Saturday, July 2, 2011


Jul 2, 2011
POA deal a win-win - eventually

In his recently released book, Diplomacy: A Singapore Experience, former Senior Minister S. Jayakumar details the background and the twists and turns in Singapore's dealings with Malaysia over the Points of Agreement on Malayan Railway land. This is an edited extract of his account, from the chapter on 'Managing relations with Malaysia'.
I WILL deal only with a set of interrelated issues that troubled our relations for many years - the implementation of the Points of Agreement (POA), relocation of the Customs, Immigration and Quarantine (CIQ) for railway facilities, revisions to the Water Agreements, and the 'crooked bridge'.

The on-again, off-again bilateral negotiations and acrimonious exchanges over these issues illustrate the volatility of political and diplomatic relations then, despite our efforts to cooperate on an equal footing and work towards a win-win outcome.

These episodes also illustrate how personal relationships between the leaders and ministers are important factors in international diplomacy, and more so in dealing with close neighbours.

I believe that PM Lee Hsien Loong and PM Najib Razak have developed a certain comfort level and trust which enabled them to finally overcome the long unresolved POA issue, to reach a mutually beneficial settlement.

At the ministerial level, I had a very good personal relationship with Foreign Minister Abdullah Badawi (1991-99). My wife and I attended the weddings of his son and daughter. I consider Abdullah Badawi one of the most gentlemanly and approachable foreign leaders I have dealt with. He knew many of our leaders well and tried hard to keep relations on an even keel.

Likewise, I got on well with Abdullah Badawi's successor, Syed Hamid Albar, with whom I shared a common passion for golf.

Unfortunately, their hands were tied by Dr Mahathir (Mohamad), who adopted a negative tone to bilateral relations. Although there was some cooperation in the early years of his administration, Dr Mahathir essentially wanted Malaysia to trump Singapore. This situation persisted even after Abdullah Badawi took over the premiership in 2003. Domestic political constraints coupled with Dr Mahathir's incessant behind-the-scenes attacks on Abdullah Badawi and Singapore restricted Abdullah Badawi's ability to settle some of the outstanding bilateral issues...

That Singapore and Malaysia will always remain neighbours is a geographic fact. There may be hiccups from time to time but both sides should continue to seize opportunities to enhance bilateral cooperation and put overall relations on a better footing. The POA settlement is an excellent example of adopting this win-win mindset...

Points of Agreement (POA)

I WILL begin with the 'POA issue' because, of all the important outstanding issues, this is the only one that can be said to have been resolved.

For nearly 20 years, the POA issue was a continuing irritant in Singapore-Malaysia relations, until May 2010 when PM Lee Hsien Loong and PM Najib Razak came to an agreement that put the matter behind us. There are many aspects, both legal and political, about the POA's chequered history. I will deal only with the more salient aspects.

What is the POA?

THE POA is an agreement between the Malaysian and Singapore Governments concerning railway lands in Singapore. It was signed by PM Lee Kuan Yew and Finance Minister Tun Daim Zainuddin on Nov27, 1990. The POA was signed on the same day that PM Lee handed over the premiership to Goh Chok Tong. PM Lee had wanted to clear the decks before Goh Chok Tong took over.

Early developments

IN THE early 1980s, Malaysia inquired whether we had any special plans for the Malayan Railway land in Tanjong Pagar. Malaysia was thinking of stopping the railway at Woodlands and either selling or developing the property in Tanjong Pagar. We responded that we preferred the Malayan Railway Administration (MRA, now KTMB) to continue to use the land at Tanjong Pagar for railway purposes.

However, if MRA did not want the land because it wanted to terminate the services at Woodlands, we were prepared to take the land back in accordance with the leases of the various parcels.

When we decided in September 1989 to shift the CIQ facilities from Tanjong Pagar to the Woodlands Checkpoint, we thought it made sense for the railway to terminate at Woodlands as well.

We knew that the Malaysians were thinking of stopping in Woodlands and either selling or developing the Tanjong Pagar property, but that they were concerned that all MRA lands south of Woodlands would then revert to Singapore without any compensation since they would no longer be used for railway purposes. So one possible win-win solution was to allow the Malaysians to redevelop some of the MRA lands in addition to the Tanjong Pagar property, and for Singapore to share in the gain from this redevelopment. The remaining MRA lands that could not be redeveloped would revert to Singapore.

Genesis of the POA

PM LEE put this proposition to Daim. Most of the MRA lands in Singapore (with the exception of three plots in Woodlands, Kranji and Keppel) were narrow strips and not capable of independent development.

If the MRA decided to terminate its line at the new Woodlands Checkpoint, then notwithstanding the restrictive covenant, the plots at Keppel, Kranji and Woodlands could be re-alienated to a company which would be 50:50 owned by nominees of Singapore and Malaysia. There would be no compensation for the remaining MRA lands.

Malaysia, however, wanted the railway station to terminate at Bukit Timah and not Woodlands. PM Lee agreed to this. Malaysia also wanted a larger share in the joint venture company. PM Lee agreed to 60:40 in Malaysia's favour.

After further negotiations, the POA was signed by PM Lee and Daim on Nov27, 1990.

Terms of the Agreement

THE main thrust of the POA was:

The Tanjong Pagar station at Keppel would be vacated and moved to Lot 76-2 in Upper Bukit Timah in the first instance;

The land at Tanjong Pagar would be vested in a limited company (M-S Pte Ltd) to be developed as residential and commercial land in accordance with our zoning plans;

After our MRT reached Woodlands New Town, the MRA could, within five years, move its station from Lot 76-2 to a site in Woodlands adjacent or close to the MRT station. Then the two pieces of land in Kranji and Woodlands would also be vested in M-S Pte Ltd and developed in accordance with the plans given;

The POA also stated that in exchange for the MRA land at Keppel, a plot of land of equivalent value in Marina South would be offered to M-S Pte Ltd so that a prestigious building could be developed on this Marina site. If M-S Pte Ltd felt that the land offered was not suitable, then alternative sites in Marina South of equivalent value would be offered to M-S Pte Ltd.

The effect of this Agreement was that when the Tanjong Pagar station was relocated to Upper Bukit Timah, all railway lands south of Bukit Timah other than the Tanjong Pagar site would revert to Singapore.

If Malaysia exercised the option of moving the station to Woodlands (within five years after our MRT reached Woodlands, which happened in February 1996), all the railway lands south of Woodlands other than the Tanjong Pagar, Woodlands and Kranji sites would revert to Singapore.

That option eventually lapsed as Malaysia failed to move the station to Woodlands by February 2001.

The problems

FOR four years after signing the POA, we worked with Malaysia to implement the Agreement. However, the Malaysians made requests that departed from the terms of the POA.

For example, they wanted to retain certain lands outside the railway corridor that they considered capable of development, other than Keppel, Kranji and Woodlands.

Next, they asked to include a commercial/shopping complex in the Bukit Timah station and for four additional parcels of land in exchange for moving directly to Woodlands.

The Malaysians also wanted to jointly develop the Bukit Timah site on a 60:40 basis if MRA relocated its station straight to Woodlands.

Malaysia also disagreed with us on the legal status of the POA as well as on when it took effect.

Our position was clear: The POA was an internationally binding agreement concluded by the two governments after careful deliberation and should be implemented in good faith.

As PM Goh told Parliament on June5, 1997, 'it is not possible for me, or for any Prime Minister of Singapore, to simply set aside the POA, which is an international agreement solemnly entered into between two governments. To do so would undermine the sanctity of all the agreements and treaties Singapore has concluded in the past or will sign in the future.'

To resolve the legal issues, we proposed arbitration or international adjudication.

POA unresolved for 20 years

BECAUSE of these problems, the POA became an outstanding issue for two decades. Several attempts to discuss the POA as part of a larger package deal did not bear fruit.

On the important aspect of the legal status of the POA, there was a major breakthrough during Malaysian Foreign Minister Rais Yatim's introductory visit to Singapore in April 2008.

When he called on PM Lee Hsien Loong, he acknowledged that the POA was a valid and legally binding document. That was significant as no other Malaysian leader had hitherto taken that position. We had always been prepared to be flexible, provided the legality of the POA was not questioned.

Once Dr Mahathir questioned it, we had no choice but to be firm.

Final agreement in May 2010

THE POA was finally resolved in May 2010 when PM Lee Hsien Loong and PM Najib Razak reached an agreement. KTMB would relocate its Tanjong Pagar station to Woodlands by July1, 2011 and the POA land parcels and some additional land parcels in Bukit Timah would be vested in M+S Pte Ltd.

The agreement also involved a land swop of the POA and Bukit Timah parcels for land of equivalent value in Marina South and Ophir-Rochor, which Malaysia formally took up in September 2010.

When announcing the land swop deal, the two Prime Ministers also agreed that both countries would jointly develop a Rapid Transit System between Tanjung Puteri, Johor Bahru and Singapore and an iconic project in Iskandar Malaysia.

In my view, the POA deal is clearly a win-win outcome. It was a political and economic plus for both sides.

For Malaysia, the deal meant additional land parcels in Bukit Timah being vested in M+S Pte Ltd, together with the three POA parcels in Tanjong Pagar, Kranji and Woodlands mentioned in the original POA (which could subsequently be swopped for land in Marina South and Ophir-Rochor).

In conjunction with investments in Iskandar Malaysia and a Rapid Transit System linking Johor Bahru and Singapore, the political settlement was one which Najib and his administration were comfortable with.

For Singapore, after all these years that the railway line had cut Singapore into two halves, the deal removed a major obstacle to efficient land use and planning. It also enabled us to rationalise and amalgamate the various railway land parcels south of Woodlands Train Checkpoint (WTCP), amounting to about 216ha, which would otherwise have stagnated as isolated land parcels specifically designated for railway use only.

In addition, KTMB's relocation to WTCP would resolve long-standing security concerns vis-a-vis the Malayan railway line extending south all the way to Tanjong Pagar, such as smuggling, drug trafficking, and more recently in the wake of 9/11, terrorism.

Furthermore, Singapore and Malaysia both stand to benefit from the joint 60:40 ownership of M+S Pte Ltd, which is developing the Marina South and Ophir-Rochor parcels.

Singapore would gain from the future revenue streams of 'iconic' developments at the Marina South and Ophir-Rochor locations through our 40 per cent stake in M+S Pte Ltd.

Finally, on a broader note, the settlement of the long-standing POA issue removes a major obstacle to bilateral relations, hopefully paving the way for deeper cooperation between Singapore and Malaysia.

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