Written Reply by Minister for Defence Dr Ng Eng Hen to Parliamentary Question on Subletting of Land Below Fair Market Value

Mr Png Eng Huat: To ask the Minister for Defence in light of the Report of the Auditor-General for FY2013/14 on land sublet at below fair market value (a) how many years of nominal rental of $45 a year did the privatised contractor enjoy before the annual rental was revised to $0.83 million; and (b) whether there is any attempt to clawback the rental from the privatised company.

Dr Ng Eng Hen: The company that the land was leased to was Government-owned until 2000 and therefore not required to pay rent as the goods and services it provided were solely in support of MINDEF and the SAF.
 
Even after the company was privatised in 2000 till the present date, the majority of its business is still in providing goods and services to MINDEF, with a smaller portion of its revenue from other commercial activities. It would therefore be difficult to compute exact savings from the nominal rent, as the land it leased was not solely for commercial use. 
 
Nevertheless, MINDEF proceeded to regularise the rents based on market value on an imputed portion of land used for commercial business. To effect this, MINDEF had to work with PUB to update the changes in land size and rental rates of its lease as the land area had changed over time. This was to ensure that our sub-license to the contractor was consistent with the main license agreement with PUB.
 
MINDEF and PUB agree with the AGO report that this process should have been settled expeditiously. We apologise for this lapse. MINDEF and PUB have recently finalised the main license agreement in June 2014, following which the land was leased to the company based on market value. In addition, MINDEF is reviewing other sub-lease contracts to ensure compliance with good governance.