Nominal Rental for Sublet of Land to MINDEF's Contractor

Mr Png Eng Huat asked 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 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-licence to the contractor was consistent with the main licence agreement with PUB.

MINDEF and PUB agree with the Auditor-General report that this process should have been settled expeditiously. We apologise for this lapse. MINDEF and PUB have recently finalised the main licence 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.