Malaysia Singapore Relations

IT IS SAID THAT MALAYSIA-SINGAPORE RELATIONS HAVE EVOLVED FROM AN INHERENTLY UNSTABLE TO A MORE MATURE RELATIONSHIP. DISCUSS THE REASONS FOR THIS CHANGE AND PROSPECT OF FURTHER CONSOLIDATION OF THEIR BILATERAL RELATION

1.0 INTRODUCTION Malaysia and Singapore shares a special relationship mainly due to geographical proximity and historical linkage. It reached to a lower ebb in the 1960’s when it was termed to be a ‘Cats and Dogs relationship’ by the then Malaysian Prime Minister. The ultimate result was a separation to create an Independent Singapore. Since Singapore’s separation from Malaysia in August 1965, both countries have experienced many highs and lows over the last 47 years. The past and ongoing differences include water issue, Pedra Branca (Pulau Batu Putih) claim, Malayan Railway (KTM) land and CIQ at Tanjung Pagar, land reclamation at Tuas and Pulau Tekong, Central Provident Fund (CPF) withdrawals by Malaysians, Malaysian airspace violation by RSAF planes and replacement of the Johor Causeway etc. Some observers have compared this relationship with that of a divorced couple. The period under Tun Mahathir administration was by far the most stressful in the short history of relations between independent Singapore and Malaysia, with a number of issues reaching confrontational level and thus rendering them more difficult to resolve. However, the impasse came to an end when Tun Abdullah Ahmad Badawi became the Prime Minister of Malaysia in 2003. Since then there have been enhanced contacts and cooperation between the two countries and both have been embarking on a series of initiatives in improving the bilateral relationship. Under the current leadership of Prime Minister Dato’ Sri Mohd Najib Razak, it can be said that Malaysia-Singapore relations have evolved to a more mature and positive relationship. This essay will discuss the reasons for the change in the relationship between these two countries as well as the prospect of future consolidation of their bilateral relations. In this paper an effort will be made initially to highlight the issues and challenges that made the bilateral relations between Malaysia- Singapore inherently unstable and their recent development which signifies a turn towards a more mature relationship. Subsequently it will discuss the important factors that played catalytic role in improving the relations and finally the prospect of further consolidation of bilateral relations will be discussed.
2.0 AIM The aim of this paper is to analyze the past and present of the issues and challenges in the bilateral relations between Malaysia-Singapore with a view to identifying the factors affecting the positive turn and prospects of further consolidations of their relations.
3.0 ISSUES AND CHALLENGES
The bilateral issues and challenges that affect the relationship of Malaysia and Singapore and discussed subsequently.
3.1 Water. Singapore get water supply for a lengthy period of time from Johor. Currently, Malaysia sells raw water to Singapore at 3 cent per 1000 gallons. Johor government pays Singapore 50 cent per 1000 gallons of treated water. Two agreements exists between Singapore and Malaysia (Johor) as follows:

3.1.1 The 1961 Tebrau and Skudai Water Agreement. Allow Singapore to draw up to 86 million gallon/day (mgd) and was expired in 2011. This agreement allowed Singapore to take water from Sungai Skudai and Sungai Teberau. On 01 Sep 2011, Singapore transferred to Johor two water treatment plants at Skudai and Gunung Pulai with two pump houses in Pontian and Tebrau.

3.1.2 The 1962 Johor River Water Agreement. Allow Singapore to draw up to 250 million gallon/day (mgd) and expired in 2061 and this agreement is still going on. This agreement also was enhanced by a subsequent agreement in 1990 which allowed Singapore to build and manage the Linggiu Dam.

3.2 Pulau Batu Puteh (Pedra Branca) Claim. Singapore has occupied and exercised full sovereignty since 1840s and dutifully maintained the Horsburgh Lighthouse with other facilities on the island. On 6 Feb 2003, both governments have signed the Special Agreement for submission the Pulau Batu Puteh issue to the International Court of Justice (ICJ). On 23 May 2008, ICJ rendered its judgment in the case concerning sovereignty and the results is, Pulau Batu Puteh (Pedra Branca) and South Ledge belong to Singapore when Middle Rock belong to Malaysia.

3.3 Malayan Railway (KTM) Land in Singapore and Customs, Immigration and Quarantine (CIQ) at Tanjong Pagar. Malaysia was the owner of a piece of railway land in the heart of Singapore. On 27 Nov 1990, a Points of Agreement (POA) was signed by Malaysia and Singapore, agreeing that the KTM railway station will be moved to a location to be decided later. On 01 Jul 2011, Malayan Railway (KTM) was moved out of Tanjong Pagar and established a station at the Woodlands Train Checkpoint (WTCP). Malaysia would also relocate its CIQ facilities from Tanjong Pagar to the WTCP, enabling an integrated border crossing facility between Malaysia and Singapore.
3.4 Land Reclamation Issue. Two recent reclamation works carried out by Singapore at Tuas (since 2001) and in the waters adjacent to Pulau Tekong in the Straits of Johor (since 1991). Malaysia merely argued that the reclamation works would affect the environment of the Straits of Johor and on 4 Sep 2003, Malaysia submitted a case to the International Tribunal for the Law of the Sea (ITLOS). In 8 October 2003, the tribunal decided Singapore could continue its land reclamation activities. In April 2005, Malaysian and Singapore governments signed a Settlement Agreement and Malaysia agreed to drop its legal suit against Singapore while Singapore agreed to take some steps to minimise the environmental impact. Singapore has also agreed to pay a lump sum for Malaysian fisherman amounting a total of 374,400 Malaysian Ringgit as compensation for the fishermen who face losses as a result of the reclamation works.
3.5 Central Provident Fund (CPF) Withdrawals. Malaysian employees from the East Malaysian states of Sabah and Sarawak are able to withdraw their CPF saving upon completing their employment contracts in Singapore whereas those from Peninsular are unable to do so under similar circumstances. The current practice allows a peninsular Malaysian to withdrawal his CPF saving in full if he is at least 50 years old, and has left permanently to reside in peninsular Malaysia. However Singapore has adopted a more conciliatory approach to the CPF issue in that permit Peninsular Malaysians to withdraw CPF funds over a two years period, upon achieving an overall package agreement.

3.6 Violating Malaysian Airspace by Republic of Singapore Air Force (RSAF) Aircraft. Malaysia formally revoked permission for the RSAF to use its airspace in southern Johor On 18 Sep 1998 because of trespassing by RSAF into Malaysia air space. It was due to the rising concerns over alleged airspace intrusions by a neighbour whose military power has expended significantly over the past decade. But this action has caused dissatisfaction of Singapore. Yet, political will and pragmatism on both sides do enable agreements to be made that may minimize so-called sovereignty-sensitive issues.

3.7 Replacement of the Johor Causeway. In year 2000 Malaysia and Singapore agreed to replace the old causeway, which blocks some of Malaysia’s potential customers with high bridge that would allow navigation of the Johor Straits. Malaysia first announced in Sep 2003 its intention to replace its half of the causeway with the new bridge because Singapore has consistently refused to continue negotiation on the project. On 5 Jan 2004, Singapore commented that it did not make sense for Singapore to replace its half of the bridge, as it would cost along revisions to CIQ facilities. On 2 Feb 2004, Malaysia proposed with the new design for the bridge to replace the causeway and in April 2006 Malaysia Prime Minister Dato’ Sri Abdullah Badawi announced that Malaysia would drop the half bridge project altogether.

4.0 REASONS FOR POSITIVE CHANGE IN RELATION
There had been a number of factors that contributed in the positive change in the bitter relationship between the mutually dependent neighbours Malaysia and Singapore. These factors are discussed subsequently.
4.1 Change of Leaderships. The bumpy relationship between Malaysia and Singapore (specially in the last few years of the premiership of Dr Mahathir) finally came to an end once the leadership in both countries underwent a change in 2003-2004. In October 2003 Datuk Seri Abdullah Ahmad Badawi took over as Premier of Malaysia. In November 2003, Singapore’s premier in waiting, Lee Hsein Loong , optimistically said in a interview with Chinese daily Lianhe Zoobao, that: “Mr Abdullah’s appointment as prime minister gives us confidence, as we know him for many years….We know his character, his approach to problems and his attitude towards Singapore.” (A F Presse: 2003)
In August 2004 there was a change in Premiership in Singapore and Lee Hsein Loong took over from Mr. Goh. With that both countries saw new generations of leadership taking over the helm of power. It was argued by many that these new generations were not haunted by stigma of separation of Singapore from Malaysia and therefore having a positive mindset to each other.
4.2 Exchange of High Level Visits. Both the incumbent prime ministers made visiting the other country a priority in their agenda. It was followed by high level visits of ministers, business leaders and delegations on various projects which made the working environment very congenial between officials the countries. In April 2005, Singapore’s President S.R. Nathan made a 3 days state visit to Malaysia, which was first in fourteen years. These visits emanated the goodwill of the leaders in both countries to encourage closer ties and it naturally worked in a positive way.
4.3 Willingness to Solve Matters Amicably. During the last years of Dr Mahathir Malaysia decided to deal with Singapore about the various issues in a package, i.e. all issues at a time or none at all. After 2003 Malaysian Premier during his first visit to Singapore in January 2004, called for more flexibility and proposed that both sides treat issues on their own merits and not as package. Thus he displayed his true intention to solve matters amicably. The Singaporean counterpart also accepted the proposal with good grace and finally the ball started rolling.
4.4 Positive Role of Media. In the troubled days of the relationship between these countries, there were a number of situations when the leaders of both the countries were quoted in the media to have been bashing their counterpart in some public meeting. Dr Mahathir’s ‘skinning the cat…’ term that emerged in Daily Berita Harian can be mentioned as an example. But a change was observed in this situation as soon as Badawi took over office. Starting from the positive coverage of various visits of the state leaders to the positive expectations of the delegation after various meetings, the media kept the diplomatic environment cool between the two countries.
4.5 Convergence of Interest. As soon as the bilateral relationship started improving, there was a huge positive development in the economic sectors specially regarding inflow of FDI from Singapore to Malaysia. In late May 2004, Malaysian Trade minister Rafidah Aziz mentioned that, ‘ Politically there are ups and downs but let’s keep the economic account going’ (A F Presse: 2004). This underscored the importance of economic exchange between the countries. During the first visit of new Singaporean Premier Hsein Loong an agreement was signed to avoid double taxation that promoted trade, investment, financial activities and movement of technical experts across borders. The immediate results were the Government of Singapore Investment Corporation (GIC) acquiring 5.04% share in Proton Holdings, Investment in Bank of about RM 500 million for real state etc. This inflow of liquidity further fostered and stressed the necessity of closer relationship between the countries.
4.6 Confidence Building Measures. After a long frozen relation upto 2003, both Malaysia and Singapore decided to resume the Annual Malaysia- Singapore Games after a break of two years, involving senior administrative officials of the foreign affairs and home affairs ministries of both countries. It was followed by invitatation to Goh and his members of cabinet in Ramadan and Kongsi Raya in the State of Johor. Singapore reciprocated with invitation to Malaysian Cabinet to Sentosa Island where both parties engaged in some golf diplomacies. At the lower levels both countries introduced student exchange program, joint overseas youth exchange program etc to promote people to people relations. These steps were important in clearing the fogs of misunderstanding between the people and the leaders in both the countries.
4.7 Military Cooperation. Malaysia and Singapore has long-standing defence ties which continues to thrive through FPDA. It features annual exercises that allow the five countries to standardize procedures. In June 2004, all countries agreed to expand the scope of FPDA to include anti- terrorism drills. Malaysia and Singapore also continues to exchange military courses as part of defence diplomacy. All these have a positive impact to make the relationship between the countries more warm.

5.0 PROSPECT OF FURTHER CONSOLIDATION OF RELATIONS
The relationship between Malaysia and Singapore that has crossed the impasse it faced in the last years of Dr Mahathir’s premiership, has flourished a lot in the last few years. In fact due to the mutual benefit of both states this relationship has to keep bolstering and there are high prospects of further consolidations of relations. The prospects are discussed in the following paragraphs.
5.1 Solving Bilateral Issues
It is a common fact that neighbouring countries will have bilateral issues but what matters is the willingness of the leaderships to solve the issues respecting each other. In the Leader’s Retreat 2013, both Prime Ministers Najib and Lee Hsien Loong have discussed a wide range of existing and potential areas for cooperation, including the collaboration between Khazanah and Temasek Holdings through joint investments in Singapore and Iskandar Malaysia; the work done by the JMC for Iskandar Malaysia in fostering bilateral co-operation in connectivity, immigration, tourism and the environment; and the good progress made on the Rapid Transit Link between Singapore and Johor Bahru.
The successful implementation of the Points of Agreement on Malayan Railway Land in Singapore in 2010, which had been outstanding for 20 years, was the result of close bilateral cooperation. The amicable way and speed with which KTMB’s land-swap deal was resolved made it clear that the two leaders were willing to discard the historical baggage affecting relations between the two nations. Both Prime Ministers had made it clear that they are representing a new batch of leaders who are willing to discard the siege mentality of their predecessors which had affected bilateral relations between the two countries in the past.
5.2 Economic Prospect
The current leadership in both countries made it a point to send the right signals to the business communities in both private and public sectors. Singapore has continued to be a preferred destination for Malaysian firms to export their products and services, given the factors such as proximity, inter-connectivity, complementary and ease in doing business in each other's country. The same goes for Singapore firms whereby Malaysia has always been top in the list of destinations for them to conduct business with.
5.2.1 Bilateral Trade
Malaysia is one of Singapore's biggest trading partners. Meanwhile Singapore continued to be Malaysia's second largest trading partner after China. Bilateral trade between the two countries was more than S$110 billion in 2008, accounting for over a fifth of total trade within ASEAN, and totaled roughly 39 billion US dollars in the first half of 2010, an increase of 36 percent from the same period in 2009.
5.2.2 Investments
From January to October 2012, a total of 88 projects involving Singapore's participation in the manufacturing sector, were approved with investments of US$585.5 million, creating 10,470 jobs in Malaysia. A lot of Malaysian private companies have invested in Singapore and vice versa, such as Sime Darby, MISC, Berjaya Group, CIMB, AMMB Holdings, OSK Holdings, MCL Land, Parkway, United Overseas Land etc. The close ties between the private sectors of both countries are important in globalizing world as they could collaborate and cooperate to tap opportunities arising from deeper economic integration.
5.2.3 Iskandar Malaysia
The iconic project of Iskandar Malaysia has become an important symbol of the solid bilateral relations between the two countries. Khazanah Nasional Berhad and Temasek Holdings have collaborated to develop two wellness projects in Medini area with a gross development value (GDP) of RM5.2 billion. Iskandar Waterfront Holdings Sdn Bhd, the master developer of parts of Johor Bahru city, and its Singapore partner, CapitaLand Ltd will jointly develop Danga Bay project, worth RM4-5 billion GDP.
5.3 Prospect in Security Cooperation
Cooperation between Malaysia and Singapore in security sectors are thriving in recent days. An example of cooperation between the military agencies is the Eyes in the Sky (EiS), a concept to enhance the security in the Straits of Malacca and Singapore by a combined maritime air patrol together with Indonesia. Both countries also share strong concern over the threat from terrorism. Both agencies had conducted operations to curb Jemaah Islamiyah (JI) activities with a series of arrests including the capture of Mas Selamat Kastari in 2009. This types of cooperations have a prospect of further enhancement in future.
5.4 Tourism
Both countries are key sources of tourism for each other. Singapore residents made over 13 million visits to Malaysia in 2010, up 2.4 per cent from 2009. This constituted 53 per cent of the country’s total tourist arrivals, contributing RM28.4 billion in receipts. More Singaporeans are expected to visit Malaysia in the coming years, especially during Visit Malaysia Year 2013-2014.
5.5 Planned Future Mega Projects
Both countries have planned certain mega projects which are testimony of further cooperative relations in days to come.
5.5.1 High Speed Rail Link (RST)
On February 9, 2013, Prime Minister Lee and Najib had announced plans to develop a high-speed rail link between KL and Singapore. The railway line, which will span approximately 315 km, is expected to boost bilateral trade between the two countries amidst an uncertain global economy.
5.5.2 CIQ Complex & Ferry Terminal, Puteri Harbour
A new customs, immigration and quarantine (CIQ) complex and ferry terminal is currently being completed in Puteri Harbour, in the Iskandar region of Johor, and expected to commence in the first quarter of 2013. Ferry services will be operating between Puteri Harbour and Singapore, representing a third link to Singapore to complement the existing Causeway and Tuas Second Link.
5.5.3 Asia-Pacific Telecommunity Band plan
Both countries have also resolved to expand the 700 MHz digital dividend radio frequencies, in harmonization with the Asia-Pacific Telecommunity band plan, for the deployment of mobile broadband services with the relevant spectrum. Both countries are also working together to persuade other counterparts like Brunei, Thai and Indonesia to have a multi-cooperational set up using facilities of these spectrum.

5.5.4 Energy
Malaysia and Singapore have raised the prospect of sharing electricity during the meeting between Prime Minister Najib and Lee Hsien Long in 2012. While the plan would be a private sector initiative, Singapore is open to importing a portion of its electricity from Malaysia if the terms were right. It will be a mutually benifitting venture for both the neighbours.
6.0 CONCLUSION
The bilateral relationship between Malaysia and Singapore had suffered for a long time due to the bitter memory of separation due to irreconcilable differences. There had been ups and down in the relationship very often and it reached to its lowest ebb in the last few years of Dr Mahathir’s premiership in Malaysia. But then a positive wind of change started blowing after there were leadership changes in Malaysia and Singapore in 2003-2004. Realizing the importance of mutual cooperation in the competitive world, both countries undertook pragmatic steps to bolster their cooperation in all sectors. The intensity of cooperation in various areas as mentioned above has been made possible by foregoing the historical baggage between the two countries in recent years. The currently positive political environment, growing trade figures and investment flows, increasing exchange of visits and strengthening collaboration in various areas, promise a better future outlook in the bilateral relations. Thus, the momentum should be sustained at all cost for the benefit of the two nations.

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