S'pore, KL look ahead as rail land tax issue is settled
Joint venture firm won't have to pay development charge, tribunal rules
By Zakir Hussain, The Straits Times, 1 Nov 2014
Joint venture firm won't have to pay development charge, tribunal rules
By Zakir Hussain, The Straits Times, 1 Nov 2014
In its decision, an international tribunal said the Malaysia-Singapore joint venture company, M+S, need not pay a development charge on three parcels of former railway land.
The Singapore and Malaysian foreign ministries announced the decision - delivered by the arbitral tribunal on Thursday - in a joint statement yesterday. Both said they would abide by the outcome.
Both sides sent the matter for arbitration when they could not agree on whether the charge had to be paid for three plots of former railway land in Tanjong Pagar, Kranji and Woodlands.
These plots, and three others, were swopped for six new land parcels in downtown Singapore in 2010. The new plots are being jointly developed now by M+S.
Prime Minister Lee Hsien Loong said yesterday morning that Singapore fully accepted the tribunal's decision. He said: "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 Points of Agreement (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 (Malaysian) PM Najib (Razak) bilaterally, and in Asean, to benefit both countries," he added.
In Kuala Lumpur, Malaysian Foreign Minister Anifah Aman told The Straits Times: "We believe this is the way forward in dealing with disputes."
Observers said the mature manner in which the issue was settled was a model for how others could handle international disputes.
The issue was left over from the 1990 POA between the two sides, under which Malayan Railway's station would be moved from Tanjong Pagar to Woodlands.
But this was held up over differing interpretations of POA clauses until 2010, when a landmark land swop deal between Mr Lee and his Malaysian counterpart, Datuk Seri Najib, broke the 20-year impasse.
Under the deal, railway land plots in Tanjong Pagar, Kranji and Woodlands - and three other plots in Bukit Timah - would be exchanged for four land parcels in Marina South and two parcels in Ophir-Rochor.
A new company, M+S, was formed to develop the new plots. M+S is owned by both countries' investment arms. Malaysia's Khazanah Nasional has a 60 per cent stake and Singapore's Temasek Holdings, the other 40 per cent.
Under the deal, railway land plots in Tanjong Pagar, Kranji and Woodlands - and three other plots in Bukit Timah - would be exchanged for four land parcels in Marina South and two parcels in Ophir-Rochor.
A new company, M+S, was formed to develop the new plots. M+S is owned by both countries' investment arms. Malaysia's Khazanah Nasional has a 60 per cent stake and Singapore's Temasek Holdings, the other 40 per cent.
These developments saw the last train leave Tanjong Pagar station in 2011 as part of the POA's implementation.
Malaysia also agreed for M+S to foot development charges for the Bukit Timah plots. Still, an outstanding issue remained: the development charge for the parcels in Tanjong Pagar, Kranji and Woodlands.
Singapore levies the tax for projects that increase the land value, and argued that the levy had to be paid for these plots. Malaysia argued otherwise.
Both sides agreed to settle the matter amicably through the Permanent Court of Arbitration at The Hague in the Netherlands.
Malaysian regional publication The Edge Review recently put the development charge at $1.4 billion, but this has not been officially confirmed.
Arbitration 'the right step' for rail-land tax issue
Singapore, Malaysia working on many projects for mutual benefit: Shanmugam
By Toh Yong Chuan, The Straits Times, 3 Nov 2014
Singapore, Malaysia working on many projects for mutual benefit: Shanmugam
By Toh Yong Chuan, The Straits Times, 3 Nov 2014
RESOLVING the issue of whether development charges were payable on former Malayan Railway land through 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. An international tribunal gave its decision on the matter last week.
Singapore accepts the decision and it will move on, he said of the arbitration tribunal's decision that a Malaysia-Singapore joint venture company will not have to pay taxes on three parcels in Tanjong Pagar, Kranji and Woodlands.
Mr Shanmugam, who is also Law Minister, noted that the two countries are now collaborating on many projects on both sides of the Causeway that are "benefiting the people of Malaysia and Singapore".
"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 added.
"The two countries (are) such close neighbours, we have to find sensible ways of moving forward."
His comments yesterday came two days after Singapore and Malaysia jointly announced the tribunal's decision last Friday.
The issue of development charges for the three parcels of former railway land in Tanjong Pagar, Kranji and Woodlands was left over from a 1990 Points of Agreement (POA) between the two countries over the relocation of the railway station and the freeing up of the land the line occupied. The implementation of the POA 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.
The deal saw the POA being implemented and the last train left Tanjong Pagar Railway Station in 2011. Trains from Malaysia now stop at Woodlands.
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, 40 per cent.
Malaysia agreed for M+S to pay development charges - taxes levied by the 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 last Thursday that M+S will not have to pay the $1.47 billion in levy that Singapore sought.
Mr Shanmugam was speaking to reporters on the sidelines of a community event in Nee Soon GRC, where he is anchor minister.
The active ageing carnival drew some 1,200 residents, who took part in activities such as mass exercising and tree planting. Five seniors aged between 62 and 77 also received awards for being role models for volunteering in community activities.
Settlement of land case 'points way to handling disputes'
Observers say process of arbitration shows respect for rule of law
By Walter Sim And Shannon Teoh, The Straits Times, 1 Nov 2014
Observers say process of arbitration shows respect for rule of law
By Walter Sim And Shannon Teoh, The Straits Times, 1 Nov 2014
DIPLOMATIC and legal observers have welcomed the decision by Singapore and Malaysia to accept the outcome of an international tribunal on a development charge on former Malayan Railway land in Singapore.
They cited how it reflected respect for third-party arbitration to resolve knotty issues and set the momentum for bilateral cooperation to strengthen further.
Former Singapore high commissioner to Malaysia K. Kesavapany told The Straits Times: "At a time when maritime and territorial disputes are on the rise in the region, this is a salutary example of the manner in which such disputes can be resolved."
He said putting the matter through third-party adjudication to resolve the matter was possible because of the cordial relations between both neighbours.
Malaysian Foreign Minister Anifah Aman also alluded to these ties, saying the agreement by both to abide by the decision was a major step to closer cooperation. "The understanding between both prime ministers is very good... We believe this is the way forward in dealing with disputes," Mr Anifah said.
On Thursday, an international arbitral tribunal decided that Malaysia-Singapore joint venture company M+S need not pay a development charge on three parcels of former railway land. The charge is imposed on the enhancement in land value, and Malaysia disagreed with Singapore that it had to be paid on these plots.
Prime Minister Lee Hsien Loong said Singapore fully accepted the tribunal's decision and he was happy the issue could be resolved impartially and amicably.
Professor Robert Beckman, director of the Centre for International Law at the National University of Singapore, said he was pleased to read PM Lee's statement. "This shows respect for the rule of law and for independent third-party adjudication and it is a good example for the region as a whole," he said.
"This is how mature and responsible states handle international dispute settlement. They put their cases before a tribunal, accept the results, and move on."
Mr Alvin Yeo, MP and member of the Government Parliamentary Committee for Defence and Foreign Affairs, felt the outcome was "proof that the consensual approach to resolving differences in views can result in a 'win-win' situation".
"Any loss of revenue from the development charge would be more than made up (for) by not just the higher share of profits that will accrue to the Singapore side, but from the friendly relationship which is vital for any partnership to succeed," he added.
Former Singapore foreign minister George Yeo said in a Facebook post: "Disappointed that Singapore lost the case but stakes in good bilateral relations are much greater."
Dr James Chin, government studies director at the Jeffrey Cheah Institute on Southeast Asia, said it was a positive development at a time when both countries are enjoying very good ties.
Mr Wong Chen, head of investment and trade for Malaysia's opposition Parti Keadilan Rakyat, said the decision by both sides was honourable, but called on the Malaysian government to be transparent on any gains accrued from M+S as it originated from a swop of Malaysian land.
Background to railway land tax issue
IN 1990, Singapore and Malaysia signed a Points of Agreement (POA) to relocate the Malayan Railway station from Tanjong Pagar to Woodlands. But differing interpretations of the pact delayed its implementation until 2010, when Prime Minister Lee Hsien Loong and his Malaysian counterpart Najib Razak agreed on a landmark land swop deal.
Under it, three plots of railway land in Tanjong Pagar, Kranji and Woodlands, and another three plots in Bukit Timah, would be exchanged for four land parcels in Marina South and two parcels in Ophir-Rochor. The six new plots will be developed by M+S, a company owned by both countries' investment arms: Malaysia's Khazanah Nasional holds 60 per cent and Singapore's Temasek Holdings, the remainder.
Malaysia agreed that M+S will foot the development charges for the Bukit Timah plots. But both sides could not agree on whether there should be a development charge for the parcels in Tanjong Pagar, Kranji and Woodlands.
This charge is a tax paid to Singapore on the enhanced value of the land when planning permission is given.
Both agreed to settle the matter amicably through arbitration, under the auspices of the Permanent Court of Arbitration at The Hague in the Netherlands and registered the case in January 2012.
A three-man Arbitral Tribunal delivered its award on Thursday. It said M+S does not have to pay development charges on the three parcels if these had been vested in M+S, and if M+S developed them according to the proposed land uses set out in the POA.
Rail land tax: 'Both sides wanted win-win deal'
Arbitral tribunal notes S'pore had sought $1.47b levy on three plots valued in 2008 at $2.8b in total
By Walter Sim, The Sunday Times, 2 Nov 2014
Arbitral tribunal notes S'pore had sought $1.47b levy on three plots valued in 2008 at $2.8b in total
By Walter Sim, The Sunday Times, 2 Nov 2014
Singapore and Malaysia were seeking an agreement on the transfer of railway land that could be described as a "win-win" situation that would leave each party better off than before, an international tribunal has said.
The arbitral tribunal made this point in a 76-page document, called an award and published last Friday, that said Malaysia-Singapore joint venture company M+S need not pay development charges for three parcels of former Malayan Railway land in Keppel, Kranji and Woodlands.
The three-member panel disclosed that Singapore had sought a levy of $1.47 billion, in keeping with its practice of imposing such charges when permission is given to develop land that appreciates in value. A 2008 valuation had put the value of these three plots at $2.8 billion altogether.
These plots, and three others in Bukit Timah, were swopped for six new land parcels in downtown Singapore in 2010, which are now being jointly developed by M+S.
But the tribunal also noted that during a hearing in July this year, Malaysian witness Nor Mohamed Yakcop had conceded that even with the charge, the agreement was "a sweet deal" for Malaysia.
"Equally we believe that the deal will have proved advantageous for Singapore even if we conclude that development charge is not payable," the tribunal said.
The panel was chaired by former English judge Lord Phillips of Worth Matravers; the other members were German legal expert Bruno Simma and former Australian chief justice Murray Gleeson.
Their decision was made known last Thursday to both countries, which issued a joint statement announcing it last Friday and said they would abide by the outcome.
Prime Minister Lee Hsien Loong said he was glad both sides were able to resolve the matter in this amicable way.
Malaysian Prime Minister Najib Razak said both countries looked forward to working closely together to further strengthen and broaden their cooperation.
The award was later uploaded on the website of the Permanent Court of Arbitration in The Hague, which acts as a registry.
The matter arose from a 1990 agreement between both countries, known as the Points of Agreement, (POA), to move Malayan Railway's station from Tanjong Pagar to Woodlands.
But the move was held up over differing interpretations of several clauses until 2010, when a landmark land swop deal between Mr Lee and Mr Najib broke the 20-year impasse.
This deal provided for the exchange of three parcels of railway land spelt out in the POA plus three plots in Bukit Timah, in return for four plots in Marina South and two in Ophir-Rochor.
No development charge was payable for these six downtown parcels, because the exchange was done on the basis that they were of equal value to the six plots offered for exchange, taking into account potential developments.
M+S was formed to develop the new plots. Malaysia's Khazanah Nasional owns 60 per cent of the company and Singapore's Temasek Holdings, the other 40 per cent.
Malaysia agreed for M+S to foot the development charges for the Bukit Timah plots, as they were not covered in the POA.
But differing interpretations over whether the POA meant development charges for the Keppel, Kranji and Woodlands plots had to be paid saw both sides agree to submit the matter for arbitration.
Malaysia, represented by Attorney-General Abdul Gani Patail, argued that the value of the three parcels would already be enhanced by Singapore's agreement for M+S to develop them according to the POA - not by the subsequent grant of planning permission - and so, there was no basis to impose a development charge.
Singapore, represented by then Attorney-General Steven Chong, argued the POA imposed an obligation on M+S to pay the development charge, in line with Singapore municipal law, to obtain planning permission. The tribunal rejected Singapore's submission.
But it said: "We hope that its resolution will be a chapter in the continued fruitful cooperation between the two countries involved."
Differing interpretations of POA
The nub of the disagreement over development charges on former Malayan Railway land parcels goes back to differing interpretations of the Points of Agreement (POA) that Singapore and Malaysia signed in 1990.
Under the POA, Singapore would issue freehold land titles to three vacated plots of land in Keppel, Kranji and Woodlands to a joint venture company, M+S, when the Tanjong Pagar station was relocated.
A plot of land of equivalent value in Marina South would be offered in exchange for the plot at Keppel.
Singapore took the view that nothing in the POA absolved M+S from paying development charges, levied on the enhancement in land value when planning permission is granted.
It said that during later negotiations, Malaysia agreed, or appeared to agree with, Singapore's view that the charges were payable.
Malaysia, however, said at no time did it believe these charges were payable, and "true interpretation" of the POA would support its view.
A hearing was held in London from July 15 to 18.
Former foreign minister George Yeo and Malaysia's former second finance minister Nor Mohamed Yakcop testified.
In its award, the tribunal found the Malaysians did not agree that Singapore's statements were correct.
But neither did it challenge them, leading Singapore to believe it had accepted that development charges were payable.
No comments:
Post a Comment