KUALA LUMPUR, Oct 31 — The Permanent Court of Arbitration in The Hague has ruled that Singapore must not impose development charges on a parcel of Malaysian Railways (KTM) land to be jointly developed by the republic and Malaysia, news portal Channel News Asia reported today.
The decision favours Malaysia’s position, expressed by Prime Minister Datuk Seri Najib Razak in 2010, that no such charge should be levied on the Tanjung Pagar, Kranji and Woodlands plots, which differed from Singapore counterpart Lee Hsien Loong who said the tax should apply.
Development charges are a tax levied under Singapore law on the value of property that appreciates as a result of government approval for a project of greater worth. Putrajaya had contested the application of the tax on the land that belonged to KTM.
In 2010, Najib and Lee made a historic agreement relocate to the 78-year-old Tanjong Pagar railway station operated by KTM to Woodlands and for the land to be jointly developed by a firm, M+S Pte Ltd, which is jointly owned by sovereign wealth funds Temasek and Khazanah Nasional.
The deal stemmed from a controversial 1990 Points of Agreement signed by Lee Kuan Yew, Singapore’s founding father, and former Malaysian finance minister Tun Daim Zainuddin.
The agreement saw M+S being given control over the plots in Tanjong Pagar, Kranji and Woodlands, along with three more in Bukit Timah, which could then be swapped on the basis of equivalent value for property in Marina South and Ophir-Rochor.
However, the deal ran into disagreement on the development charges that Singapore sought to levy.
Yesterday, Lee said he was “happy that Singapore and Malaysia have been able to resolve this dispute in this impartial and amicable way”.