Friday 29 Mar 2024
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Under Singapore law, development charges are a tax on the enhanced value of land. Malaysia had argued that the charge should not apply to the three land parcels.

SINGAPORE (Oct 31): The Permanent Court of Arbitration has ruled that the development charges on the three parcels of Points of Agreement (POA) land formerly occupied by Malayan Railways (KTM) in Singapore at Tanjong Pagar, Kranji and Woodlands will not have to be paid.

This was announced by the Foreign Affairs Ministries of the two countries in a joint press release this morning.

In September 2010, Prime Ministers Lee Hsien Loong and Najib Razak announced that both countries had different views relating to the development charges on the three parcels of Points of Agreement (POA) land in Tanjong Pagar, Kranji and Woodlands.

Under Singapore law, development charges are a tax on the enhanced value of land. Malaysia had argued that the charge should not apply to the three land parcels.

Both leaders agreed to settle the issue amicably through arbitration and agreed to accept the arbitration award as final and binding.   

In January 2012, Singapore and Malaysia entered into an agreement, submitting the issue to the Permanent Court of Arbitration for final and binding arbitration.

Giving its verdict on Oct 30, 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 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”.

In the Malaysia-Singapore 1990 POA, it was agreed that KTM would vacate its former railway land in Singapore and hand it over for development by M+S Pte Ltd, a joint venture split 60:40 between Malaysia's Khazanah Nasional sovereign wealth fund and Singapore's Temasek Holdings state investment company.

Singapore and Malaysia have agreed to abide by and fully implement the decision of the Tribunal, adding that the full and successful implementation of the POA has paved the way for joint development projects and closer collaboration between the two countries.

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