved in the landmark land swap deal between Singapore and Malaysia in 2010, an international court has ruled.

KTM Tanjong Pagar railway station at Keppel road. TODAY file photo

KTM Tanjong Pagar railway station at Keppel road. TODAY file photo

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SINGAPORE - Malaysia will not have to pay development charges on three parcels of former railway land involved in the landmark land swap deal between Singapore and Malaysia in 2010, an international court has ruled.

The ruling on the charges - reportedly amounting to about S$1.4 billion - was delivered on Thursday (Oct 30).

In a statement issued today (Oct 31) on the ruling, Prime Minister Lee Hsien Loong said: “This was an issue left over from the Points of Agreement (POA) which was signed in 1990. There was a question of whether development charge was payable on the three parcels of POA land in Tanjong Pagar, Kranji and Woodlands. Prime Minister Najib (Razak) and I agreed to resolve it through arbitration. This has been done and the Tribunal has decided that development charge was not payable.”

He added: “Singapore fully accepts the decision. It allows us to put this matter behind us. I am happy that Singapore and Malaysia have been able to resolve this dispute in an impartial and amicable way.”

Mr Lee and Mr Najib had reached an agreement in 2010 for ex-railway land to be returned to Singapore, in exchange for land in Marina South and Ophir-Rochor to be developed by M+S, a joint venture owned by Temasek Holdings and Malaysia’s Khazanah Nasional.

Left unresolved however was the issue of whether Malaysia had to pay the development charges for the three parcels of ex-railway land.

Development charges are levied in Singapore when a piece of land has been approved for development with a higher value. Singapore had argued that this charge must be paid, but Malaysia had disagreed.

Both parties had agreed to settle the issue through arbitration and accept the arbitration award as final and binding. The matter was referred to the Permanent Court of Arbitration in The Hague.

According to the Ministry of Foreign Affairs, the tribunal decided that M+S would not be liable to pay development charges on the three plots of land, if the land had been vested in M+S and was developed by the company in accordance with proposed land uses set out in the POA annexes.

“Both Singapore and Malaysia are satisfied with the arbitral process and affirm that both countries were afforded the opportunity to fully present their case on the issue. Singapore and Malaysia have agreed to abide by and fully implement the decision of the tribunal,” the ministry said.

Mr Lee said: “The full and successful implementation of the 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 PM Najib bilaterally, and in ASEAN to benefit both countries.”

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