MFA Press Release: Transcript of Minister for Foreign Affairs K Shanmugam's Reply to the Parliamentary Questions, 18 Aug 2015

18 August 2015



MR SITOH YIH PIN: To ask the Minister for Foreign Affairs (a) what is the status of the land assessment tax applicable to PUB’s waterworks in Johor; and (b) whether there have been any recent developments.





1.       Madam Speaker, as the House is aware, the PUB owns Johor River Waterworks.  This is in the Kota Tinggi District of Johor and the Waterworks extracts and treats water from Johor River.  This is done in accordance with the 1962 Water Agreement.


2.       In late-2014, the Kota Tinggi District Council issued a Notice. That notice sought to double the rate of land assessment tax imposed on the Waterworks.


3.       The revised rate was more than double that of the next highest rate in the entire Kota Tinggi District.  The Waterworks’ assessed property value was also increased.


4.       The new rate was applied to a category which was created solely for the PUB.


5.       PUB’s operations in Johor are governed by the 1962 Water Agreement. That Agreement governs what PUB has to pay and PUB is not obliged to pay the land assessment tax which has been sought to be imposed.  There is some additional background on the Johor authorities imposing such taxes, in the past.


6.       For present purposes, I do not propose to go into what had happened in the past.


7.       In respect of the latest tax assessments, we have registered our concerns.  My Ministry has done so with the Malaysian Ministry of Foreign Affairs through two Third Person Notes.  PUB has got in touch with the Kota Tinggi District Council on the same.  I have also raised this issue directly with my Malaysian counterpart, Foreign Minister Anifah Aman, twice, in April 2015 and on the 4th of August 2015.  Prime Minister Lee Hsien Loong has also spoken directly to Prime Minister Najib Razak in May of this year. 


8.       Malaysia is aware that the issue of PUB’s rights under the Water Agreement is critical and sensitive for us.  The Malaysian Federal Government has guaranteed in the Separation Agreement that Johor would abide by the 1962 Water Agreement, and as I have said earlier, the agreement does not require the payment of this land tax.  We have requested the Malaysian Federal Government to address the issue.  The Federal Government has indicated that it would work with the Johor State Government to address our concerns. 


9.       Thank you, Madam Speaker.


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18 AUGUST 2015


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