THE Arbitration Tribunal’s decision in favour of Malaysia has laid to rest the long-drawn-out affair concerning the Malayan Railway land swap in Singapore and saved the country S$1.4 billion (RM3.6 billion).
The decision on this government-to-government matter by The Permanent Court of Arbitration in The Hague, the Netherlands, is viewed as a positive development as it will strengthen relations between the two countries.
The tribunal on Oct 30 ruled that Malaysia will not have to pay development charges, a form of land tax, on three parcels of land in Keppel (Tanjong Pagar), Kranji and Woodlands.
The matter was referred to arbitration because Malaysia and Singapore had differing interpretations of the development charges on the parcels. The question that arose was whether the development would have been liable to pay the charges, which is a tax on the enhancement in land value resulting from Singapore authorities approving a higher-value development proposal. The charges are said to amount to S$1.4 billion.
In 2010, Prime Minister Datuk Seri Najib Razak negotiated with his Singapore counterpart Lee Hsien Loong and agreed that in exchange for Malayan Railway’s land in Tanjong Pagar, Kranji and Woodlands, Malaysia would receive six parcels of land in the Ophir-Rochor and Marina South areas. This land swap deal was struck after a two-decade deadlock between the two neighbours over the Points of Agreement (POA) signed in 1990 during the Tun Dr Mahathir Mohamad administration.
In the 2010 agreement, both governments will form a company —
M + S Pte Ltd — to develop the parcels. M + S is a joint investment company between Khazanah Nasional Bhd (60%) and Temasek Holdings Pte Ltd (40%). Singapore then vested the six parcels of land in M + S.
A joint statement issued by the ministries of foreign affairs of Malaysia and Singapore says the Arbitral Tribunal decided that “M+S Pte Ltd would not have been liable to pay development charges on the Keppel, Kranji and Woodlands parcels if the said parcels had been vested in M + S and if M + S had actually developed the land in accordance with the proposed land uses set out in the annexes of the POA”.
It adds that Singapore and Malaysia are satisfied with the arbitral process and affirm that both countries were afforded the opportunity to fully present their case. Singapore and Malaysia have agreed to abide by and fully implement the decision of the tribunal.
“By resolving this matter through third-party arbitration, both countries have demonstrated our common commitment to settling disputes in an amicable manner in accordance with international laws,” the statement says.
“The full and successful implementation of the POA paves the way for joint development projects and closer collaboration between Singapore and Malaysia. Both countries look forward to working closely together to further strengthen and broaden our cooperation.”
This settlement is expected to put Najib in a better light following a recent decline in his approval rating. An independent pollster survey by Merdeka Center revealed on Thursday that Najib’s approval rating had slipped to 48% compared with a previous survey in August where he scored 54%. The decline was attributed to the fuel subsidy cut, while his performance in August came after he took charge of operations to recover the wreckage of Malaysia Airlines Flight MH17 from Ukraine.
Meanwhile, the proposed development of the parcels vested in M+S is under way. The projects — The Duo Residences and The Marina One Residences — have a combined gross development value of S$11 billion.
The Duo Residences, launched in December last year, will sit on 6.67 acres in Ophir-Rochor Road. It is an integrated development comprising luxury residential units, a five-star hotel, grade-A offices and retail units.
The project offers 660 residential units. Its studio, one-bedroom and two-bedroom units have been sold. The three-bedroom and four-bedroom units are priced at over RM3 million each. There are also penthouses, measuring between 2,454 and 4,349 sq ft. UEM Sunrise Bhd and Singapore’s CapitaLand Ltd are marketing the development.
Last month, M+S launched The Marina One Residences in Marina South. Occupying 6.47 acres, the development has been described as a “city within a city in the Lion City — Singapore”. The project comprises two 30-storey office blocks and two 34-storey residential blocks with an underground pedestrian network.
It offers 1,042 residential units, ranging from one bedroom to four bedrooms, and penthouses. This project is managed by Mapletree Investments Pte Ltd and UEM Sunrise.
This article first appeared in The Edge Malaysia Weekly, on November 03 - 09, 2014.
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