http://www.businesstimes.com.sg/gove...sites-in-spore

No development charges for 3 former KTM sites in S'pore

By Angela Tan

[email protected]

1 Nov


A LAND development charge dispute which threatened to derail joint mega property projects related to three former Malayan Railway (KTM) sites in Singapore has been resolved.

On Friday, the foreign ministries of Singapore and Malaysia revealed in a joint statement that the Permanent Court of Arbitration at The Hague in Netherlands has decided that M+S Pte Ltd need not pay development charges on the three sites at Tanjong Pagar, Kranji and Woodlands.

M+S is the joint venture company which is developing the S$11 billion Marina South and Ophir-Rochor projects. These comprise hotels, apartments, offices and shops on a total of 501,020 square metres of space in two prime areas of Singapore's downtown. Malaysia's sovereign wealth fund Khazanah Nasional has a 60 per cent stake in M+S, while Singapore's Temasek Holdings holds 40 per cent.

The Arbitral Tribunal ruled that charges are not payable if they "had been vested in M+S Pte Ltd and if M+S Pte Ltd had actually developed the lands in accordance with the proposed land uses set out in the Annexes to the POA (Points of Agreement)".

Both Singapore and Malaysia were satisfied with the arbitral process.

"Singapore and Malaysia have agreed to abide by and fully implement the decision of the Tribunal," the joint statement said. "Both countries look forward to working closely together to further strengthen and broaden our bilateral cooperation."

In response to media queries, Singapore Prime Minister Lee Hsien Loong said that Singapore fully accepts the Tribunal's decision, adding: "It allows us to put this matter behind us. I am happy that Singapore and Malaysia have been able to resolve this dispute in this impartial and amicable way."

"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," he said.

The issue arose from the resolution in 2010 of a 20-year impasse between Singapore and Malaysia over the POA signed in 1990 to relocate the Tanjong Pagar railway station to Woodlands. But this was not implemented because of differing interpretations of a few clauses.

However in 2010, a landmark land-swop deal involving the KTM land in Singapore, negotiated between PM Lee and his Malaysian counterpart Najib Razak, closed the matter.

Malaysia, in exchange for giving Singapore its railway land in Tanjong Pagar, Kranji, Woodlands and Bukit Timah, received land of equivalent value in Marina South and Ophir-Rochor, which it formally took up in September 2010.

But there was one outstanding issue - and this was whether Malaysia had to foot the land development charge, said to be around S$1.4 billion, going by estimates in the Malaysian media, for the sites in Tanjong Pagar, Kranji and Woodlands.

Malaysia agreed that M+S should pay the development charges for the Bukit Timah parcels, but interpreted the 1990 POA to mean that these charges should not be levied for the other three sites.

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