KTM RAILWAY LAND

Jul 12, 2010

New light on an old issue

By Yang Razali Kassim

MALAYSIAN Deputy Foreign Minister Richard Riot Jaem's statement in Parliament on June 28, on the landmark deal on Malayan Railway (KTM) land in Singapore, has shed new light on an old issue. Responding to a question from an MP from the opposition Parti Islam SeMalaysia, the deputy minister unveiled what had hitherto been little known to the public in Malaysia as well as in Singapore.

As reported by the national news agency Bernama, Datuk Jaem dismissed the MP's allegation that the KTM land in Tanjong Pagar was to be sold to Singapore.

'The land is not ours,' he said. Rather, it had been leased in 1918 for 999 years from the Straits Settlements, of which Singapore was then a part.

The deputy minister continued: 'The Singapore Railway land leased was 434.26 acres (175.7ha). Out of this, 352.52 acres (142.6ha) was to be held by the Federal Land Commissioner for a period of 999 years, while 81.74 acres (33.1ha) was for perpetuity.

'If the land were no longer to be used for rail services, it was to be returned to the respective Straits Settlement without compensation whatsoever. As such, such allegations (those made by the MP) are not true because the land is not ours,' he was quoted as saying.

The Straits Settlements was a British colonial construct comprising Singapore, Malacca and Penang. It was dissolved in 1946 when Singapore became a crown colony separate from Peninsular Malaya. The Oct 25, 1918 agreement, known as the Singapore Railway Transfer Ordinance, gave the then Federated Malay States use of the land. But the land would have to be reverted - without cost, if the transfer was without cost - if it was not used for railway purposes.

The deputy minister's statement gives a totally new complexion to the long-running saga concerning KTM land in Singapore. The general perception in both Malaysia and Singapore had been that KTM land in Singapore was Malaysian territory - a residue of history. The land had long been seen as belonging to Malaysia because KTM was a state-owned entity, though it was subsequently corporatised in 1992.

Mr Jaem's statement clarified for the first time to the Malaysian public that the KTM land did not in fact belong to Malaysia, because it was 'leased' from the Straits Settlements in 1918. It was also probably the first time the Malaysian public learnt of the 999-year lease.

Significantly, the 1918 agreement had also stipulated that should the land not be used for its intended purpose - that is, for a railway line - then it would revert to the Straits Settlement concerned, in this case, its successor entity, Singapore.

Another significant point was that the land, should it be vacated, would revert to the transferring party 'without compensation whatsoever', in Mr Jaem's words. Hence his assertion that the issue of selling the land did not arise.

The larger significance of Mr Jaem's statement concerns the issue of sovereignty. For a long time, it was thought that the KTM land in Singapore was Malaysian state land, and therefore would never be sold. Mr Jaem's statement has turned the issue of sovereignty on its head: It was Singapore's sovereignty that was at issue.

As long as the KTM land existed in Singapore as state land, it could be argued that this affected Singapore's sovereignty. But because Malaysia's leased ownership of the land is based on a historical agreement, Singapore has to respect the law. Kuala Lumpur has no doubt been long aware that it would lose ownership of the land should it move its station from Tanjong Pagar to Woodlands. Hence the mutual recognition that the most rational solution would be to jointly develop the land vacated by the move.

Singapore is prepared to realise the market value of the KTM land in offering Malaysia a 60 per cent stake in the joint holding company that will develop the land. Singapore is also prepared to swop the KTM land at Tanjong Pagar, Bukit Timah, Kranji and Woodlands for other parcels in downtown Singapore of equivalent value.

So what was legally supposed to be returned to Singapore for free will now largely be paid for by Singapore - at a price that is now the subject of mutual valuation and negotiations between the two governments. A Malaysian paper, The Star, reported that a valuation exercise last year estimated the value of the land to be up to $4 billion.

Significantly, the debates in Malaysia on the deal have focused on the 1918 agreement. Former minister Shahrir Samad from Johor urged Malaysians to move away from 'nostalgic-romantic sentiments' to a future arrangement that would benefit KTM and Malaysia. Umno Supreme Council member Norraesah Mohamad said the new deal would turn a 'sleepy asset' into a high-value commercial venture. Umno Youth leader Khairy Jamaluddin said the new agreement would allow Malaysia to monetise its assets in Singapore. 'Malaysians must know that the Tanjong Pagar land cannot be utilised for anything other than a railway station,' he said.

This major shift in the railway land issue would not have been possible had there not been a new mindset at the very top of the Malaysian leadership. Under Prime Minister Najib Razak, we are seeing a government that is prepared to break new ground in seeking mutual accommodation for mutual gain. Singapore's leadership has also contributed to this major shift by not being too calculating, and showing that Singapore can also think out of the box to secure a more harmonious long-term strategic relationship. The end result is not just a resolution of the railway land issue, but also possibly a settlement of other outstanding issues that have bedevilled bilateral ties for too long.

The writer is a senior fellow at the S. Rajaratnam School of International Studies, Nanyang Technological University.

[The 999 year lease may be new to me, but the terms of the lease has been mentioned before. KTM had the use of the land for as long as they used the land for the purposes of a railway. If it stopped services, the land would revert to Singapore. Economically, it may make more sense for the train to terminate at Woodlands and lower operating costs. But KTM hung onto the land out of inertia or perhaps to hold Singapore to ransom. In any case Singapore sought to turn a lose-lose dong-in-a-manger situation into a win-win situation. Which the intractable and irascible Dr M with derailed with his paranoia. I am guessing that Singapore's easy agreement to the terms raised suspicions in Dr M that he was being taken advantage of. I think he was projecting.]