Malaysia wins dispute over development charges for KTM land in Singapore

A tribunal has ruled that Singapore must not impose development charges on a parcel of Malaysian Railways (KTM) land which was to be jointly developed by the Republic and Malaysia.

Channel News Asia today reported that the Permanent Court of Arbitration in The Hague has ruled in favour of Malaysia’s arguments that no extra land tax was needed to be paid by M+S Pte Ltd -- a joint investment company co-owned by Malaysia's Khazanah Nasional and Singapore's Temasek Holdings -- on three plots of land.

The tax dispute arose in September 2010 after Singapore Prime Minister Lee Hsien Loong and Malaysian Prime Minister Datuk Seri Najib Razak announced that the countries had different perspectives relating to the development charges on the Keppel (or Tanjong Pagar), Kranji and Woodlands plots, lands formerly occupied by KTM in Singapore.

"Both Singapore and Malaysia are satisfied with the arbitral process and affirm that both countries were afforded the opportunity to fully present their case on the issue.

“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 law.

"The full and successful implementation of the POA (Points of Agreement) has paved 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 bilateral cooperation," the two governments' foreign ministries' said in a joint statement today.

In the Malaysia-Singapore 1990 POA, KTM agreed it would vacate its former railway land in Singapore, to be handed over for development by M+S Pte Ltd.

However, the countries held differing views on the development charges -- reportedly in the region of S$1.4 billion (RM3.6 billion). The dispute remained unresolved over the next two decades.

Najib, meanwhile, welcomes the tribunal's decision.