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Singapore and Malaysia: Better neighbours
A truce across the Johor strait
Economist
January 20, 2005
KUALA LUMPUR
FOR most neighbouring countries, an agreement on the use of a shared
waterway, some big cross-border investments or talks on remodelling a
border crossing would be workaday, technical issues. For Singapore and
Malaysia, they are fraught. Indeed, since Singapore split acrimoniously
from Malaysia in 1965, the two have argued over just about everything.
All the more remarkable, then, that they have agreed to all three steps
in recent months and are tackling their other disputes.
All manner of quarrels mar ties between the two countries. Singapore
wants permission for its air force to train in Malaysian airspace. It
also wants Malaysia's railway to move its passenger terminus (which,
thanks to history, it still owns) in Singapore. Malaysia, for its part,
wants Singapore to hand over the pension payments of Malaysians who work
for a time in Singapore but move away before they reach retirement age.
It also wants to replace the causeway linking the two countries with a
bridge. The most heated arguments concern the price of the water
Singapore buys from Malaysia and sovereignty over a small rock in the
Singapore strait, known as Pedra Blanca or Pulau Batu Putih, depending
on your point of view.
Mahathir Mohamad, Malaysia's former prime minister, viewed all these
issues as grave points of principle. When Singapore refused to replace
the causeway, he proposed demolishing the Malaysian half anyway and
replacing it with a bridge, even though the limited space would have
necessitated a wonky, dog-leg design. He threatened to increase the
price of water or even cut off the supply, prompting Singapore to embark
on an expensive recycling project. His government also hauled Singapore
before two different international tribunals, over both Pedra Blanca and
a Singaporean land-reclamation scheme along the Johor strait, the narrow
channel separating the two countries.
Earlier this month, however, negotiators for the two sides agreed on a
settlement of the reclamation case. They released a statement saying
that the deal “augurs well for the further strengthening of good
relations between these two friendly and close neighbours.” Singapore
has now offered to release Malaysians' pension contributions in exchange
for access to Malaysian airspace. Sensing a new mood, railway employees
have even taken down a cheeky sign at the station in Singapore welcoming
passengers to Malaysia.
On the economic front, things are moving even faster. Malaysia used to
insist that anything Singapore could do, it could do better. Dr
Mahathir's government encouraged the development of a massive new port,
for example, in direct competition with that of Singapore. Moreover, Dr
Mahathir was determined to recapture the commanding heights of the
Malaysian economy from the Chinese businessmen who dominated it. He
steered capital towards firms owned by Malays or the state, hoping to
create Malay-run national champions. Companies from Singapore, largely
Chinese, did not get a look in.
Last year, however, Malaysia's new prime minister, Abdullah Badawi,
approved the sale of stakes in a local bank and the state-owned telecoms
company to Temasek, the Singaporean government's main investment arm.
The Malaysian and Singaporean governments are now said to be planning
joint investments overseas, and the two countries' stock exchanges plan
to start trading one another's shares. Mr Badawi likes to compare the
two countries to a semi-detached house. By that analogy, neighbours who
used to bang on the walls are now sharing utilities.
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