Singapore-Malaysia Relations under Abdullah Badawi 9789812305633

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SingaporeMalaysia Relations Under Abdullah Badawi

The Institute of Southeast Asian Studies (ISEAS) was established as an autonomous organisation in 1968. It is a regional research centre for scholars and other specialists concerned with modern Southeast Asia, particularly the many-faceted issues and challenges of stability and security, economic development, and political and social change. The Institute’s research programmes are Regional Economic Studies (RES, including ASEAN and APEC), Regional Strategic and Political Studies (RSPS), and Regional Social and Cultural Studies (RSCS). ISEAS Publications, an established academic press, has issued more than 1,000 books and journals. It is the largest scholarly publisher of research about Southeast Asia from within the region. ISEAS Publications works with many other academic and trade publishers and distributors to disseminate important research and analyses from and about Southeast Asia to the rest of the world.

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SingaporeMalaysia Relations Under Abdullah Badawi

SAW SWEE-HOCK K. KESAVAPANY

INSTITUTE OF SOUTHEAST ASIAN STUDIES Singapore

First published in Singapore in 2006 by Institute of Southeast Asian Studies 30 Heng Mui Keng Terrace Pasir Panjang Singapore 119614 Internet e-mail: [email protected] World Wide Web: http://bookshop.iseas.edu.sg All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies. This book is published under the Malaysia Study Programme funded by Professor Saw Swee-Hock. © 2006 Institute of Southeast Asian Studies, Singapore The responsibility for facts and opinions in this publication rests exclusively with the authors and their interpretations do not necessarily reflect the views or the policy of the Institute or its supporters. ISEAS Library Cataloguing-in-Publication Data Saw, Swee-Hock, 1931– Singapore-Malaysia relations under Abdullah Badawi / Saw Swee-Hock & K. Kesavapany. 1. Singapore—Foreign relations—Malaysia. 2. Malaysia—Foreign relations—Singapore. I. Kesavapany, K. II. Title DS610.47 M3S27 2006 ISBN 981-230-378-2 Typeset by Superskill Graphics Pte Ltd Printed in Singapore by Seng Lee Press Pte Ltd

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Contents

Preface Foreword by Professor Shamsul A.B. About the Authors

vii ix xiii

Background

xv

1

Resolving Bilateral Issues

1

2

Intensifying Official Visits

15

3

Developing People-to-People Contacts

23

4

Deepening Public Sector Economic Links

29

5

Expanding Private Sector Economic Links

39

6

Renewing Educational and Sporting Events

49

7

Uplifting Future Relations

55

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Contents

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Appendix A: Speeches by Malaysia’s Agong and Singapore’s President, Kuala Lumpur, 11 April 2005

61

Appendix B: Speeches by Singapore’s President and Malaysia’s Agong, Singapore, 23 January 2006

71

Appendix C: Malaysians’ Comments on Singapore-Malaysia Relations

81

Appendix D: Singapore Businessmen’s Comments on Singapore-Malaysia Relations

91

Index

97

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Preface

Ever since Singapore departed suddenly from the Federation of Malaysia on 9 August 1965 to emerge as an independent sovereign state, relations between the two immediate neighbours have not always remained on an even keel, sinking to the worst level during the later period of the Mahathir administration. It was not until Abdullah Badawi assumed the position of Prime Minister on 30 October 2003 that the strained bilateral ties began to take a clear turn for the better. The purpose of this book, a project undertaken under ISEAS Malaysia Study Programme, is to document the series of important events that have taken place in the last twenty-eight months which have contributed to the warmer relations presently enjoyed by the two countries. Building good neighbourliness, viewed in a wider context, among two or more members of ASEAN will help to hasten the process of economic integration in bringing peace and prosperity to the 550 million population in the region. The book has been structured in such a manner as to incorporate eight chapters dealing with background, bilateral ties, official visits, people-to-people contacts, public sector economic ties, private sector economic ties, educational and sporting events, and future relations. To add an extra dimension to the book, we have decided to include four

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appendices, with the first two containing the speeches by the Yang diPertuan Agong of Malaysia and the President of Singapore on the occasion of their state visit to each other’s country and the other two containing the comments of some personalities from the two countries on the current status of bilateral ties. These comments reflect the new climate of bilateral relations. We hope the book will interest readers who seek a closer understanding of the marked improvement in friendly relations between Singapore and Malaysia under Prime Minister Abdullah Badawi. We would like to thank Professor Shamsul Amri Baharuddin, Director, Institute of the Malay World and Civilization, Universiti Kebangsaan, Malaysia, for contributing the Foreword and the other Malaysian personalities for sharing their thoughts on bilateral ties included in Appendix C. At ISEAS, our thanks go to Ms Ng Boon Yian, Research Associate, for assisting in the preparation of the manuscript and Mrs Triena Ong, Managing Editor of the Publications Unit, for overseeing the publication of the book. Any opinions and shortcomings in the book are entirely ours.

Saw Swee-Hock and K. Kesavapany March 2006

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Foreword

When ISEAS was established in 1968, it was only three years after the separation of Malaysia and Singapore. It was to be expected that the relationship between the two countries at that stage was not at its best. There was much unhappiness in the air on both sides of the Causeway, not only at the level of government-to-government (G to G) but also at the people-to-people (P to P) relations. It was not really about ‘love lost’ between the two countries but ‘lost for words,’ so to speak, in their attempts to reinvent their deep historical ties in a redefined political scenario. In Malaysia, the height of this unsettling unhappiness about Malaysia-Singapore relations was articulated publicly during the political campaign leading to the 1969 general elections. We all now know what happened on 13 May 1969 in Kuala Lumpur. The ethnic riot was a dark episode in Malaysia’s history, one that all Malaysians wish to forget and still trying to, as the Malay saying goes “luka hilang, parut tetap ada” (lit. “the wound is gone but the scar remains”). Since then, Malaysia has been conducting a serious exercise of solidarity-making amongst its people of different ethnic groups, through the creation of numerous top-down policies, some popular and others not. During the launching of the 9th Malaysia Plan, recently, the Prime

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Foreword

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Minister, Abdullah Ahmad Badawi, re-emphasized the fact that Malaysia’s ‘national mission’ remains ‘national unity.’ Singapore, on the other hand, since 1965, has been involved in a mega ‘modernization project,’ both in terms of economic development and nation-building. Nothing, indeed nobody, was spared in its effort to achieve that goal. By world history standards, Singapore achieved its ambition in super quick time, but not without its cost. Therefore, in the last 40 years, Malaysia-Singapore relations have been defined very much by the different trajectories of the modernization paths that each has chosen and taken. At times, Malaysia and Singapore have been fierce competitors. In other situations, they have been close allies. However much both have wanted to be different, the historicalstructural umbilical cord that binds them has never been severed, especially at the P-to-P relations. Indeed, whatever happens in the G-to-G relations, conflicting or consensual, it is the P-to-P relations that has become the stabilizing factor, rich in goodwill guided by a deep sense of sensitivities and sensibilities. For two decades, especially, during the Mahathir regime, the G-toG relations between Malaysia and Singapore were bereft of the kind of sensitivities and sensibilities that informed the P-to-P relations. Indeed, they were times during this period that even the latter was threatened. What Abdullah Badawi has done in the last two years, since becoming the Prime Minister of Malaysia, is to revive and inject the G-to-G relations between Malaysia and Singapore with a heavy dose of sensitivities and sensibilities, which, in turn, has had an immediate spillover effect in the enhancement of the P-to-P relations. Nonetheless, the impact of the two decades of the G-to-G tense and difficult relations remains. Many are yet to be resolved. Abdullah Badawi, himself a former Minister for Foreign Affairs, knows, more than any other in his present Cabinet, what it means to live peacefully and harmoniously with the immediate neighbour. Sometimes the neighbour is more important than one’s own kin who lives faraway. What everybody forgets in this whole episode of ups and downs in the Malaysia-Singapore relation, since 1965, is the quiet role that ISEAS has played in maintaining an intellectual and academic sanity,

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consistent and reasoned, when the stage was full of unscripted dramas of unknown storylines. Arguably, ISEAS is the single largest publisher in the world of publications in English on Malaysia, outside Malaysia. If the Singapore’s Straits Times has been the keen observer and narrator of what happened in contemporary Malaysia, ISEAS has been the analyser par excellence on Malaysia and Malaysia-Singapore relations. The present volume Singapore-Malaysia Relations: Under Abdullah Badawi is a concrete testimony of that. It narrates and analyses the present positive but not unproblematic bilateral relations enjoyed by both countries, with Abdullah Badawi playing the major role from the Malaysian side. What the future holds in Malaysia-Singapore relations only time will tell. However, some ideas of where it is going is outlined in this volume. This is a must-have reference for those who wish to improve their analyses on the bilateral relations beyond rumours, teh tarik and kopi tiam talks.

Professor Shamsul A.B. Director Institute of the Malay World & Civilization (ATMA) and Institute of Occidental Studies (IKON) Universiti Kebangsaan Malaysia

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About the Authors Saw Swee-Hock is Professorial Fellow and Adviser to the Malaysia Study Programme at the Institute of Southeast Asian Studies, Singapore. He received his Ph.D. in Statistics from the London School of Economics. He was formerly Senior Lecturer in Statistics at the University of Malaya, Kuala Lumpur, and founding Professor of Statistics at the University of Hong Kong and the National University of Singapore. He is currently Council Member of the National University of Singapore and a recipient of its Distinguished Alumni Service Award. Among his major publications are A Guide to Conducting Surveys; Malayan Economic Statistics; Changing Labour Force of Malaysia; The Population of Peninsular Malaysia; The Population of Singapore; Population Policies and Programmes in Singapore; Investment Management; ASEAN Economies in Transition (editor); ASEANChina Relations: Realities and Prospects (co-editor), and Malaysia: Recent Trends and Challenges (co-editor). K. Kesavapany is Director of the Institute of Southeast Asian Studies, Singapore. He received his M.A. in Area Studies from the School of Oriental and African Studies. He was Singapore’s High Commissioner to Malaysia from 1997 to 2002. He also served as Singapore’s Permanent Representative to the UN in Geneva and was concurrently accredited as Ambassador to Italy and Turkey. He was elected as the first Chairman of the General Council of the WTO when it was established in January 1995. He led the Singapore team in the Korea-Singapore Free Trade Agreement (FTA) negotiations. Mr. Kesavapany was awarded the Singapore Government Public Administration Medal (Gold) and the Long Service Medal. He was awarded Order of the Independence (First Class) by the Hasshemite Kingdom of Jordan and the Chilean Presidential Medal of the Centennial of Pablo Neruda in July 2004. He is currently Singapore’s Non-Resident Ambassador to the Hasshemite Kingdom of Jordan. He is co-editor of Malaysia: Recent Trends and Challenges.

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Background

xv

Background

Since Singapore left Malaysia to become an independent country some forty years ago, bilateral relations between the two neighbours, bound by centuries of historical and economic ties, have undergone many stages of ups and downs. The period stretching from 1997 to 2002 under the Mahathir administration was by far the most stressful in the short history of relations between Singapore and Malaysia, with a number of issues reaching confrontational level and thus rendering them more difficult to resolve. Many old questions were resurrected, such as the return of Central Provident Funds (CPF) contributions to West Malaysian workers previously employed in Singapore, railway land and the Tanjong Pagar railway station, pricing of water supplies from Malaysia to Singapore, Singapore airforce access to Malaysian airspace, a new bridge to replace the existing Causeway, the Pedra Branca dispute and land reclamation by Singapore near the Malaysian border. The failure to resolve the issues despite many rounds of negotiations has caused some confusion and concern among governments and the general public about the bitter exchanges between the top officials of both countries. Foreign investors began to question the wisdom of investing in an area that appeared increasingly volatile.

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What was of greater concern was that the acrimony had generated unhealthy trends emerging at the people-to-people level. For example, the Singapore contingent to the Southeast Asia (SEA) Games in Kuala Lumpur in 2001 was booed during the march-past. Taking the cue from the leadership, officials began to curtail all sorts of contacts, including the Civil Services and Foreign Ministries games. Among the few that survived was the annual University of Malaya-National University of Singapore (UM-NUS) golf tournament, due in part to the UM Chancellor Sultan Azlan Shah, the true statesman that he is, insisting that the tournament must not be held hostage to the vagaries of political fortune. With the level of acrimonious exchanges growing day by day and the realization that the resolution of the issues of contention would not be forthcoming as long as Mahathir remained in office, Singapore decided to sit things out.1 The impasse came to an end with Datuk Seri Abdullah Badawi becoming the Prime Minister of Malaysia on 30 October 2003. In fact, as Deputy Prime Minister, he had visited Singapore in February 2001 and had talks with Singapore leaders on some outstanding issues, saying “just trying to move forward and trying to resolve whatever remains to be resolved”. To some extent, this helped to break the spiral of bad relations between the two countries. The Singapore leadership under Prime Minister Goh Chok Tong and his successor-to-be, Deputy Prime Minister Lee Hsien Loong, responded positively. These friendly gestures helped to remove some of the animus that had crept into the relationship and a state of normalcy returned. Since Badawi became Prime Minister, there have been enhanced contacts and cooperation between the governments and peoples of the two countries. The rapprochement between the two countries should also be viewed against the background of changing local and international developments. These include the rise of religious extremism, the spread of international terrorism and the threat of epidemics such as Severe Acute Respiratory Syndrome (SARS) and the avian influenza. These common cross-border problems brought home to the leadership of both countries the necessity and wisdom of maintaining good relations. The move towards greater contacts and cooperation was also dictated by globalisation and the rise of China and India as well as the slowdown

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in the flows of foreign investment to both countries. Together with the other ASEAN countries, Singapore and Malaysia are moving towards the creation of an integrated ASEAN community. The traditional linkages between the economies of Singapore and Malaysia can be examined in terms of trade and investments across the border. Malaysia has remained the top trading partner of Singapore, with total trade valued at S$88.3 billion or 15 per cent of the latter’s trade with the world in 2004. In that year, the values of exports to Malaysia amounted to S$46.1 billion, while the value of imports was S$42.2 billion.2 These two figures represent a healthy growth of 16 per cent and 12 per cent respectively as compared with 2003. As for crossborder investments, some 162 projects with a value of RM1.5 billion in Malaysia were from Singapore investors. Singapore is consistently ranked among the top three sources of foreign direct investment in Malaysia.3 During the first five months of 2005, Singaporeans were in fact the biggest foreign investors in the manufacturing sector of Malaysia. Out of a total of RM3 billion projects committed by foreigners, some RM1.7 billion or 57 per cent was from Singapore businessmen.4 NOTES 1. K. Kesavapany, “Chapter 12: A Promising Start in Malaysia-Singapore Relations”, in Malaysia: Recent Trends and Challenges, edited by Saw Swee-Hock and K. Kesavapany (Singapore: Institute of Southeast Asian Studies, 2006). 2. Toh Mun Heng, “Singapore-Malaysia: Cross-Border Business Opportunities and Prospects”, Paper presented to the Roundtable on Singapore-Malaysia Relations: Mending Fences and Making Good Neighbours, Institute of Southeast Asian Studies, Singapore, 30 November 2005. 3. Cassey Lee, “Economic and Business Ties between Malaysia and Singapore: Current States and the Way Forward”, Paper presented to the Roundtable on Singapore-Malaysia Relations: Mending Fences and Making Good Neighbours. Institute of Southeast Asian Studies, Singapore, 30 November 2005. 4. “S’poreans Top Foreign Investors in Malaysian Production”, Straits Times, 5 July 2005.

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Resolving Bilateral Issues

1

1

Resolving Bilateral Issues

Ever since Separation in 1965, both governments had made serious efforts to resolve a number of issues. In 1988, the then two Prime Ministers Mr Lee Kuan Yew and Dr Mahathir Mohamad agreed to have all the outstanding issues resolved as a package. A Memorandum of Understanding (MOU) was signed between the countries on four issues: water, gas, a ferry service and a new bridge on 28 June 1988.1 Subsequently, a water and gas pact was signed between Singapore and Malaysia on 24 November 1990. In 1990, a Points of Agreement (POA) on railway land and the Customs, Immigration and Quarantine (CIQ) was also concluded. Among these were the status of the railway land and the CIQ Office in Tanjong Pagar and the Central Provident Funds (CPF). Over time, other issues were also hoisted on to the list. However, several attempts to clear the deck and put the bilateral relationship on an even keel came to naught. Difficulties over the negotiations of the package and the Malaysian government’s inaction over the POA led to an impasse. Against the background of the financial crisis which hit the region in 1997, a fresh attempt was made to work on the package of issues which saw financial assistance to Malaysia and the sale of water to Singapore on a very long-term basis being included as additional

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elements. The failure to agree on the terms for the financial assistance led to a discontinuation of the negotiations on the issue. For water and other outstanding issues, several attempts were made to find a comprehensive solution, including two visits to Kuala Lumpur in 2000 and 2001 by then Senior Minister Lee Kuan Yew. In a letter to SM Lee dated 21 February 2001, the Prime Minister of Malaysia, Dr Mahathir Mohamad, offered to sell raw water to Singapore at a “fair price” of 60 cents per mgd in return for concessions on other elements of the package. Responding to the offer, and in a letter dated 23 April 2001, SM Lee said that although there were some elements to be resolved on the water issue, if there was “give and take on both sides, an agreement is possible”. In this spirit, SM Lee undertook his second visit to Kuala Lumpur in September 2001. The outcome of the visit, as recorded in a Singapore government publication, was as follows: On September 4, 2001, Senior Minister Lee Kuan Yew went to Kuala Lumpur to meet Malaysian Prime Minister Mahathir Mohamad. They reached a skeletal agreement on a range of issues. Singapore agrees to pay more for raw water under the current agreements, to Malaysia’s idea for a new bridge to replace the Causeway, and to the relocation of the KTM railway station from Tanjong Pagar to Kranji. In return, Malaysia agrees to supply Singapore with water after the 1962 Water Agreement expires in 2061 and to allow the Republic’s airforce to use its airspace.2

While the negotiations were in progress, the Malaysian government, inexplicably, raised the asking price to RM3 per thousand gallons, making it 100 times more than the existing price of raw water.3 This amount was subsequently raised to RM6.25. Such arbitrary increases made it difficult for common ground to be reached and led to a stalemate in the negotiations. In his interpretation of the outcome of that meeting, Dr Mahathir said in a letter to SM Lee dated 18 October 2001: I have mentioned at the press conference that the officials would need to work out the details. I was not prepared to look into the practical details of all the issues. However, I could go along with most of the items that we have discussed. I believe that it is only when the details have been worked out, I would be able to obtain the whole package deal in its entirety.4

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In the meantime, efforts by Singapore to increase its local supply of water began to bear fruit. Besides water imported from Malaysia, it moved towards self-sufficiency in its water requirements by obtaining water from the process of desalination, Newater from sewage waste water, and enlarging supply from increased reservoir capacity such as the future Marina Barrage at the mouth of the Singapore River. These measures, known as the Four National Taps strategy, have led to the water issue, which had hitherto been a flashpoint in the bilateral relationship, being relegated to the background.5 Future talks on this issue are expected to be on the basis of a “willing seller, willing buyer”. Singapore has indicated that it would not seek a renewal of the 1961 Water Agreement when it expires in 2010. Thereafter, the 1962 Water Agreement will continue to be in force until 2061. One of the contentious issues that was amicably resolved was the allegation by Malaysia in 2002 that Singapore had encroached into Malaysian waters in the northeast when it had undertaken reclamation work. Singapore had maintained that it was within its right to undertake such work in its own territorial waters. To defuse the build-up of tension, both sides agreed to refer the issue to the International Law of the Sea Tribunal in Hamburg. In January 2005, an independent group of experts formed on the order of the Tribunal reached a decision on the matter. The decision which, inter alia, allows Singapore to carry on with reclamation works while cooperating with Malaysia to ensure navigational safety and environmental protection, was accepted by both governments.6 The joint statement issued on that occasion revealed a decided consciousness to resolve problems in an atmosphere of goodwill. An excerpt from the statement reads as follows: The positive outcome of the meeting between Malaysia and Singapore delegations reflects the goodwill and cooperation which exist between them and their respective governments. This augurs well for the further strengthening of good relations between the two friendly and close neighbours.7

An agreement on the land reclamation issue was signed on 26 April 2005, with the Foreign Ministers of both countries, George Yeo and Syed Hamid Albar, present.8 Both were optimistic about bilateral relations in the future. George Yeo said that the civil manner in which

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both governments had been able to settle the dispute gave them confidence that other bilateral issues could be settled the same way. Echoing his counterpart’s sentiments, Syed Hamid said that he was very delighted that the two countries had been able to reach an amicable solution. In Malaysia, the New Straits Times editorial remarked in April 2005 that “the level-headed manner in which officials of the two countries had [sealed] the deal suggested the value of doing the hard bargaining out of the harsh glare of publicity” and “such discussions were held without feelings running high and as such it was easier to mend fences and reach acceptable compromises”.9 There is hope that the dispute concerning Pedra Branca, a small islet claimed by both countries, can also be resolved in a similar amicable manner. The two parties had agreed to submit the matter to the International Court of Justice in the Hague, with the assurance, given in advance, that they would abide by its ruling. This joint course of action was aimed at defusing the tensions that were gathering momentum and which could have led to an unpleasant standoff. When the judgment of the court is made in due course, yet another contentious issue would have been resolved. However, a new issue emerged in 2001 to roil the waters, with Malaysia indicating that it wanted the Causeway demolished and replaced by a bridge. Among the reasons cited were that the bridge was essential for environmental protection and for the movement of ships along the Straits. On its part, Singapore felt that there was no real need for the replacement of the Causeway with a bridge and that the high cost of construction (S$500 million for the Singapore component10) was not justifiable. However, it was prepared to negotiate the matter if the bridge issue was included as part of the package of bilateral issues under discussion.11 Irked by the impasse over the issue, PM Mahathir announced in 2003 that Malaysia would proceed to build a “crooked bridge”, which would connect with the Causeway. In fact, in the closing days of his term in office, Dr Mahathir jokingly asked if the bridge could be completed before his retirement: “I want to open the bridge myself. Can you all complete it by October?”.12 The Mahathir government’s proposal to demolish the Causeway and have it replaced by a bridge did not find resonance in some quarters

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within Malaysia. Dr Mahathir’s announcement of the “crooked bridge” was met with even more consternation. In early 2005, Shahrir Samad, Johore MP and Chairman of the Backbenchers Club, went so far as to suggest that Malaysia should shelve the whole idea of a replacement bridge for the Causeway and terminate the Malaysia Railway service in Johore Bahru (Malaysia) instead of in Tanjong Pagar (Singapore). According to him, such a move would generate an atmosphere conducive to negotiations, strengthen Malaysia’s bargaining position on other issues, and free valuable resources for improving Johore Bahru’s infrastructure. Shahrir’s suggestion was shot down immediately by Malaysia’s Foreign Minister Syed Hamid Albar, also a Johorean, who stated that the issue of the new bridge needed to be resolved quickly since the CIQ Complex was expected to be ready in 2005 and a delay in the bridge construction would increase the cost of the project.13 Subsequently, two Johore parliamentarians, Wee Ka Siong (MP, Ayer Hitam and Secretary General of MCA Youth) and Boo Cheng Hau (Opposition Socialist Youth DAP Chief ), stated in June 2005 that instead of a crooked bridge, a straight bridge should be constructed with the agreement of Singapore.14 With the change of administrations in Malaysia in October 2003, hope was rekindled for a fresh start to the negotiations to resolve the outstanding bilateral problems, with the bridge issue being at the top of the agenda. On 13 December 2004, Senior Minister Goh Chok Tong, who had been appointed by Prime Minister Lee Hsien Loong as Singapore’s representative to resolve bilateral issues with Malaysia, flew to Kuala Lumpur to meet with PM Abdullah Badawi. Both agreed that future discussions would be based on two principles. The first was to consider mutual benefits when coming up with proposals, and the second was not to let unresolved issues hold back cooperation in other areas. Abdullah said that Malaysia would consider allowing RSAF planes to resume flying through Malaysian airspace. Goh replied that if this could be done, Singapore would consider allowing Malaysian workers to withdraw their CPF savings before they turned 55. Malaysia also restated its proposal on the replacement of the Causeway with a straight bridge.15 However, Abdullah’s comment on RSAF planes resuming entry into Malaysian airspace created a furore among some parties in Malaysia,

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and in particular with UMNO politicians in Johore. They insisted on being consulted on this and other matters that concerned the state of Johore. The head of Johore Bahru UMNO Youth, Khaled Mohamed, underscored this by stating, in categorical terms, in October 2005, that the proposal from Singapore to use Johore airspace for air exercises should not be acceded to.16 Since Johore is generally acknowledged as the bastion of UMNO delivering a large share of Parliamentary and State seats, the Abdullah government had to pay heed to these concerns. Notwithstanding the sentiments expressed by Johore politicians and others, the two governments proceeded with the negotiations to find a solution to the bridge issue. On 1 March 2005, Goh Chok Tong, accompanied by Deputy Prime Minister S. Jayakumar again visited Kuala Lumpur. In a departure from the past, both sides agreed to conduct their meetings in a strictly private setting, agreeing that it would not be helpful to publicize the details of the discussions.17 This was also to avoid any heightening of expectations, as had happened in earlier negotiations. The meetings at the ministerial level were followed by negotiations at the level of officials. The issue that took centre stage at these meetings was the construction of a straight bridge mainly because Malaysia, having started construction, was keen to have Singapore’s agreement to proceed with the project. On its part, Singapore restated its position that there should be a balance of benefits. Even though the bilateral negotiations were being conducted away from public view, this did not prevent comments being aired in the media. In December 2005, Mahathir spoke to the press about outstanding bilateral issues and said that he would prefer the Malaysian government to go ahead with its proposal to build a new bridge to replace the Causeway without waiting for Singapore to make a move.18 Syed Hamid Albar, Malaysia’s Foreign Minister, said that the two countries had not reached any conclusion and that for the time being it was better to continue to talk.19 The crooked bridge saga resurfaced in the New Year when the New Straits Times reported on 26 January 2006 that Malaysia would proceed to construct the bridge, from henceforth to be known as the “scenic bridge”, without waiting for Singapore’s decision on whether to build

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the bridge on its side.20 The Minister for Works, Samy Vellu, informed reporters that the government was expected to issue a letter of intent to Gerbang Perdana, the contractor for the project, to proceed with the construction after the Chinese New Year. This was confirmed by Deputy Prime Minister, Najib Razak, who said that negotiations were still taking place and hopefully Singapore could be persuaded to jointly build a full bridge. He added, “There can be a lot of benefits because the ‘scenic bridge’ will facilitate movement of people, goods and services between Malaysia and Singapore … . But we hope that it will be a full bridge. We hope that it will be a testimony of better relations between Malaysia and Singapore.”21 News of the planned go-ahead for the “scenic bridge” took Singapore by surprise since negotiations had yet to be completed. Responding to press queries on 27 January, a spokesman from the Singapore Ministry of Foreign Affairs said, “Singapore is puzzled by the NST report. There is an on-going process in place, agreed to by Singapore and Malaysia, to discuss the bridge and other bilateral issues. We are therefore surprised by the NST report that Malaysia has decided to go ahead with the scenic bridge even before the discussions have been concluded. Singapore will seek clarification from the Malaysian authorities on this matter”.22 On 29 January, Prime Minister Abdullah Badawi said that Malaysia was making the necessary preparations to build the bridge to avoid higher construction costs and to allow “the water along the coastal area in South Johore to flow freely, not blocked by the Causeway”, which was not quite the same as letting the Causeway remain.23 The Singapore Ministry of Foreign Affairs said on 30 January that it had sent a ThirdPerson Note to Kuala Lumpur asking for clarification on the media report about Malaysia’s intention of going ahead to build its half of the bridge without demolishing the Causeway.24 Some light on the puzzle was shed on 3 February when Syed Hamid Albar said that Malaysia would continue its talks with Singapore on plans to build a full bridge to replace the Causeway, but there was no need to negotiate for a half-bridge because “it had every right to do anything within its territory”.25 Singapore had said before that it would agree to Malaysia’s proposal for the new full bridge only if there was a balance of benefits to both sides. In Malaysia there were also some

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differences of opinion as reflected in the comments by Wu Muyen, a Malaysian urban planner, that “building the crooked bridge will put us at a very big disadvantage. Other than economic reasons, it will be difficult for us to explain the illogical structure of the bridge to later generations.”26 Shahrir Samad, who was previously opposed to the halfbridge, now said that Malaysia had to go ahead with the project because Singapore was using the issue as a bargaining point.27 Two other prominent Malaysians, the head of the Senators’ Club in the Malaysian Parliament, Syed Ali Alhabshee, and a member of the Malaysia– Singapore Business Council Committee, Moehamad Izat Emir, also spoke to the press in support of building the bridge.28 When the two Foreign Ministries held their friendly games in Singapore during 4–5 February 2006, a forty-minute informal meeting between the two Foreign Ministers and their officials was held on Saturday, 4 February.29 They confirmed that negotiations on the full bridge, already conducted three times since September last year, would continue and should not go on forever. George Yeo said, “We are urging our officials to crystallize the issues, make progress so that at an appropriate time, they can be surfaced to Prime Minister Pak Lah and Senior Minister Goh Chok Tong for political decisions and trade-offs to be made since the two leaders are leading talks to resolve a range of outstanding issues.”30 As for the half-bridge, George Yeo said that Singapore respected Malaysia’s sovereignty, but would like to be consulted if there were going to be major works affecting the Singapore side. This, he said, was in accordance with the 2003 ruling by the International Tribunal for the Law of the Sea that both parties cooperate in the management of the common marine environment in the Johore Strait.31 George Yeo added that if Malaysia demolished its half of the Causeway after the scenic bridge had been built, “then Singapore would have to study very carefully the legal and environmental implications”.32 Syed Albar expressed his appreciation of Singapore’s respect for Malaysia’s sovereignty, and promised that if Singapore was affected in any way, discussions would be held “when we come to that”.33 The bridge issue, however, took a surprising turn when on 12 April 2006, the Malaysian government announced that it was discontinuing the bridge project. A statement issued by the Prime Minister’s office said:

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The Malaysian government has decided not to continue with the building of a bridge to replace the Causeway. The decision has been made after taking into account the opinions and sentiment of the Malaysian people with regard to the issues of sand supply and airspace. It has also been decided that all discussions concerning the bridge will be stopped.34

The position announced by the Malaysian government was met with surprise on both sides of the Causeway. In Malaysia, it became a domestic issue, with critics of the Abdullah government assailing it for backing down in the face of Singapore’s demands. Leading these criticisms was former Prime Minister Mahathir Mohamad, who accused the government of showing that Malaysia was a “country with no guts”. Five weeks after the decision had been taken, Dr Mahathir continued with his criticisms. In an interview with Malaysiakini.com on 16 May 2006 (published on the site on 23 May), Tun Mahathir said he was disappointed with the decision by Abdullah Badawi’s government to discontinue with the bridge project.35 Mahathir was particularly upset that Malaysia had thought of selling one billion square metres of sand to Singapore over a twenty-year period, and opening up the airspace. In an interview with Malaysiakini, Mahathir said that: Malaysia offered, at 50 million square metres a year for 20 years. That will make Singapore one-and-a-half times its present size. It will be suitable for a population of, maybe, 10 million.36

When it was pointed out that sand had also been sold previously to Singapore during his tenure in office, Mahathir said that it was only a small amount, and it was done privately. However, he had stopped this when Singapore was not cooperative in solving other outstanding bilateral issues.37 A senior UMNO politician from Johore, Senator Dr Mohd Puad Zarkashi, clarified that the State had asked for the bridge to be scrapped were untrue. He maintained that, “We never said ‘no’ to the bridge. What we opposed was the sale of sand and giving Singapore access to our airspace”.38 The Malaysian Cabinet stood by its decision and, as Foreign Affairs Minister Syed Hamid Albar put it, “the former Prime Minister has the right to disagree [but] the government has taken this action in the interest of the Malaysian people and for the benefit of the country”.39 As

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Prime Minister Abdullah put it, “If we proceed with the project, it will upset the people and turn the project into an endless issue”.40 Ambassador-at-large and former secretary-general who led Malaysia’s negotiating team, Tan Sri Ahmad Fuzi Razak, subsequently refuted former Prime Minister Tun Mahathir’s contention that Singapore had agreed in 2002 to the replacement of the Causeway with a new bridge. First, Singapore’s position was that the new bridge was to be discussed as part of a package, where there would be a balance of benefits for both sides (Singapore would agree to the construction of a straight bridge only if Malaysia sells sand and allows Singapore to use Malaysian airspace). Second, Tan Sri Ahmad Fuzi also said that the law was also not in the favour of Malaysia with the unilateral construction of the scenic halfbridge, with legal disputes likely to ensue if the present Causeway was demolished in terms of the relocation of water pipelines. There was the possibility of Singapore legally reclaiming the land used by the Malaysian railway, should railway services be disrupted for six months.41 Johore Mentri Besar, Datuk Abdul Ghani, said that Johore accepted the Federal Government’s decision, although it was unexpected. The Mentri Besar, however, felt that the decision would not hamper development plans in southern Johore.42 On its part, although surprised by the turn of events, the Singapore government accepted the action taken by Malaysia. As Foreign Minister George Yeo put it, “We respect this decision of the Malaysian government”.43 In a curious sense, the decision not to proceed with the bridge construction was a “win-win” situation for both sides. To have continued with the project on the basis of selling sand and reopening airspace would have meant endless problems for Abdullah Badawi, particularly with his political domestic, mainly UMNO, base. To have gone ahead with unilateral construction of the bridge, would also have meant endless headaches, this time with Singapore. With his focus of the implementation on the Ninth Malaysian Plan, Abdullah Badawi must have felt that he could do without the distractions caused by the bridge proposal. As for Singapore, which had not been keen on the replacement of the Causeway with a bridge right from the start, the Malaysian government’s decision was received with a feeling of equanimity.

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Both governments, however, took pains to stress that Malaysia’s decision to discontinue with the bridge project would have no adverse effect on bilateral relations. George Yeo said that, “Our bilateral relations will continue to be very good. There are so many areas we are cooperating and I have a very good working relationship with Syed Hamid Albar”.44 Underscoring the comments of the two Ministers, Malaysian High Commissioner to Singapore, Dato N. Parameswaran said, “The decision to abort the bridge is not a blow to bilateral relations. Malaysia– Singapore relations are based on strong fundamentals. The decision, although unfortunate, will not affect bilateral relations. It will not put a halt to bilateral talks on other outstanding issues”.45 Notwithstanding these diplomatic protestations of friendship, it remains to be seen whether nationalistic sentiments can be sufficiently toned down to allow the outstanding bilateral issues to be resolved in a rational manner, with benefits accruing to both countries. The general consensus of several observers, on both sides of the Causeway, is that discussion on the other outstanding bilateral issue will possibly not move for the next few months and that bilateral relations would have to be sustained by developments in other areas. NOTES 1. Cheong Yip Seng and Ismail Kassim, “Memorandum of Understanding to Be Signed Today”, Straits Times, 28 June 1988. 2. Water Talks? If Only It Could (Singapore: Ministry of Information, Communications and the Arts, 2003), p. 21. 3. Lee Poh Onn, “The Water Issue Between Singapore and Malaysia: No Solution in Sight”, ISEAS Working Papers on Economics and Finance No. 1 (Singapore: Institute of Southeast Asian Studies, 2003). 4. Water Talks? If Only it Could, p. 30. 5. Lydia Lim, “Four Big Taps will Keep Water Flowing”, Straits Times, 23 May 2002. 6. “Singapore, Malaysia Welcome New Era of Warm Ties After Landmark Agreement”, Agence France Presse, 26 April 2005. 7. “Malaysia and Singapore Settle Reclamation Row”, Dredging News Online, Issue #149, 28 January 2005. 8. “Reclamation Dispute: Final Judgment In”, Straits Times, 2 September 2005. 9. “Reclaiming Warmer Ties”, New Straits Times, 26 April 2005.

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10. Later revisions put this figure at S$725 million. See “KL Issues Causeway Statement”, Straits Times, 26 April 2006. 11. “Causeway Bridge: No Economic Agenda”, Straits Times, 23 August 2003. 12. Ibid. 13. Lydia Lim, “SM Goh in Talks with Abdullah”, Straits Times, 1 March 2005. 14. “MPs: Don’t Rush Into Building Crooked Bridge”, Straits Times, 11 June 2005. 15. Lydia Lim, “SM Goh in Talks with Abdullah”. 16. Carolyn Hong, “JB Opposes Opening Up Airspace to S’pore”, Straits Times, 26 October 2005. 17. “Progress Made in Singapore-KL Talks”, Straits Times, 2 March 2005 and Chuang Peck Ming, “S’pore, KL Make Progress in Talks on Bilateral Issues”, Business Times, 2 March 2005. 18. S. Jayasankaran, “Pity if Dr M. Doesn’t Stay Hands-Off Elder Statesman”, Business Times, 12 November 2005 and “Build Bridge Without S’pore, Says Mahathir”, Sunday Times, 11 December 2005. 19. Carolyn Hong, “Talks on Full Bridge Still On Syed Hamid”, Straits Times, 4 January 2006, and Lydia Lim and Lynn Lee, “S’pore, KL Committed to Talks on Full Bridge”, Sunday Times, 5 February 2006. 20. Ravi Nambiar, “It’s On: Work Begins Next Week”, New Straits Times, 26 January 2006 and Reme Ahmad, “KL to Go Ahead with Plans to Build Its Half of the Bridge”, Straits Times, 27 January 2006. 21. Jason Gerald and Mimi Syed Yusof, “Yes, Bridge Will Be Built”, New Straits Times, 27 January 2006 and “Half-Bridge Still of Benefit: Minister”, Business Times, 28–29 January 2006. 22. Reme Ahmad, op. cit. 23. “Singapore Aware of Reasons for Bridge”, New Straits Times, 31 January 2006. 24. Uma Shankari, “S’pore Seeks KL’s Clarification on Bridge Reports”, Business Times, 31 January 2006. 25. Carolyn Hong, “Talks on Full Bridge Still On Syed Hamid”, op. cit. 26. “Malaysia to Blame for Bridge Predicament, Says KL Urban Planner”, Straits Times, 29 January 2006. 27. “Scenic Bridge Go Ahead: Singapore Asks KL to Clarify”, Straits Times, 31 January 2006. 28. “New Bridge ‘Will Benefit S’pore and Malaysia’ ”, Straits Times, 5 January 2006. 29. Lydia Lim and Lynn Lee, “S’pore, KL Committed to Talks on Full Bridge”, Sunday Times, 5 February 2006.

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30. Ibid. 31. Ibid. 32. Ibid. 33. Sharon Vasoo, “Game for Discussion”, Today, 6 February 2006 and Peh Shing Huei, “Bridge Issues Narrowed Down to Those That Can ‘Take Off ’: Syed Hamid”, Straits Times, 6 February 2006. 34. S. Jayasankaran, “Malaysia Scraps Plan for Causeway Bridge”, Business Times, 13 April 2006. 35. “Q&A: I’m Disappointed, Says Mahathir”, Malaysiakini.com, 23 May 2006. Retrieved on 24 May 2006. 36. Ibid. 37. Ibid. 38. “Not a Blow to Bilateral Ties”, New Straits Times, 14 April 2006. 39. “M’sian FM: “Mahathir Should Accept Govt’s Decision to Scrap Bridge”, Straits Times, 28 April 2006. 40. “PM Says Decision on Bridge Due to Legal Implication”, Bernama.com, 12 April 2006. 41. “KL Issues Causeway Statement”, Straits Times, 26 April 2006. 42. “Johor Accepts Bridge Decision”, The Star, 13 April 2006. 43. “Singapore’s View”, Straits Times, 14 April 2006. 44. Ibid. 45. “Not a Blow to Bilateral Ties”, New Straits Times, 14 April 2006.

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2

Intensifying Official Visits

On becoming Prime Minister, Abdullah Badawi made a visit to Singapore in October 2003 as part of the overall courtesy visits to neighbouring countries in the ASEAN region. Abdullah put forth his view on how bilateral ties could be improved. He said, “We can make things move forward by getting some things resolved rather than [putting] everything […] in that one package and nothing [gets] resolved…so we have to pluck some low-hanging fruits before the musang (civet cat) comes and takes them away”.1 Both PM Goh Chok Tong and DPM Lee Hsien Loong went along with Abdullah’s approach and the negotiation process was back on track. When Lee Hsien Loong became Prime Minister, he also made the customary courtesy visit to Malaysia in October 2004. The visits exchanged at the Prime Ministerial level were soon followed by a series of visits by other leaders of both countries. As mentioned earlier, in his capacity as Senior Minister, two visits to Kuala Lumpur were made by Goh Chok Tong in December 2004 and March 2005 to have talks with Abdullah on outstanding issues. The Human Resources Minister of Malaysia, Fong Chan Onn, made an official visit to Singapore in August 2004 to meet with his Singapore counterpart, Ng Eng Hen. His visit was aimed at sharing views and building ties. They discussed labour issues affecting both

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countries, particularly the reliance on foreign labour.2 He mentioned that Malaysia would like to cap the foreign working population at the current level of about 10 per cent of its total workforce, adding that his staff would study how Singapore managed the foreign labour issues. The Education Minister of Malaysia, Hishamuddin Hussein Onn, visited Singapore on 13 December 2004 to attend the SingaporeMalaysia forum and, more importantly, to meet with his Singapore counterpart, Tharman Shanmugaratnam. The outcome of their talks was the establishment of a programme to bring students from secondary school level and upward to engage in joint activities. Schools from the two countries would pair themselves and initiate joint activities outside the classroom, in areas ranging from adventure camps to information technology. The following day saw the Singapore Minister for Information, Communication and the Arts, Lee Boon Yang, visiting Kuala Lumpur to have talks with Abdul Kadir Shaikh Fadzir, the Malaysian Minister for Information. One immediate outcome of the discussion was the agreement to re-start joint television productions after a hiatus of seven years. The implementation of these two schemes will be discussed in latter sections. The five-day visit by President S. R. Nathan and Mrs Nathan to Kuala Lumpur commencing 11 April 2005 brought the level of the bilateral relationship to a higher plane. The occasion for the second such Presidential visit after Wee Kim Wee’s visit during 19–22 November 1991 called for the red carpet to be rolled out. Remarking on the attention to great detail in the programme for the visit, President Nathan stated that this signified Malaysia’s close relationship with Singapore. He said that close ties between the two neighbours were more crucial than ever as both sides were facing common challenges and concerns in an increasingly globalised world: “The global landscape is very different from what it was a decade ago….Today, concerns about terrorism and economic competitiveness bind us closer together.”3 (See Appendix A). He commented that despite the tests and strains between the two countries over the years, they have continued to maintain a healthy relationship. While conscious of disagreements, both parties have not been distracted from the common challenges confronting them. However, he did observe that there was still room for greater cooperation.

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On receiving the President, the Yang di-Pertuan Agong depicted the bilateral relationship as “bagaikan aur dengan tebing” (like the bamboo grove and the river bank) and “neither would survive without the other and neither would gain if the other weakens or perishes” (see Appendix A). This was in sharp contrast to the imagery used during the Mahathir era when Singapore was expected to behave like an “adik” (younger brother) to Malaysia’s “abang” (older brother). Sultan Azlan Shah, the Sultan of Perak and Chancellor of the University of Malaya, also received President Nathan who is the Chancellor of the National University of Singapore. Both universities trace their roots to the founding of the King Edward VII College of Medicine in 1905 and the programme for joint research and visits by students and staff from the two universities. Another significant point to note is that President Nathan ended his Malaysian programme with a two-day stay in Sarawak, the first for a President from Singapore. The Presidential visit was soon followed by Minister Mentor Lee Kuan Yew’s four-day visit to Malaysia ending on 28 April 2005, the latest and stringent indicator of a perceptible improvement in bilateral relations. Staying clear of outstanding bilateral issues, which are handled by Goh Chok Tong, Lee focused on the enhancement of bilateral interaction at the public level. His confidence in the direction the two countries were heading and the maturity in bilateral relations encouraged him to propose a limited circulation on both sides of the Causeway, after some 30-year ban, of each other’s newspapers. He also called for the pragmatic approach of moving “slowly and comfortably as both sides feel” and “see each other as we are and not through caricature, nor stereotype”.4 In the month that followed, the Minister for National Development, Mah Bow Tan, visited Kuala Lumpur and Putrajaya from 10 May 2005. His trip was part of an ongoing exchange of visits by ministers from the two countries. He visited new developments in Putrajaya and Cyberjaya to gain some insights into the development and management of the two areas.5 In Kuala Lumpur, he was briefed on its large integrated projects such as the Kuala Lumpur City Centre, Petronas Towers, Times Square and Sentral. He held talks with the Minister for Agriculture and Agro-based Industry Muhyiddin Yasin, Housing and Local Government Minister Ong Ka Ting, and Federal

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Territories Minister Mohamed Isa Abdul Samad. He was accompanied by senior officials from the National Development Ministry, Urban Redevelopment Authority, Housing Board and members of the Government Parliamentary Committee for National Development. A delegation of officials and teachers from Malaysia visited Singapore on 6 July 2005 to study how Singapore educates its dyslexic children.6 The visit was linked to the pilot programme for dyslexic children introduced in Malaysian national schools in the previous year. The delegation was led by Syed Abdullah Syed Kamaruddin, Deputy Director of the Special Education Department in the Ministry of Education. The 50-strong delegation visited the Dyslexic Association of Singapore and toured the Dyslexia Centre in Bukit Merah Council. They also took the opportunity to visit Anderson and Queenstown Primary Schools to observe teachers from the association conduct a remedial programme for dyslexic children. Another visit from a Malaysian minister was that of Rafidah Aziz, Minister for Trade and Industry, who came to Singapore to participate in a seminar on Business Opportunities in Malaysia on 29 August 2005.7 The seminar was attended by civil servants, diplomats and business people. The need for greater economic integration in the region was emphasized by Rafidah, saying that there was vast potential in ASEAN countries, particularly in the services sector. She also stated that companies from both countries could collaborate and cooperate to tap opportunities arising from deeper economic integration.8 Her positive stance towards better economic cooperation between the two countries was another reflection of the improving relations between the two neighbours since Abdullah Badawi took over the leadership of the country. A more recent visit on 3 October 2005 was made by Sri Abdul Aziz Haji Zainal, Malaysia’s Chief of Army. While in Singapore, he held talks with Acting Minister for Defence Ng Eng Hen, Chief of Defence Force, Lieutenant-General Ng Yet Chung and Chief of Army, MajorGeneral Desmond Kuek. He also visited the Basic Military Training Centre on Pulau Tekong.9 For the following month, Ng Yet Chung attended the 72nd anniversary celebration of the Malaysian Armed Forces in Kuala Lumpur, and was conferred the highest military award,

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Darjah Panglima Gagah Angkatan Tentera, at a ceremony held in the Istana Negara. Two special visits, though brief but significant, were made by Singapore leaders towards the end of 2005. The first was on the sad occasion of the death of Abdullah Badawi’s wife, Datin Seri Endon Mahmood, in October 2005. A high-level delegation led by President and Mrs S.R. Nathan, Prime Minister and Mrs Lee Hsien Loong and Senior Minister and Mrs Goh Chok Tong flew to Kuala Lumpur to pay their respects and offer condolences to Abdullah. The importance of this event was highlighted by Channel NewsAsia which telecast the Singapore leaders at the funeral ceremony. The other visit was made by Manpower Minister Ng Eng Hen and Community Development, Youth and Sports Minister Vivian Balakrishnan, together with their wives, to Johore Bahru in late 2005 to have lunch with the Sultan of Johore and his family on the occasion of Hari Raya.10 These visits demonstrate the warm friendship prevailing among the leaders of the two countries. At the end of November 2005, Deputy Prime Minister S. Jayakumar made a two-day visit to Malaysia in his capacity as Coordinating Minister for National Security. In Kuala Lumpur he had discussions with Malaysian Deputy Prime Minister Najib Razak on security matters. Speaking at a joint press conference, Jayakumar emphasized the importance of maintaining close ties, particularly when the two countries faced many new challenges like cross-border crimes, threats from drug smuggling and international terrorism.11 Najib also mentioned that although some measure of success had been achieved in the fight against terrorism, the threat was not over and both countries realized that the effort to combat terrorism was a long-term process. The new year ushered in a historical three-day visit by the Yang diPertuan Agong Tuanku Syed Sirajuddin to Singapore at the invitation of President S. R. Nathan, the first by a Malaysian Head of State since 1988. This visit by the Agong came soon after President Nathan’s state visit to Malaysia in April last year. Among those accompanying him on his visit were his wife, Raja Permaisuri Agong Fauziah, his two children Tuanku Syed Faizuddin Putra and Datuk Seri Sharifah Fazira, his three grandchildren, and the Minister for Home Affairs, Azmi Khalid.12

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During his visit from 23 to 25 January 2006, the Agong and his delegation visited the Underwater World in Sentosa, the Singapore Armed Forces Armour Headquarters in Sungei Gedong, the HDB Hub in Toa Payoh, Parliament House, the Biopolis in Buona Vista, and the Botanic Gardens where an orchid with yellow-gold flowers was named after the Agong.13 The official functions for the Agong and his party included a lunch hosted by the Prime Minister, Lee Hsien Loong, and a state dinner at the Istana hosted by President S. R. Nathan. At the Istana dinner, President Nathan highlighted the change in bilateral ties in recent years, which have broadened and deepened, marked by greater contact and cooperation between leaders, officials and businesses (see Appendix B). The Agong, in summing up the confluence of favourable factors, said, “No doubt the positive political environment, growing trade figures and investment flows, increasing exchanges of visits and strengthening cooperation in various areas, augur well for the future outlook in our bilateral relations”14 (see Appendix B). NOTES 1. Ramesh, S. and Dominique Loh, “Singapore and Malaysia Determined to Put Ties Back on Track”, 12 January 2004, Channel NewsAsia. 2. “Malaysian Minister Here to Build Ties”, Straits Times, 19 August 2005. 3. Chen Huifen, “Closer S’pore-Malaysia Ties Crucial: Nathan”, Straits Times, 12 April 2005. 4. Chua Mui Hoong, “MM Calls for Better Information Flow”, Straits Times, 29 April 2005. 5. “Mah Bow Tan Visits KL”, Straits Times, 10 May 2005. 6. “Study Team From Malaysia”, Straits Times, 7 July 2005. 7. Clement Mesenas, “Rafidah Aziz Bounced Back”, Today, 30 August 2005. 8. Daniel Buenas, “S’pore, Malaysia Pledge to Advance Asean Integration”, Business Times, 30 August 2005. 9. “Malaysian General Visits”, Straits Times, 4 October 2005. 10. Li Xueying, “Happy Hari Raya Between Good Friends”, Straits Times, 4 November 2005.

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11. Leslie Lau, “KL, S’pore Pledge Close Ties to Face Security Threats”, Straits Times, 29 November 2005. 12. “Malaysian King to Arrive on Monday for 3-Day Visit”, Straits Times, 21 January 2006. 13. Li Xueying, “Royal Thumbs-Up for Singapore Rifle”, Straits Times, 25 January 2006 and Li Xueying, “Malaysian King Ends 3-Day Visit”, Straits Times, 26 January 2006. 14. Li Xueying, “Malaysian King’s Visit to Singapore Reaffirms Close Ties”, Straits Times, 24 January 2006.

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3

Developing Peopleto-People Contacts

When Datuk Seri Najib Razak, Deputy Prime Minister of Malaysia, called on President Nathan in April 2005 during the Presidential visit, he emphasized the importance of people-to-people ties. He said, “We should encourage more visits, more tourist arrivals from Singapore and Malaysia and vice versa, and explore ways to…look at opportunities in third countries”.1 He mentioned that Singapore was the second largest foreign investor in Malaysia in 2005, and cited cooperation in areas such as trade and investment, tourism and defence, and even ties between universities on each side of the Causeway. As mentioned earlier, during his visit to Malaysia in April 2005, Lee Kuan Yew suggested a limited circulation of each other’s newspapers on both sides of the Causeway be allowed after an almost 30-year long ban. This is one way of boosting people-to-people contact between the two neighbours and further improve overall ties. He said, “Let’s not push it. This is some idea tossed out to maintain knowledge and intimacy with each other….We read Indonesian papers. We ought to be able to read Malaysian papers….They [the Malaysian newspapers editors] saw a potential market, expansion with the market, getting themselves wider readership, why not?”2 Abdullah Badawi responded

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by saying that they would consider the suggestion to ease the threedecade ban on each other’s newspapers. He said, “I will talk to my [Cabinet] colleagues; we can consider it.”3 Singapore Press Holdings, which publishes Straits Times, Business Times and other newspapers, responded positively to the suggestion. “SPH welcomes the opportunity for Singapore and Malaysia newspapers to circulate in each other’s country as this would help people on both sides to keep up with developments in the two countries and foster better understanding and bilateral ties….Free flow of information as a result of a lifting of the restriction will constitute closer people-topeople relations.”4 Bursa Malaysia chief, Yusli Mohamad Yusoff said that removing the long-standing ban could also help facilitate crosstrading between the two countries’ stock exchanges since lifting the ban would get both sets of investors familiar with companies as they would read about them regularly.5 To date, this suggestion by Lee Kuan Yew has not yet resulted in the lifting of the newspaper ban. The agreement signed in December 2004 to re-start joint television resulted in MediaCorp of Singapore and Television Malaysia holding a Muzika Ekstravaganza in Singapore in April 2005. Speaking on the occasion, Singapore’s Minister for Information, Communications and the Arts, Lee Boon Yang, said that Singaporeans shared a lot with Malaysians and it made for much better regional understanding if we had a deeper understanding of each other. Datuk Abdul Kadir Sheikh Fadzir remarked that the event truly showed that we were one country and one people, even though we were ruled by two governments. The second Muzika Ekstravaganza was held on 26 November 2005 in the Penang Stadium in front of a huge audience, including Abdul Kadir and Lee Boon Yang who was on a three-day visit to Malaysia. The event was again telecast live throughout Malaysia over Suria in Singapore. Such popular events went far beyond the thawing of ties at the diplomatic and political level, and in fact sought to satisfy a general wish to bring the peoples of the two countries together. In a joint press conference, the two Ministers announced a new initiative whereby Television Malaysia and MediaCorp will proceed with the joint production of two drama programmes with local content and values. The first will be a 13-part Malay drama and the other a 13-part Chinese drama. The two programmes, part of an overall

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cooperative effort, will be shown widely in the two countries, and even in other countries where demand for such programmes exists. According to Abdul Kadir, such joint ventures could help to promote more people-to-people contacts and thus strengthen bilateral ties.6 Another proposal raised by leaders from both sides to promote greater people-to-people contact was the introduction of student exchange programmes. This idea was mooted by Lee Hsien Loong and Goh Chok Tong in their earlier visits to Malaysia. In his April visit, Lee Kuan Yew brought up the idea again, saying “They are useful frameworks…to get to see each other at close quarters so that we don’t feel like Malaysians are like Thais, Cambodians or Laotians. Malaysians were part of us and it’ll be useful for both sides to understand each other better…”7 This suggestion was agreed to by both countries and exchange visits of students have taken place. (This is discussed in the section on educational and sporting exchanges.) The call for greater people-to-people contacts from the leaders of both countries was wholeheartedly received and numerous crossCauseway visits were made.8 The People’s Action Party (PAP) Women’s Wing visited their Malaysian counterparts in Kuala Lumpur during 18–20 May 2005. The aim was to build on the group’s warm ties shared with Barisan Nasional Wanita, UMNO Wanita and MCA Wanita. The 30-member Singapore delegation was led by the Minister of State for Finance and Transport and Chairman of the PAP Women’s Wing, Mrs Lim Hwee Hua. In Malaysia, they exchanged ideas and shared experiences on the economic, tourism and community development issues.9 In early June 2005 eleven students from six secondary schools and the Straits Times Media Club met their counterparts in Kuala Lumpur.10 The three-day visit was the joint overseas youth exchange programme organized for the club by the Straits Times. The students met the management, editors and journalists of the two top English dailies, The Star and New Straits Times. The highlight of the trip for the students, mainly editors and presidents of their school newsletters and media clubs, was to meet the two newspapers’ own youth media clubs. Han Fook Kwang, editor of the Straits Times, said “Journalism broadens the mind and so does travel, so I hope they’ll benefit doubly from the trip.”11 To reciprocate the Kuala Lumpur visit, the Malaysian students

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associated with the two Malaysian newspapers were invited to Singapore so that the youth exchange programme would continue. In the following month, some 40 youths from Malaysia came to Singapore to participate in the 10th Singapore-Malaysia Youth Camp organized by the National Youth Council. The Malaysian delegation was led by the Deputy Minister for Youth and Sports, Ong Lee Keat, while the 40 Singaporean youths were headed by Vivian Balakrishnan, Minister for Youth, Sports and Community. The youth from both countries engaged in outdoor sports such as trekking and kayaking, visited the Esplanade and had a one-night stay with Singaporean families in HDB flats.12 Balakrishnan commented: “We should continue to promote more of such exchanges, as they help to enhance understanding among the younger generation in the two countries….It is this informal and intuitive understanding of each other that provides the glue for close business, social and political ties.”13 On his part, Datuk Ong said: “The very fact that we have managed to retain interest in the programme speaks volumes for our resolution to extend our cooperation and collaboration to cover more meaningful exchanges in the near future.”14 An interesting event took place on Saturday, 25 February 2006 when George Yeo led a delegation consisting of his family members and some 80 grassroots personnel from his Aljunied constituency to attend the wedding of Syed Hamid Albar’s son, Syed Naqib Albar and Farralia Dato Hj Bahari. The wedding took place at Kota Tinggi, Johore, where Syed Hamid is the Member of Parliament for that area. The Singaporeans also visited a printing factory in Johore Bahru owned by Abdul Aziz bin Abu Talib, a member of the Singapore delegation. Impressed by the warmth and hospitality shown by the Kota Tinggi grassroots leaders and leaders, George Yeo expressed his hope that contacts between the Kota Tinggi and Aljunied constituencies could be established.15 NOTES 1. Peh Shing Huei, “Call for More Interaction by Young Leaders”, Business Times, 12 April 2005. 2. Chua Mui Hoong, “MM Calls for Better Info Flow”, Straits Times, 29 April 2005. 3. “KL to Consider Easing Ban on Singapore Press”, Straits Times, 1 May 2005.

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4. Chuang Peck Ming, “MM Lee to KL: Let’s Ease Ban on Each Other’s Newspapers”, Business Times, 29 April 2005. 5. “Lifting Ban on Newspaper Sale Can Boost Cross-trading”, Business Times, 7 June 2005. 6. “Singapore and KL Explore TV Tie-ups”, Straits Times, 27 November 2005. 7. Chua Mui Hoong, “MM Calls for Better Info Flow”, Straits Times, 29 April 2005. 8. Rajan Moses, “People-to-People Relations”, Paper presented to the Roundtable on Singapore-Malaysia Relations: Mending Fences and Making Good Neighbours, Institute of Southeast Asian Studies, Singapore, 30 November 2005. 9. “PAP Women to Visit M’sian Counterparts”, Today, 17 May 2005. 10. Liaw Wy-Cin, “ST Media Club Send 11 Students on Three-day Trip to KL”, Straits Times, 14 June 2005. 11. Mardiana Ismail, “ST Media Club Members Visit Malaysian Dailies”, Straits Times, 17 June 2005. 12. “M’sian Youth Gets First Taste of HDB Life”, Straits Times, 5 July 2005. 13. Zakir Hussein, “Water Way for Youth to Boost Causeway Ties”, Straits Times, 5 July 2005. 14. Ibid. 15. Ling Chang Hong, “George Yeo’s Kota Tinggi Visit Boosts Grassroots Ties”, Sunday Times, 26 February 2006.

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4

Deepening Public Sector Economic Links

After Abdullah Badawi became Prime Minister, the leadership in both countries made it a point to send the right signals to the business communities in both the private sector and the public sector with government-linked companies. In his talks with President Nathan in Kuala Lumpur in April 2005, the Deputy Prime Minister of Malaysia, Najib Razak, commented, “Malaysia and Singapore are two countries that have reached respective levels of development…Therefore we should conduct ourselves in a very mature and dignified manner so that we can show that this should be the way to conduct business between the two neighbours.1 Leveraging on much improved bilateral political ties, many top corporate names from both countries began to establish a series of high-level contacts to explore new business opportunities. At the invitation of the Kuala Lumpur Business Club (KLBC), a by-invitation-only organization, Ms Ho Ching, Chief Executive of Temasek Holdings, visited Kuala Lumpur in 2004 to deliver a speech at a dinner function. To reciprocate her visit, some of Malaysia’s biggest names belonging to the KLBC embarked on a two-day visit to Singapore for a series of high-level meetings in June 2005. The delegation met

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Prime Minister Lee Hsien Loong, attended a reception hosted by Temasek Holdings Chief Executive Ho Ching and had a breakfast meeting with Singapore Airlines Chairman Koh Boon Hwee and other private meetings with top Singapore businessmen. The Malaysian delegation, with top officials from Malaysia Airlines, YTL Corporation, CIMB, Genting and RHB, was led by Science, Technology and Innovation Minister Jamaludin Jaris. He said, “It’s important for Malaysian and Singaporean business community to touch base regularly….High politics may continue to disagree on certain lines but on the ground and in business, there is much that can still go on.”2 A seminar on business opportunities in Malaysia attended by some 1,200 businessmen was held in Singapore on 29 August 2005. The highlights of the seminar was the paper delivered by Rafidah Aziz, Malaysian Minister for International Trade and Industry and the other by Singapore Minister for Trade and Industry, Lim Hng Kiang. The two ministers were quite upbeat about the prospects for increasing trade and investment across the Causeway.3 Rafidah stated that Malaysia remained committed to ensuring that it remained business-friendly and cost-competitive, and Singapore businessmen could rest assured that policies would be implemented and fine-tuned to address their needs. Lim Hng Kiang said that both countries could leverage on each other’s abilities to take on the rest of the world, for example, both countries might work to draft an open skies policy to encourage more flights and tourism. The open skies policy was, in fact, broached in ASEAN many years ago. Rafidah agreed that an open skies policy would be of benefit to both, and that it was time for this issue to be taken up again and moved forward. Encouraged by the new political and business atmosphere, both the government and private sector have moved quickly in areas such as strategic investments, corporate purchases and joint business ventures. Beginning from early 2004, there was a surge in investment activities led by government-linked companies of both countries. In March 2004, Temasek Holdings acquired 5 per cent of Telekom Malaysia for RM2.9 billion, its first major direct investment in that country.4 This was followed in June 2004 by GIC Real Estate Pte Ltd, part of the Government of Singapore Investment Corporation (GIC) buying a

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100 per cent stake in Johore Bahru City Square Mall for a sum of RM123 million. Earlier, it had already made investments in Sunway Pyramid Mall, Sunway City Berhad, Menara Standard Chartered, and RB Land Sdn Bhd. In July 2004, GIC bought a 5 per cent stake in Gamuda Bhd, one of Malaysia’s largest construction companies, for RM53 million, and also another 5 per cent stake in Malaysia’s Shell Refining Co. for RM28 million. In July 2004, Mapletree Capital Management, a subsidiary of Mapletree Investments which is in turn a subsidiary of Temasek Holdings, went into a partnership with a Malaysian investment bank, CIMB. This deal involved an initial capital of US$132 million which was in fact the first private institutional real estate fund in Malaysia. In August 2005, CIMB-Mapletree announced the acquisition of CP Tower, a 22-storey commercial office building located in the commercial area of Petaling Jaya.5 This first-acquired asset will be injected with other property purchases in due course into a private real estate fund. In December 2004, Bank Negara gave permission for a company owned by Temasek Holdings to obtain a 14.7 per cent stake amounting to RM550 million in Malaysian Plantations. After some protracted negotiations, the deal was finally completed in March 2005.6 Since Malaysian Plantations owns Alliance Bank, a small bank with assets worth S$12.4 billion, the deal was the first major investment by a stateowned Singaporean company in a Malaysian financial institution and underscores the improving relations between the two neighbours. A far more important investment by Temasek in the financial sector refers to its gradual building of a stake in Southern Bank. In early October 2005, CIMB, a sister company of BumiputraCommerce Holdings, had obtained the approval of Bank Negara to proceed with merger talks with the shareholders of Southern Bank. The key shareholders of the bank are its CEO Tan Teong Hean, its Chairman Syed Mohd Yusof Syed Nasir, and the Sultan of Selangor Sharafuddin Idris Shah. In view of this hostile takeover bid, Temasek Holdings issued a statement to clarify that its substantial stake in Southern Bank, 7.58 per cent, was part of its financial investments and not to thwart any merger with CIMB.7 Temasek revealed that it had a direct interest of 4.36 per cent through its Aranda Investments and 3.22 per cent

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through related subsidiaries and associates. The latter consists of 3.18 per cent by Keppel Corporation, 0.03 per cent by ST Aerospace, 0.03 per cent by ST Marine and 0.01 per cent by PSA. However, by early November 2005 Temasek had sold 2.7 per cent to trim its stake in Southern Bank to less than 5 per cent so as to conform to Malaysia’s banking laws.8 Another dramatic corporate development was the signing in February 2005 of a codeshare agreement between airlines of the two countries, Malaysia Airlines (MAS), Singapore Airlines (SIA) and SilkAir, to expand their air connectivity.9 This landmark deal allows the three airlines to cross-sell their seats to customers wishing to fly to selected Malaysian destinations and Singapore. SilkAir took advantage of the agreement and commenced flying four times a week between Singapore and Kuching from March 2005, and twice per week between Singapore and Kota Kinabalu from December 2005. Adding the daily flight to Kuching and thrice weekly flights to Kota Kinabalu by MAS would give a total of 11 flights and 5 flights per week to these two destinations. The move has generated more tourists to Sabah, Sarawak, Penang and Perak, while Singapore benefits from the spillover traffic as tourists flying to Malaysia cities uses Changi Airport. This deal, designed to combat competition from low-cost carriers, between the national airlines of the two countries was only possible with the blessing and desire of the political leaders to forge greater economic cooperation. There was even some talk about reviewing the air agreement signed by the two countries in 1980 with the view to liberalizing the air services regime to benefit both parties. Under a gas-supply contract, gas has been piped from offshore Trengganu by Petronas, Malaysia’s national oil company, to Senoko Power in Singapore since 1992. This business cooperation was further strengthened in June 2005 when Petronas signed a S$3 billion-plus deal with Keppel Energy, a subsidiary of Keppel Corporation.10 Under this arrangement, Keppel Gas will bring in gas in mid-2006 to fuel Keppel Energy power station being constructed on Jurong Island and sell to other industrial and commercial customers after the liberalisation of the gas market in Singapore at the end of 2005. The new pipeline from the Peninsula gas system will feed gas into the Singapore grid

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Table 4.1 Singapore-Malaysia Cross-Border Public Sector Investments, 2004–05 Year

Company

Acquisition/Investment

2004

Temasek Holdings

Paid RM2.9 billion for 5% stake in Telekom Malaysia

2004

Temasek Holdings

Paid RM550 million for 14.7% stake in Malaysian Plantations, which owns Alliance Bank

2004

GIC Real Estate

Paid RM123 million for 100% stake in Johore Bahru City Square Mall

2004

GIC

Paid RM53 million for 5% stake in Gamuda

2004

GIC

Paid RM28 million for 5% stake in Shell Refining

2004

Temasek-owned Mapletree Investments

Invested RM132 million in partnership with CMBC to form CIMB-Mapletree. Joint venture bought 22-storey CP Tower in Petaling Jaya

2005

Temasek-owned Aranda

Acquired 4.36% stake in Southern Bank

2005

Keppel Energy

About S$3 billion deal with Petronas to supply gas

2005

Sunshare Investments, jointly owned by Khazanah National (20%) and Telekom Malaysia (80%)

Paid S$260.8 million for 12.06% stake in MobileOne, and subsequently raised to 24.04%

and will ensure a secure and reliable supply of gas of some 115 million standard cubic feet (mscf ) daily for 18 years. This can be expanded to 290 mscf daily in the future, if necessary. The new deal will ensure a continuous supply of gas for Singapore should the present gas supply from Indonesia’s Natuna and Sumatra fields be disrupted in the future. As another sign of the close ties between Singapore and Malaysia, the gas contract signing at Petronas Twin Towers was witnessed by

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Vivian Balakrishnan, Second Minister for Trade and Industry and Lim Keng Yaik, Minister for Energy, Water and Communications.11 The President and CEO of Petronas, Mohd Hassan Marican, said that the new pipeline would ensure a secure and reliable supply of gas to Singapore with the possibility for further expansion. The senior executive director of Keppel Corp said that the deal was “an important milestone in furthering economic cooperation [between the two nations]…It is an example of how both countries, as close neighbours, can come together to conclude deals that are mutually beneficial….This agreement is made possible by the warm relationship enjoyed by the two countries at both the governmental and private sector levels.”12 One of the more significant investment flow from Malaysia was the purchase of a stake in Singapore’s MobileOne Ltd in August 2005 by SunShare Investments Ltd, a joint venture between Khazanah Nasional (20 per cent) and Telekom Malaysia (80 per cent). This 12.06 per cent stake in MobileOne was worth some S$260.8 million. Ganen Sarvananthan, Investment Director of Khazanah, said, “This is our first equity investment in Singapore and it fits into our regionalisation strategy”.13 Before the end of the month, the stake was raised twice via open market purchases to 18.45 per cent and then to 23.64 per cent. This cross-border investment by Malaysia’s investment arm, Khazanah, and Telekom Malaysia has significant political and economic importance viewed in terms of bilateral relations between the two countries. In November 2005, Yusof Annuar Yaacob and Ganen Sarvanathan, both directors of SunShare Investments, were appointed directors of MobileOne. The above cross-border business linkage was further deepened in December 2005 when MobileOne decided to cut costs by outsourcing its call centre operations to Malaysia. MobileOne had previously looked at the viability of relocating some of its operations in lowercost countries such as India, but had not done so. After SunShare of Malaysia came on board, the question of outsourcing was re-examined carefully with regard to Malaysia. Neil Montefiore, CEO of MobileOne, said that our northern neighbour was better suited to the unique mix of languages spoken by its customers in Singapore.14 The English, Mandarin, Malay and Tamil spoken by these customers can be easily handled by the call centre operations in Malaysia.

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Datu Abdul Wahid Omar, chief executive of Telekom Malaysia, said that he saw no impediment for cross-border investments, citing Temasek Holdings’ 5 per cent investment in Telecom Malaysia in early 2004. This sentiment was reciprocated by Lee Hsien Loong, in his 2005 National Day Rally: “We are investing in Malaysia, and you see Malaysia is investing in Singapore. They recently bought some shares in, I think, M1. We are happy at that.”15 A political commentator, Karim Raslan, said, “It also shows the business world that Malaysian government-linked companies have an appetite for regional expansion and that Singapore is very much a part of their ambitions.”16 The above approach suits Singapore well as companies in both countries can also join forces to invest in third countries. Indeed, George Yeo and Rafidah Aziz signed an agreement on 2 July 2004 to establish the Malaysia-Singapore Third Country Business Development Fund (MSBF), which replaced the former Malaysia-Singapore Third Country Feasibility Study Fund (MSTCF). The MSBF was doubled to RM10 million, with equal funding by Singapore’s Ministry of Trade and Industry and Malaysia’s Ministry of International Trade and Industry.17 This fund is available to companies to apply for 50 per cent reimbursement of expenses such as economy-class air travel, accommodation and common costs for approved joint activities like ground transportation, networking sessions and market brochures. The fund has received the attention of private corporations as well as business chambers and trade associations on both sides of the Causeway. As a follow-up of their inaugural meeting in Malaysia last year, officials from the Malaysian Industrial Development Authority, the Malaysia External Trade Corporation and the International Enterprise Singapore met in Singapore during 24–26 November 2005.18 This annual event involving the trade promotion agencies is aimed at fostering rapport and camaraderie for closer cooperation for the benefit of business on both sides of the Causeway. These areas of cooperation were identified by the agencies.19 The first is to promote industry collaboration in the consumer electronics sector by exploring how Singapore companies can share experience in innovation and product design with Malaysian manufacturers. The second is to promote collaboration between companies from both countries to tap the global halal market, worth some US$15 billion in 2003 and 2004. A third area of cooperation is

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designed to bring regional and international buyers from selected industries to the two countries in a coordinated effort to make it more convenient and cheaper for them to meet local suppliers in a single trip. An economic cooperation at the government level was initiated on 16 January 2006 on the sidelines of the ASEAN Tourism Meeting held in the Philippines.20 Under this landmark tourism agreement signed by Leo Michael, Malaysian Minister for Tourism and Vivian Balakrishnan, Singapore Minister for Community Development, Youth and Sports, the two neighbours agreed on the following: 1. Each country will identify three visitor centres in the other country to display its marketing brochures. 2. Participating attractions of each country will offer free entry to each other’s visitors on a selected date. The attractions and dates will be announced later. 3. The two countries will split the cost of joint advertising that will be rolled out first in the United States, Middle East and Russia. 4. The two sides will bring back the Malaysia-Singapore Tourism Games, a bonding event for the tourism players of both countries. The above agreement, made possible by the warmer bilateral relations, has given a huge boost to the tourism industry on both sides of the Causeway. In fact, tourism between the two countries has been increasing sharply in the last two years. Some 537,000 Malaysians visited Singapore by air and sea in 2004, a rise of 22.3 per cent as compared to the previous, while the first eleven months of 2005 recorded a growth of 7.7 per cent in Malaysian visitors.21 The latest government-to-government economic cooperation occurred on 13 February 2006 when a new double taxation agreement between Singapore and Malaysia came into effect.22 The revised terms under the agreement include the following: 1. Reducing the rate of withholding tax on interest and royalties to 10 per cent and 8 per cent respectively. Under the previous deal, these were taxed at prevailing domestic rates ranging from 10 per cent to 15 per cent.

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2. Clarifying the tax treatment of technical fees and setting withholding tax of 5 per cent for such payments. 3. Applying mutual tax sparing relief to the first 10 years. 4. Singapore allowing, in the case of dividends received from a Malaysian resident company, a tax credit for the Malaysian tax on that portion of profits out of which the dividends are paid. Malaysia will allow a similar tax credit on dividends received from Singapore if the Malaysian resident company holds at least a 10 per cent stake in the Singapore resident company. Technical fees, under (2) above, refer to payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of a technical, managerial or consultancy nature. The agreement will cover income derived on or after 1 January 2006. The improved agreement, covering both individual and corporate income taxes, will continue to assist investors to avoid the burden of double taxation on income derived from the two countries. This will facilitate the cross-flow of trade, investment, financial activities and technical know-how, thus contributing to the economic progress of the two close neighbours. NOTES 1. “Call for More Interaction by Young Leaders”, Business Times, 12 April 2005. 2. Carolyn Hong, “KL Corporate Leaders in Singapore to Cement Ties”, Straits Times, 1 June 2005. 3. Daniel Buenas, “S’pore, Malaysia Pledge to Advance Asean Integration,” Business Times, 30 August 2005. 4. Audrey Tan, “Temasek Likely to Lead Singapore’s Investment Charge into Malaysia”, Straits Times, 11 November 2004. 5. Pauline Ng, “CIMB-Mapletree in 1st M’sian Purchase”, Business Times, 26 August 2005. 6. S. Jayasankaran, “Temasek Gets Stake in M’sia’s Alliance Bank”, Business Times, 8 March 2005. 7. S. Jayasankaran, “Temasek Clears Air over Stake in Southern Bank”, Business Times, 29–30 October 2005.

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8. Lorna Tan, “Temasek Trims Stake in Southern Bank to Below 5%”, Straits Times, 10 November 2005. 9. Pauline Ng, “M’sia, S’pore Strike Win-Win Air Deal”, Business Times, 28 February 2005. 10. Ronnie Lim, “Keppel Unit Bags $3 billion M’sian Natural Gas Deal”, Business Times, 28 June 2005 and “Keppel Energy Signs S$3 billion Gas Contract with Petronas”, Today, 28 June 2005. 11. Ronnie Lim, “S’pore Gas Market is Fast Opening Up”, Business Times, 4 July 2005. 12. Audrey Tan, “$3b Gas Deal Struck with Malaysia”, Straits Times, 28 June 2005 and “Keppel Energy Signs $3 Billion Gas Contract with Petronas”, Today, 28 June 2005. 13. Siow Li Sen, “Khazanah Makes First S’pore Foray with MobileOne Deal”, Business Times, 18 August 2005. 14. Angela Tan, “M1 May Outsource Call Centre Operations to Malaysia,” Business Times, 10–11 December 2005. 15. Reme Ahmad, “KL Investment Extends Its Reach”, Straits Times, 24 August 2005. 16. Ibid. 17. Toh Mun Heng, op. cit. 18. Naredra Aggarwal, “S’pore, KL to Jointly Attract Global Buyers”, Straits Times, 26 November 2005. 19. “S’pore and M’sia to Develop Industry Links”, Business Times, 26–27 November 2005. 20. Krist Boo, “S’pore, KL Reach Deal on Tourism”, Straits Times, 17 January 2006. 21. Arlina Arshad, “Visitor-Friendly Perks Boost Malaysian Arrivals”, Straits Times, 23 January 2006. 22. “Singapore, Malaysia Sign New Double Taxation Agreement”, Today, 14 February 2006, “Revised S’pore-KL Double Taxation Pact”, Straits Times, 14 February 2006 and www.iras.gov.sg.

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5

Expanding Private Sector Economic Links

The much improved atmosphere between the two neighbours arising out of the leadership change in Malaysia has resulted in a resurgence of economic activities among not only government-linked companies but also companies in the private sector. In some instances, the heightened cross-border business activities were facilitated by direct economic cooperation between the two governments. One example is the Mutual Recognition Agreement signed by Singapore and Malaysia in November 2004 that would allow billions of dollars in telecommunications products, including cellphones, to be sold in each other’s country more cheaply and to hit the market faster.1 Products already checked in either country will no longer be required to be tested again, thus making it easier for companies to trade such items across the border. The agreement, to take effect in 2008, will cover products such as radio, global systems for mobile communications (GSM), integrated services digital network (ISDN), and public switched telephone network (PSTN). Present in the agreement signing were Lee Boon Yang, Minister for Information, Communication and the Arts and Lim Keng Yaik, Minister for Energy, Water and Communications, who urged companies in both countries to work together to enter the growing markets in the region.

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Consequent on the much improved bilateral ties between the two countries, the Malaysia-Singapore Forum 2004 was held on 13 December 2004 in Singapore. The theme of the forum was “New Leadership, New Challenges and New Opportunities” aimed at enhancing cooperation among businessmen and corporations of both countries.2 It was organized by the Asian Strategy and Leadership Institute (ASLI) in conjunction with the ASEAN Business Forum and Money World Asia. The joint opening address entitled Deepening Business and Economic Cooperation between Malaysia and Singapore was delivered by Lim Hng Kiang, Singapore’s Minister for Trade and Industry, and Mustapa Mohamed, Minister in the Prime Minister’s Department, Malaysia. Forums of this type are instrumental in helping to spawn networking opportunities for business delegates and foster greater understanding of bilateral problems and issues. In February 2005, it was announced that Commerce International Merchants Bankers Bhd (CIMB), a Malaysian merchant bank, would purchase the entire stockbroking arm of GK Goh Holdings for S$239 million in cash. This purchase was completed in June 2005, with CIMB-GK as the new name for the new entity. Goh Giok Khim, the Chairman of GK Goh, pointed out that the overall ambitions and strengths of CIMB would provide more capital for deals, broaden career advancement prospects for staff, and deliver stronger and more diverse products to sales teams and remisiers. Goh Geok Khim assumed the new role of adviser to CIMB-GK, and Goh Yew Lai and Lee Ming San, executive director of the old firm, became executive deputy director and chief executive respectively. The chief executive of CIMB, Nazir Razak who is the brother of Malaysia’s Deputy Prime Minister, said that CIMB-GK would serve as a holding company for the CIMB Group’s non-Malaysia investment banking business. He said, “We hope our customers in Singapore, Indonesia and elsewhere in the region will see us as the premier ‘local’ investment bank.”3 February 2005 also saw the announcement by AMMB Holdings, a Malaysian company, that it would purchase the remaining shares of Singapore’s oldest broking house, Fraser Securities.4 AMMB had previously owned 49 per cent of Fraser Securities, acquired some 20 years ago in the aftermath of the Pan-Electric crisis when Singapore

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first allowed foreign institutions to own tranches in local broking firms. The other 51 per cent was controlled by a group of individuals holding corporate stakes. The forthcoming linkage of the Singapore Exchange and Bursa Malaysia by the end of 2006 was cited by AMMB as one of its reasons for wanting to raise its stake in Fraser Securities. Since then the trading link between the two exchanges has been pushed back to 2007. In late November 2005 two new offshore funds were launched in Malaysia, benefiting globally competitive companies in Singapore. Public Mutual launched its Far-East Select Fund and CIMB-Principal Asset Management its Hidden Value Fund, with RM375 million and RM150 million respectively, for Malaysian investors to subscribe.5 Both funds have been structured to invest a position of the funds in the Singapore market. Far-East Select Fund would be targeting the blue chips and growth stocks and Hidden Value Fund at undervalued mid-cap stocks. An increasing number of funds managed in Singapore would be going offshore to seek better returns, and Singapore companies will undoubtedly benefit from this trend. Another interesting development mentioned in the market refers to the possibility of CapitaLand of Singapore, a pioneer in starting the real estate investment trust (REIT), may set up REITs in Malaysia.6 A Singapore company that took advantage of the good climate for cross-Causeway business was MCL Land, the listed property arm of Jardine by Cycle & Carriage. In June 2005, MCL Land announced that it would buy 50 per cent, less one ordinary share, in a Malaysian company, Landmarks Land & Properties (LLP) for S$34.2 million.7 LLP, which is a subsidiary of Bursa Malaysia listed Landmarks Berhad, owns tracts of land in Bandar Wangsa Maju in the Setapak area on the outskirts of Kuala Lumpur. On completion of the purchase by MCL Land, LLP would become a subsidiary of the former. In fact, in July 2004, MCL Land has bought a 50 per cent stake in Tropical Terrain, a unit of Malaysia’s Sunrise Bhd. According to MCL Land, the competitive market environment in Singapore necessitates the expansion of its presence in Malaysia to diversify market risks. In February 2005, a Bursa Malaysia limited company, Habib Corporation which is involved in the jewellery business, announced

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Table 5.1 Singapore-Malaysia Cross-Border Private Sector Investments, 2004–05 Year

Company

Acquisition/Investment

2004

Sime Darby

Paid S$223 million for 29.9% stake in Jaya Holdings

2004

MISC

Acquired NOL’s American Eagle Tankers for S$662 million

2004

Berjaya

Raised its stakes in Informatics to 29.07% for S$31 million

2004

Star Cruise

Paid US$15 million for 20% stake in Valuair

2005

CIMB

Acquired GK Goh Holdings for S$239 million to form CIMB-GK

2005

AMMB Holdings

Bought remaining 51% of Fraser Securities in addition to the 49% it already owned

2005

Habib Corporation

Acquired marine assets of Chuan Hup Holdings for S$572 million

2005

OSK Holdings

Paid S$50 million for 51% stake in DMG & Partners Securities

2005

MCL Land

Paid S$34.2 million for 50% less one share in Landmarks Land and Properties

2005

Parkway

Paid S$139 million for 31.34% stake in Pantai Holdings

2005

Ascendas

Formed Ascendas-OSK Funds Management, with Ascendas taking 49% and OSK 51%

2005

United Overseas Land

Acquired through UOL Overseas Development 290 serviced apartments in South Tower of One Residency from the Lion Group for S$43.4 million

2005

GIC Real Estate and Lum Chang

Joint venture by GIC Real Estate’s affiliate RECO Kemensah (49%) and Lum Chang’s Urban Assignment (51%) in Venus Capital to develop houses in Kuala Lumpur

2005

Genting International, CapitaLand and Hotel Properties

Joint venture with one-third share each to form 808 Holdings to invest in Britain

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that it would buy the marine assets of Singapore’s Chuan Hup Holdings for S$572 million. With this acquisition, Habib attracted the Scomi Group, Malaysia’s fast-growing oil services firm, to take an acquiring stake of 29.6 per cent of its share holding.8 This tripartite arrangement, completed in mid-2005, resulted in Habib Corporation gaining access to some 155 vessels owned directly and indirectly by Chuan Hup, while the latter achieved a long-sought entity into the lucrative oil and gas markets in Malaysia and the Middle East. Another cross-border deal was announced on 18 August 2005 when Southern Bank, a Malaysian Bank stated that it proposed to acquire Singapore-based insurer Asia General Holdings by paying S$918.8 million in cash. Asia General Holdings, with S$2.85 billion worth of asset, operates life and general insurance business across the region through its units, Asia Life and Asia Insurance. Southern Bank’s chief executive, Tan Teong Hean, said that the acquisition would provide greater traction for the bank in bank assurance within the region.9 This financial institution deal occurred in fact a day after Telekom Malaysia became the biggest shareholder in Singapore’s Mobile One, a reflection of strengthening economic ties between the two neighbours. However, in early December 2005 Bank Negara effectively scuttled Southern Bank’s plan by denying approval of its proposal to buy a stake in Asia General, but later informed the bank that it may consider an alternative proposal involving the purchase of Asia General’s life insurance business only.10 However, in January 2006 Southern Bank announced that it had scrapped plans to buy Asia General. Another cross-border investment, but this time from the Singapore side, was the purchase of 31.34 per cent in S$139 million of Pantai Holdings Bhd by Parkway Holdings in September 2005. Parkway, controlled by US-based Newbridge Capital, bought 8.8 per cent of Pantai shares in the open market and the other 22.54 per cent from Lim Leng Yong of Paos Bhd. Pantai owns seven hospitals in Malaysia, four in Klang Valley and one each in Penang, Ipoh and Malacca. Richard Seow, Parkway Chairman, said “The acquisition will enable us to expand our base of business and grow our presence in this very important market, from two hospitals to nine hospitals and ancillary facilities across the country.”11

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However, the acquisition had received some criticism in Malaysia to the effect that foreign companies should not benefit from the two government-awarded concessions given to Pantai in accordance with the policy of promoting Malay business. One concession, Pantai Medivest, refers to the provision of support services to government hospitals in Malacca, Negri Sembilan and Johore, and the other, Fomena, to the provision of medical check-ups for foreign workers.12 However, it is unlikely that the Malaysian Government would take any action, especially when it is considering a foreign partner for Proton. What can happen is that Pantai may sell the concessions to Malaysian interests, or Pantai’s concessions may not be renewed after their expiry in 2012. To squash rumours of Parkway selling its majority stake, Lim Cheok Peng, managing director of Parkway Holdings, stated in November 2005 that Parkway investment in Pantai was for the long haul, and was an integral part of its strategy to grow the Parkway brand across the regional markets.13 The above cross-border investment was followed by another deal from Singapore’s Ascendas which established a tie-up with OSK Holdings, a listed Malaysian financial services firm. Ascendas teamed up with OSK to form a fund management company called AscendasOSK Funds Management to explore real estate opportunities over the Causeway.14 OSK has a 51 per cent stake and Ascendas (Malaysia) holds the remaining 49 per cent. Ascendas-OSK has applied to the Securities Commission of Malaysia for REIT status, aiming to set up a listed REIT comprising primarily of assets in the Klang Valley. Ascendas, which develops, manages and markets IT and industrial parks and office space, already has a presence in China, India and South Korea apart from its Singapore home base.15 Apart from the above important cross-border investments, there were of course many other investments of a smaller scale, and many of them have never been made known publicly. Those that have been known are Sime Darby’s acquisition of 29.9 per cent stake, worth S$223 million in Jaya Holdings in 2004, MISC acquisition of NOL tanker unit amounting to S$662 million, Berjaya’s acquisition of 29.07 per cent, worth S$31 million, in Informatics and Star Cruise’s acquisition of 20 per cent, worth US$15 million, in Valuair. An interesting investment company, 808 Holdings, was established in December 2005

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by gaming company Genting International in collaboration with CapitaLand and Hotel Properties, with each partner having a one-third share. 808 Holdings would be looking at investment opportunities in Britain where all three companies already have businesses.16 The same month also saw United Overseas Land (UOL) teaming up with Lion Group in Malaysia to purchase the 290 serviced suites and apartments in the South Tower of One Residency development in Kuala Lumpur for RM98.5 million. Before 2005 came to an end, Lum Chang’s subsidiary Urban Assignment and GIC Real Estate’s affiliate RECO Kemensah put RM10 million each into a joint venture to develop housing near Kuala Lumpur through property developer Venus Capital. Earlier, Venus had in fact bought five pieces of land spanning 12 ha north of Kuala Lumpur to develop semi-detached houses and bungalows.17 A promotion of some 400 food products of 62 SMEs from Malaysia was held during 4–17 December 2005 in the Giant Hypermarket in Singapore. The special promotion known as “Taste of Malaysia” was launched by Haji Mohd Shafie Haji Apdal, Malaysia’s Minister for Domestic Trade and Consumer Affairs, at the Giant Hypermarket at the IMM Centre in Jurong on 4 December 2005. Apart from the huge crowd, the 62 SMEs were able to meet and network with some 300 Singapore traders. The promotion gave the SMEs an opportunity to accelerate and widen their penetration in the Singapore marketplace through Giant’s chain of established supermarkets. Haji Mohd Shafie said, “We also appreciated the support and expertise our partner has given in helping to build long-term and mutually rewarding partnership between Malaysian and Singapore traders.”18 A further strengthening of the private sector cooperation occurred at the beginning of the new year when three joint cross-border cooperation initiatives were announced. On 1 July 2005, MAE Engineering, a company listed on SESDAQ of the Singapore Exchange announced that it had entered into an agreement with Eliglo Sdn. Bhd. to acquire a substantial stake, 38 per cent, in its biofuel maker Loreno Sdn. Bhd.19 Loreno is building a plant, projected to commence operation in 2007, in Perak to be among the first companies to produce and sell biofuel made from palm oil. MAE Engineering has come out with this joint venture to branch out into the energy biofuels industry in Malaysia.

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The Malaysian Palm Oil Board has been promoting the establishment of plants to manufacture biofuel and biodiesel from palm oil. On 18 January 2006, CapitaLand announced that it had set up a joint venture, Alpine Return Sdn. Bhd., through its wholly-owned subsidiary Acegoal Sdn. Bhd., with two Malaysian companies United Malaya Land (UM Land) and Bolton to buy and develop prime residential land in Kuala Lumpur. UM Land and Bolton have a 35 per cent stake each in the joint venture, with the remaining 30 per cent held by Acegoal. The joint venture plans to develop a condominium on a site near the popular Suria KLCC Shopping Centre. CapitaLand Group president and chief executive, Liew Mun Leong, said, “With this joint venture, we are building our presence in Malaysia on several fronts”.20 Before January came to an end, another cross-border venture was announced on 23 January 2006 with the signing of a memorandum of understanding between the Singapore Exchange (SGX) and the Chicago Board of Trade (CBOT) on the one hand and Bursa Malaysia on the other.21 Joint Asian Derivatives, a joint 50–50 venture company owned by SBX and CBOT, intends to use the settlement prices of Bursa’s crude palm oil futures contract when the company launches the Joint Asian Derivatives Exchange (JADE) in late 2006. In addition to palm oil futures, other futures relating to soya beans, rubber, energy and metals would be included. The trading of the prices of these futures on JADE will be executed via CBOT’s existing electronic trading platform, with contracts cleared through the SGX. The recent corporate forays across the Causeway have been engendered by the much warmer bilateral ties between the leadership of the two neighbours. The huge inflow of Malaysian investments was also due to the ending of capital controls on money leaving the country by Bank Negara on 1 April 2005. After more than six years of restriction, individuals and corporations were quick to seize the opportunities existing in Singapore, thus reversing the previous one-way traffic of Singaporean money buying up Malaysian assets. In fact, the Malaysian investments in 2005 in Singapore were the largest since the Asian financial crisis of 1997–98 when capital controls were instituted.22

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NOTES 1. Alfred Siew, “S’pore and KL Ink Telecoms Pact”, Straits Times, 11 November 2004. 2. Toh Mun Heng, “Singapore-Malaysia Cross-Border Business Opportunities and Prospects”, Paper presented to the Roundtable on Singapore-Malaysia Relations: Mending Fences and Making Good Neighbours, Institute of Southeast Asian Studies, Singapore, 30 November 2005. 3. Joyce Koh, “GK Goh Completes Stockbroking Sale to CIMB”, Business Times, 29 June 2005 and “CIMB-GK Takes Off ”, New Straits Times, 25 July 2005. 4. “AMMB in Talks to Buy Out of Fraser Securities”, Straits Times, 2 February 2005. 5. Pauline Ng, “Two New Malaysian Funds to Seek S’pore Exposure”, Business Times, 23 November 2005. 6. Malar Velaigam, “CapitaLand Plans Malaysia’s Largest REIT”, The Edge Singapore, 28 November 2005. 7. Nande Khin, “MCL Land to Buy Half of Landmarks Unit for RM78”, Business Times, 13 June 2005. 8. S. Jayasankaran, “Impending Habib Deal with Chuan Hup”, Business Times, 16 June 2005. 9. “Now a Malaysia Bank Acquires Singapore Insurer”, Today, 19 August 2005. 10. S. Jayasankaran, “Bk Negara Rejects SBB’s Takeover of Asia General”, Business Times, 8 December 2005. 11. “Parkway Buys Major Stakes in Pantai”, New Straits Times, 4 September 2005 and Chen Huifen and Pauline Ng, “Parkway Buys 31% of M’sian Healthcare Firm”, Business Times, 14 September 2005. 12. S. Jayasankaran, “Abdullah Not Likely to Buckle over Pantai”, Business Times, 15 November 2005. 13. “No Plans to Sell Pantai Stake, Says Parkway”, The Edge Singapore, 25 November 2005. 14. “OSK to Form Reit with Ascendas of Singapore”, Star, 4 October 2005. 15. Alexandra Ho, “Ascendas, OSK Tie Up to Explore Reit in M’sia”, Business Times, 4 October 2005 and Fiona Chan, “Ascendas May Set Up Reit in Malaysia,” Straits Times, 4 November 2005. 16. “Genting in Tie-up with CapitaLand, HPL”, Straits Times, 6 December 2005. 17. Grace Ng, “GIC Unit in Second KL Property Venture”, Straits Times, 22 December 2005.

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18. “For a Limited Time Only, Buy a Taste of Malaysia at Giant”, Today, 6 December 2005. 19. Arthur Sim, “MAE Engineering to Enter Malaysia’s Biofuels Sector”, Business Times, 2 January 2006. 20. Lorna Tan, “CapitaLand in KL Property Tie-Up”, Straits Times, 19 January 2006. 21. Fiona Chan, “SGX and CBOT Venture Inks Deal with Bursa”, Straits Times, 24 January 2006. 22. Pauline Ng, “S’pore Assets Bought by M’sian Firms Top $1b in 2005”, Business Times, 29 December 2005.

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6

Renewing Educational and Sporting Events

It may be recalled that in his Presidential visit to Malaysia in April 2005, President Nathan visited the University of Malaya in Kuala Lumpur to be briefed on the centennial celebrations by the University and the National University of Singapore and the exchange of students and staff between the two universities. The two universities share a common heritage, with roots going back to the Medical School founded some one hundred years ago at Sepoy Lines near Outram Road. The universities renewed their connection with the signing of an agreement on 26 July 2005 to formalize joint programmes to be offered to students and staff. Under the agreement, students in architecture, arts and social sciences can spend time on both the NUS campus and the UM campus in Kuala Lumpur. Architecture students can attend seminars on both campuses and do fieldwork together, while arts and social sciences students can attend joint classes on, among others, Singapore and Malaysian literature.1 UM will offer a scholarship to an NUS student to pursue a masters or doctorate degree on its campus. UM Vice-Chancellor, Hashim Yaacob, said, “Now we have come together, we should be able to forge closer ties, not only among academic but

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also among our people…I hope we can exchange friendship, knowledge, build our nations together, and most important, live in peace together.”2 During the same month the Law Faculties of NUS and UM had in fact come together to hold two public symposia on “Developments in Singapore and Malaysian Law”. The laws and the legal systems of the two countries have very common characteristics arising from the British colonial period. One symposium was hosted by NUS in Singapore, and the other by UM in Kuala Lumpur over two weekends.3 The symposia programmes highlighted legislature and judicial developments in areas of mutual interest and applicability such as commercial, criminal, international and family law. It was also an opportunity for the two faculties to strengthen ties and the academic staff to socialize and get to know each other better. Earlier in Match 2005 a unique business cooperation between the National University of Singapore and a Malaysian management training institute was established. A memorandum was initialled between the NUS Business School and KUB Malaysia Berhad, paving the way for the former to provide management education to middlelevel and senior executives in the KUB network of enterprises and government-related agencies.4 The executive education programmes will be conducted through the Academy of Knowledge for Accounting and Leadership, an institute of KUB dedicated to executive training. The academic staff in the NUS Business School flew to Kuala Lumpur in June 2005 to conduct courses on a wide range of management courses. The programme will provide KUB executives an intensive digest of the latest international management thoughts and practices. It was mentioned earlier that when the Malaysia Minister for Education, Hishamuddin Hussein Onn visited Singapore in December 2004, he argued for the establishment of a programme for school children to socialise with one another. The details of the student exchange programme were announced in June 2005 when he visited Singapore again to have talks with his Singapore counterpart, Tharman Shanmugaratnam. One of the activities under the programme involves 12 premier Singapore secondary schools being paired with 12 similar Malaysian schools in Peninsular Malaysia.5 The students of paired schools will hold friendly sports matches, joint workshops in drama and debate and forums. There will be opportunities for teachers to

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exchange views and best school practices. The primary aim of the twinning scheme is to provide bonding among the present generation of students just as the ever-lasting bonding among many Malaysia and Singapore students in the 1950s and 1960s. “There have been ups and downs between Singapore and Malaysia. But in the past, what has helped us get through the downs are the people-to-people relationships,” said Hishammuddin.6 Tharman said that when you put young, bright and enthusiastic kids together, they would do wonderful things for future cooperation and relations. In early 2005, some students from Singapore participated in the School Marching Band Competition in Malaysia, and Malaysian students also performed at the Singapore Youth Festival for the first time in July 2005. The first twinning activity by students from the two countries was the Wilderness Adventure Camp held in Langkawi in June 2005. The students had to set up tents and latrines, cook their own food and be exposed to the elements of nature. The Singapore students were full of praise and appreciation for the unique and enriching experience. Early November 2005 saw another gathering of students from the two countries, and this was the inaugural Singapore-Malaysia Students Leaders Adventure Camp held in Singapore at the newly opened Changi Coast Adventure Centre. Among the 200 students participating in the camp, about 100 were from Malaysian schools and the other 100 from Singapore schools. Opening the camp, Hawazi Daipi, Senior Parliamentary Secretary for Education and also Manpower, said, “All the collaborations, and others in the pipeline, help enhance the people-to-people linkages between Malaysia and Singapore and this augurs well for the good relations in the education sectors between the two countries.”7 The traditional sporting links between officials of the two countries were suspended during the period of high tensions. The inter-university golf game between the University of Malaya and the National University of Singapore, never suspended even during the worst of times, was held in Kuala Lumpur during 3–5 May 2005. The Singapore team was led by President S.R. Nathan, Chancellor of NUS, and the UM team by Sultan Aslan Shah who is the Chancellor.8 With the warming of relations after Abdullah became Prime Minister in October 2003, there was a revival of sporting activities between officials of the two neighbours.

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When the 40 delegates from the Malaysian Industrial Development Authority and the Malaysian External Trade Corporation came to Singapore in November 2006 to hold talks with the officials representing International Enterprise Singapore, they also took part in a series of games, golf, tennis, pool, badminton, chess and table tennis.9 In May 2005, lawyers and judges from both sides of the Causeway gathered in Singapore to participate in the annual Bench and Bar Games. They spent the weekend competing against one another in games like football, netball, swimming and golf.10 This series of annual games allows those in the legal profession from the two countries to renew friendly and build good relations. In early October 2005, senior civil servants from the two countries came to Singapore to participate in the Malaysia-Singapore Public Service Games. The Singapore team included 38 officials comprising permanent secretaries, deputy secretaries, heads of statutory boards and other public sector leaders, led by civil service head, Peter Ho. The aim of the games was for the senior civil servants to know one another better and to enhance the relationship of the two civil services.11 In December 2005, Wong Kan Seng, Deputy Prime Minister and Minister for Home Affairs led a group of officers to Penang for a joint game with their counterparts from the Ministry of Internal Security. The games are meant to promote friendship and networking among the officers of the two countries. While in Penang, Wong Kan Seng held talks with Abdullah Badawi who is the Minister for Internal Security.12 It is interesting to note that, notwithstanding the recent scenic bridge saga involving particularly officials from the Foreign Affairs Ministry of the two countries, the Ministry of Foreign Affairs Wisma Putra Games was held in Singapore during 4–5 February 2006.13 This, unlike the previous low point under the Mahathir period when most sporting events were cancelled, is a reflection of the current strength of bilateral ties prevailing nowadays. The Malaysian delegation was led by no other than the Minister for Foreign Affairs, Syed Hamid Albar, together with his Deputy Minister, Joseph Salang, the Menteri Besar of Johore, Abdul Ghani Othman, and Johore MP, Shahrir Samad. The Singapore Minister for Foreign Affairs, George Yeo and his Minister of State, Zainul Abidin Rasheed, led the Singapore delegation. Other

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officials from the two ministries and even Members of Parliament from both countries participated in the games, including golf, tennis, badminton, soccer and bowling. This series of games was aimed at forging closer links between the foreign ministries on both sides of the Causeway. However, in view of the very recent stream of mass media reports about the scenic bridge, discussed earlier, the sports meetings served to provide an opportunity for the politicians and officials on both sides to clarify and discuss the matter informally. Responding to reporters at a grassroots event on 3 February 2006, George Yeo said, “Syed Hamid and our friends from Malaysia are coming down this weekend for bilateral games between the two foreign ministries. So we look forward to having discussions with them. He has clarified the Malaysian position. We’ll see what they say and we will try to achieve a win-win position for everybody. I think it is important that we have discussions on the basis of good neighbourliness and goodwill”.14 One interesting sporting link occurred in March 2005 when a Malaysian bank, RHB Bank Berhad, came to an agreement with the football S-League to be its main sponsor. RHB, Malaysia’s third largest financial institution, signed a three-year deal worth S$1.5 million to be the main sponsor of the S-League as well as the Singapore Cup. Part of the money is earmarked for developing programmes for the various national teams, youth development and community football. The chief executive of RHB, Sulaiman Abdul Rahman, said that the objective was to build its brand name and market presence in Singapore, thus helping to raise its profile not only in the Republic but also in the region.15 Indeed, during the 2005 S-League season, the RHB brand received wide coverage and publicity, particularly when the match was telecast live on Fridays during evening prime time by Channel NewsAsia. A popular sporting event involving the two countries was the Malaysia Cup football annual event which Singapore participated until 1994 even after it separated from Malaysia to become an independent state. After 1994 Singapore started its own S-League, but there was always talk about rejoining the Malaysia Cup to revive the “Kallang Roar”. With the warming of relations between the two countries in recent years, the two Football Associations commenced discussions in

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2005 about the possibility of Singapore returning to the Malaysian football competition. The outcome was that the Young Lions football team of Singapore played against Shahzan Muda at the Darulmakmur Stadium in Kuantan, Pahang, on 12 February 2006 in the first leg of the Malaysia FA Cup first round. The second leg between the two teams was played in Singapore on 19 February. The cooperation between the two Football Associations will extend further when Malaysia will send an Under-23 team to compete in the Singapore Cup during the later part of the year. NOTES 1. “UM And NUS Students Go Places”, Knowledge Enterprise, September 2005. 2. “Malaysian Varsity Tie-Up a ‘Reunion’ ”, Straits Times, 26 July 2005. 3. “NUS-UM Centennial Law Symposia”, AlumNus, National University of Singapore, July 2005. 4. Ibid. 5. Sandra Davie, “Schools to Recreate Bonds with Malaysia”, Straits Times, 28 June 2005. 6. Lisa Tan, “School Swimming Programme to Pave Way for Stronger Bilateral Ties”, Business Times, 28 June 2005. 7. Jackson Sawatan, “Singapore, Malaysia Continue to Nurture People-to-People Relations”, BERNAMA, 14 November 2005. 8. “Tee Connect”, AlumNus, National University of Singapore, July 2005. 9. “Spore, KL to Jointly Attract Global Buyers”, Straits Times, 26 November 2005. 10. Karen Wong, “Report and Pictures”, Today, 25 May 2005. 11. “Games Help Singapore, KL Civil Servants Bond”, Straits Times, 3 October 2005. 12. “Annual Games Held in Penang”, Straits Times, 17 December 2005. 13. “S’pore, KL Hold Games to Boost Ties”, Straits Times, 3 February 2006. 14. Carolyn Hong, “Talks on Full Bridge Still on: Syed Hamid”, Straits Times, 4 February 2006. 15. Marc Lim, “RHB Banking on S’pore Football”, Straits Times, 22 March 2005. 16. Gary Lim, “Great Start for Fandi and Qiu Li”, Straits Times, 13 February 2006 and Chan Yi Shen, “Young Lions Open M’sia FA Cup Account with 3-1 Win”, Straits Times, 13 February 2006.

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7

Uplifting Future Relations

The Abdullah administration, commencing more than two years ago, had made a significant impact on the much-improved relations between the two neighbouring countries. The reclamation issue has been amicably settled and the dispute over Pedra Branca is under arbitration in the International Court of Justice. The water issue is no longer a major bone of contention, at least in so far as Singapore is concerned since it is now able to find alternative supplies of water. Discussions on the other outstanding issues are being conducted between officials of the two countries and, more importantly, in a quiet manner without any public comment on the ongoing discussions. This is a clear reflection that the two sides are now determined to resolve the problems without the distraction of them being politicized. Equally important is the realization and acceptance that even with some issues still under negotiations, it is imperative that both sides look at the bigger picture and work together for mutual benefits in a region and world that is fast changing.1 The two countries are small players on the world stage but have the capacity and wherewithal to contribute increasingly to economic integration and regional security. As President Nathan observed during his official visit to Kuala Lumpur in April 2005, “As founding members of ASEAN and two of the more developed

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economies in the region, there is also much scope for Singapore and Malaysia to pool our efforts to strengthen ASEAN.”2 There are opportunities for the two countries to come together to cooperate and, even take the lead, to discuss and resolve multilateral challenges among countries in the region. One good example concerns the perennial concern of piracy in the Straits of Malacca, where some 50,000 ships carrying half of the world’s oil pass through every year, poses a serious concern to the littoral countries, shipowners and businessmen. Happily, Malaysia and Singapore were able to persuade Indonesia and Thailand to launch a landmark joint air patrol programme known as “Eye in the Sky” to prevent pirate attacks, numbering about 27 last year, and possible future terrorist attacks in the 900-kilometre waterway.3 Indeed, this new initiative to supplement increased boat patrols has resulted in a dramatic drop in pirate attacks from 38 in 2004 to 12 in 2005 in the Malacca Straits. Shippers in the three littoral states have therefore asked the London-based Lloyd’s Joint War Committee (JCW) to remove the Straits of Malacca from its war-risk zones.4 The success of air patrol has led Najib Razak, Deputy Prime Minister and Minister for Defence, to ask the international community to offer appropriate assistance to strengthen the programme. It is, however, in the area of economic cooperation that more opportunities exist for the two neighbours to join forces to go regional to reap greater benefits. A recent example of such cooperation is the proposal from Singapore for the two countries to proceed with the implementation of an open sky policy for commercial aircrafts, and not to wait until 2008 when ASEAN is supposed to adopt this policy. This open sky policy proposal aimed at promoting tourism and other commercial contacts is still under consideration, though codeshare between the commercial airlines of the two countries was implemented in early 2005. The necessity to go beyond codeshare has been acknowledged by the two governments, and officials from the two countries have started preliminary talks to review the existing air services agreement signed in 1980.5 However, the need to revise the bilateral air agreement or to adopt an open sky policy between them has been overtaken by developments in the two-day ASEAN Summit

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of ten leaders held during 12–13 December 2005. There was strong support to introduce the open sky arrangements two years earlier by the end of 2006 rather than 2008.6 A liberal open air agreement would enhance connectivity within ASEAN by allowing the carriers from the ten countries to expand their frequencies and to let in new carriers, which will certainly stimulate tourism and cross-border business. Economic cooperation, not directly involving the two governments and free from political constraints, is of course easier to be achieved by the business communities. It may be recalled that the two stock exchanges, Singapore Exchange and Bursa Malaysia, have been holding a series of talks with the view of introducing cross-border trading of shares. This will permit investors in the two countries to trade each other’s securities on their exchanges in 2007. Speaking at the 3rd ASEAN Business and Investment Summit held in Kuala Lumpur on 10 December 2005 in conjunction with the ASEAN Summit Meeting, the Prime Minister of Singapore, Lee Hsien Loong, suggested that the cross-border trading between the two neighbours should be expanded to other countries in the whole of ASEAN region.7 Bringing capital markets in ASEAN together would enhance liquidity and will make them more attractive to investors. While acknowledging the difficulty of linking up regional markets, he added that if we can bring our people together and understand what is happening among ASEAN capitals and companies, we could bring capital markets together. Another important proposal made during the 3rd ASEAN Business and Investment Summit was offered by Abdullah Badawi, the Prime Minister of Malaysia.8 He urged greater regional trade liberalisation, reiterating that the grouping does not believe in the erection of barriers to trade. Faced with competition from China and India, it is extremely important to realize the creation of a single ASEAN market, with the free flow of goods, services, investment, labour and capital among the 530 million people in the region. The Prime Minister of Singapore, Lee Hsien Loong, went a step further by calling for the acceleration of economic integration among member countries of ASEAN.9 One approach, he proposed, was to bring forward the timeframe for an ASEAN Economic Community, originally targeted for 2020, by five

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years. This proposal received sympathetic consideration from the leaders of Indonesia, Vietnam and Malaysia. Indeed, we have observed the flurry of cross-border business deals inked by both government-linked and private-owned companies.10 We can certainly look forward to cross-border investments by the two government holding companies, Temasek and Khazanah Nasional. Khazanah has been a somewhat passive investor since its establishment more than a decade ago, but when Abdullah Badawi took over the premiership, he directed the agency to pursue an active investment strategy, including venturing overseas.11 The new approach, coupled with the emergence of friendly relations between the neighbours in recent years, has resulted in Singapore receiving a fair share of Khazanah’s overseas investments. There are many projects in Singapore, such as the integrated resort, to attract keen interest from investors in both the public and private sectors in Singapore. The integrated resorts at Marina and Sentosa will probably lead to a spillover of tourists to Malaysia, particularly Johore. The range of investments from Singapore in its northern neighbour has also been led by Temasek Holdings as part of its strategy to divert more of its investments into Asia. By and large, this has been engendered by the present favourable climate that is now conducive to investments by government-linked companies from Singapore. Examples of such cross-border deals, mentioned earlier, are Temasek’s investment in Telekom Malaysia, Malaysian Plantations and Southern Bank, all with the approval of the relevant authorities. For sure, there will be more investments by Temasek in Malaysia in the years ahead as it steadily increases its exposure to Asia to avoid over-concentration in one country or industry.12 Most of Singapore investments have flowed to West Malaysia, but there are opportunities for trade and investments in Sabah and Sarawak. Pandikar Amin Haji Mulia, Chairman of the Institute for Development Studies in Sabah, said, “I would like to put on record that the State Government of Sabah encourages and welcomes Singaporean participation in the state’s POIC as well as its nascent biotechnology sector for mutual benefits.”13 POIC refers to the Palm Oil Industrial Cluster. There can also be close collaboration in food and oleochemical

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production and tourism projects which have been boasted by SilkAir flying to Kota Kinabalu twice per week from December 2005. Similarly, the flight of SilkAir to Kuching four times per week since March 2005 has stimulated tourism to Sarawak.14 There are good opportunities for Singapore businessmen to participate in infrastructure projects which have received increased allocation under the Ninth Malaysia Plan to be implemented on 1 January 2006. The private companies have been quick to seize the new opportunities and invested heavily in a variety of enterprises. During the dark days of bilateral relations, Malaysia accounted for about 9 per cent of all Singapore’s investment abroad, but the tide has shifted recently. The businessmen in Singapore are now more sanguine about investment opportunities in neighbouring Malaysia. A big boost to this two-way investments will take place when Bursa Malaysia and the Singapore Exchange finally decide to implement the proposal for cross-trading of securities by the end of 2007. The intensity of cooperation in various areas has been made possible by the warming of the relationship between the two countries in recent years. There is some concern about the enormous scope and advantage of working together for mutual benefits even as they compete where they must and collaborate where they can. Nevertheless, as with any two neighbours, the prospects of downturns in bilateral relations, arising often from unforeseen circumstances, cannot and should not be precluded. It is in the interest of both nations and their peoples to guard against such downturns by careful management of the relationship, and this has certainly been made easier by the goodwill and cooperative spirit engendered in the last two years or so under Abdullah Badawi. In fact, one of Abdullah’s achievements in the area of international relations since he succeeded Mahathir is the much-improved bilateral ties between the two close neighbours. NOTES 1. K. Kesavapany, “Keeping Ties Warm Between Malaysia and Singapore,” Paper presented to seminar on “Singapore Perspectives 2005: People and Partnerships”, 19 January 2005, Singapore.

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2. Chen Huifen, “Closer Singapore-Malaysia Ties Crucial: Nathan”, Business Times, 12 April 2005. 3. “Eye in the Sky Launched”, New Straits Times, 14 September 2005 and “Straits Nations Launch ‘Eye in the Sky’ ”, Business Times, 14 September 2005. 4. Devi Asmarani and Reme Ahmad, “Pirate Attacks in Malacca Straits at Six-Year Low”, Straits Times, 9 November 2005 and “Jakarta Credited for Drop in Malacca Straits Piracy”, Business Times, 1 December 2005 and K. C. Vijayan, “12 Pirate Attacks Last Year is Lowest in Seven Years”, Straits Times, 31 January 2005. 5. Ven Sreenivasan, “Time to Review S’pore-M’sia Air Pact”, Business Times, 23 November 2005, Cindy Lim, “Expanding S’pore-KL Air Rights the Way Forward”, Straits Times, 26 November 2005 and Goh Chin Lian, “Govt Hopes for S’pore-KL Talks to Expand Air Links”, Straits Times, 22 November 2005. 6. Karamjit Kaur, “Unlimited Flights Within Region Possible Soon”, Straits Times, 26 November 2005. 7. Nande Khin, “Expand Cross-Trading of Shares”, Business Times, 12 December 2005. 8. Leslie Lau, “Asean’s Future in Free Trade, Says Abdullah”, Sunday Times, 11 December 2005. 9. Sharon Vasoo, “It Will Take 10 to Tango”, Today, 12 December 2005. 10. “Singapore-Malaysia Investment Flows: Turning Around?”, The Edge Malaysia, 15 November 2005. 11. “K2 Investment Firm Spreads Its Wings”, Straits Times, 22 October 2005. 12. Audrey Tan, “Temasek Likely to Lead S’pore’s Investment Charge into Malaysia”, Straits Times, 11 November 2004. 13. Pandikar Amin Haji Mulia, “Singapore-Sabah Ties”, Paper presented to the Roundtable on Singapore-Malaysia Relations: Mending Fences and Making Good Neighbours, Institute of Southeast Asian Studies, Singapore, 30 November 2005. 14. James Chin, “Singapore-Sarawak Relations”, Paper presented to the Roundtable on Singapore-Malaysia Relations: Mending Fences and Making Good Neighbours, Institute of Southeast Asian Studies, Singapore, 30 November 2005.

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APPENDIX A Speeches by Malaysia’s Agong and Singapore’s President Kuala Lumpur, 11 April 2005

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1. Speech by Yang di-Pertuan Agong Tuanku Syed Sirajuddin at the State Banquet Held in Honour of President and Mrs S. R. Nathan at the Istana Negara, Kuala Lumpur, 11 April 2005.

Your Excellency, S. R. Nathan, President of the Republic of Singapore, And Mrs S. R. Nathan, The Honourable Dato’ Sri Najib Tun Abdul Razak, The Deputy Prime Minister of Malaysia Excellencies, Distinguished Guests, Ladies and Gentlemen, The Raja Permaisuri Agong joins us in warmly welcoming Your Excellency and Mrs Nathan to Malaysia. We are indeed pleased by your visit, which is the first State Visit to Malaysia by the President of the Republic of Singapore since the year 1991. This visit comes at a crucial time of renewed friendship and enhanced bilateral ties between our two countries. 2. We believe that Your Excellency will feel at home during this visit, as Your Excellency is no stranger to this country, having served as the High Commissioner of the Republic of Singapore to Malaysia from 1988 to 1990. Your Excellency, 3. Malaysia and the Republic of Singapore share unique and special ties, not only as close neighbours but also through our permanent links of shared history, cultures and languages. Relations between our two countries can be illustrated by the Malay proverb, “Bagaikan aur dengan tebing”, which literally means “like the bamboo grove and the riverbank”.

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4. The bamboo grove and the riverbank share a symbiotic relationship. The bamboo grove depends on the soil of the riverbank to grow. While the riverbank is dependent on the roots of the bamboo grove to prevent it from gradual erosion, which can lead to its collapse. Neither would survive without the other and neither would gain if the other weakens or perishes. Your Excellency, Our two countries also enjoy substantive relations. 5. In the areas of trade and investment, Singapore is Malaysia’s second biggest trade partner and the fourth largest foreign investor in Malaysia. While Malaysia, amongst the ASEAN countries, is the largest investor in Singapore. 6. We are also pleased to note that Singaporeans make up the highest share of tourist arrival to Malaysia annually. Singapore likewise, is a major tourist destination for Malaysians. 7. The establishment of the ‘Malaysia-Singapore Third Country Business Development Fund’ in 2004 illustrates the unlimited opportunities for both countries to cooperate and expand joint investments and business opportunities, not only in our two countries, but also in third countries for our mutual benefit. Your Excellency, 8. Being close neighbours, we may sometimes have to compete with each other in facing increasing challenges of globalization and shifting geo-political order in the region. Competition, in itself, is not a bad thing as it allows us to improve ourselves, so as not to become complacent. However, more often than not, both countries will find it more beneficial in their long-term interests to cooperate in a complementary way when facing such challenges.

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9. As another Malay saying goes “Sedangkan lidah lagi tergigit”. This implies that differences can arise even though we are close to one another. More importantly, it is the way we deal with and react to the differences that matter in building a constructive relationship. In this connection, we are indeed pleased to see our two countries moving forward in the ongoing negotiations to resolve outstanding bilateral issues based on the spirit of good neighbourliness and cooperation. Your Excellency, 10. To further strengthen relations and cooperation between our two countries, we believe it is important for us to encourage closer peopleto-people contacts. It is indeed heartening to witness the steady increase in the cross-flow of people from both sides in recent years. This has been further enhanced lately by the increase in the exchange for visits involving government leader, ministers, senior officials and students between the two countries. We are confident that such interaction would create greater awareness and understanding, thereby enhancing the goodwill that exists between our two countries. Your Excellency, 11. In ensuring peace, security and prosperity in the region, ASEAN has played a crucial role as the galvanizing force that binds the member countries and defines the identity of the Southeast ASEAN region. Malaysia and Singapore should continue to play a key role in promoting ASEAN as a dynamic regional grouping to ensure peace, stability and the economic integration of the diverse countries in the region. 12. It is our earnest desire to see the good relations between Malaysia and the Republic of Singapore continue to be further strengthened and expanded for the mutual benefit of our two countries in the years ahead. 13. We sincerely hope that Your Excellency and Mrs Nathan will enjoy your stay in Malaysia and to bring back fond memories of your visit. Once again, “SELAMAT DATANG KE MALAYSIA”.

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Distinguished Guests, Ladies and Gentlemen, 14. With those words, may we invite all present, to join us in a toast, to the continued good health and happiness of His Excellency President S. R. Nathan and Mrs S. R. Nathan, as well as for the peace and prosperity of the people of the Republic of Singapore. Thank you.

2. Speech by President S. R. Nathan at the State Banquet Hosted by their Majesties the Yang di-Pertuan Agong Tuanku Syed Sirajuddin and the Raja Permaisuri Agong Tuanku Fauziah at the Istana Negara, Kuala Lumpur, 11 April 2005.

Your Majesty the Yang Di-Pertuan Agong of Malaysia, Tuanku Syed Sirajuddin Your Majesty the Raja Permaisuri Agong, Tuanku Fauziah Excellencies Ladies and Gentlemen It is with considerable pleasure that my wife and I are making this State Visit to Malaysia at the kind invitation of Your Majesties. I sincerely appreciate the warmth with which we are being received and the generous hospitality extended to us and our accompanying delegation. For my wife and me and Singaporeans of our generation, Malaysia has always been a part of our lives. The many acts of personal affection and courtesies we shared have left us with lasting and happy memories of this country. In our time, my wife and I worked in pre-Independence Malaya and shared the hopes and joys of the people of this country. There have been some painful moments in the history of our two

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countries, but our peoples overcame them and moved on. We have built a constructive and mutually beneficial relationship. Our partnership has endured despite occasional stresses and strains, which are inevitable between close neighbours with such intertwined histories. Above all, we are close enough to know each other well and share what befalls each other. Our countries may have different priorities and organising principles, but our two peoples have a mutual interest in each other’s progress and prosperity, and in working together to tackle common challenges and opportunities. This unique relationship, has withstood many tests and strains over the years. Our leaders and our peoples are conscious that whatever be our occasional disagreements, they should not distract us from the common challenges confronting us in an increasingly globalised world. These challenges are opportunities for our two countries to provide leadership for the region, as it adjusts to the tectonic shifts going on around us. As my wife and I look back in our early years working in Malaya and when Kuala Lumpur was our home during my stint as Singapore’s High Commissioner (1988–1990), we see how much Malaysia has progressed, with Kuala Lumpur as a shining metropolis befitting your economically prosperous country. It is remarkable to see how much the city has developed since. Some parts are no longer recognisable to us. This is testimony to the rapid transformation that has taken place in Malaysia as a whole. It is also a symbol of Malaysia’s impressive growth over the last decade. Likewise, our relationships at all levels have developed for the mutual benefit of our two countries and peoples. At the working level there is interaction. We are prepared to learn from each other. There are also signs of our greater desire to strengthen relations at all levels. Today, our economies are increasingly intertwined. We are among each other’s top trading partners with RM203 billion of bilateral trade in 2004, an increase of over 14 percent from 2003. We are also each other’s key sources of investments and tourism. In 2004, Singapore was the second largest foreign investor in Malaysia with investments worth RM1.5 billion in 156 projects. We continue to look for such opportunities with each passing day. There

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are also noteworthy investments from Malaysia into Singapore, such as CIMB’s acquisition of GK Goh which would strengthen the combined entity’s position as one of the leading investment banks and brokerage in the region. Then there are the recent tie-ups between Bursa Malaysia and the Singapore Exchange to promote cross-trading on each other’s stock markets, and between Telekom Malaysia International and Singapore Technologies Telemedia to co-invest in India’s leading cellular company. Last year, both sides also launched the Malaysia-Singapore Third Country Business Development Fund and the Malaysia Singapore Business Council (MSBC) to promote exchange of information, regular dialogues and business conferences, and joint participation in trade exhibitions. Both countries are also looking at collaborating in infrastructural development projects in China and India. These are just some of the healthy indications of growing mutual confidence and close economic cooperation. On the tourism front, Singapore remains Malaysia’s biggest source of tourists with almost 10 million tourist arrivals last year, accounting for 60 percent of total arrivals. Regular high level visits from both sides have also continued, including the recent introductory visits by Prime Minister Abdullah Badawi and Prime Minister Lee Hsien Loong. Moving forward, we face many common challenges. The global landscape is very different from what it was a decade ago. Today, concerns over terrorism and economic competitiveness bind us closer together. Closer links between our two countries are more crucial than ever. I am therefore pleased to note that both sides have taken a renewed interest in each other’s development and cooperated in such areas as combating SARS, avian flu and counter-terrorism. As founding members of ASEAN and two of the more developed economies in the region, there is also much scope for Singapore and Malaysia to pool our efforts to strengthen ASEAN. Singapore and Malaysia can help set the pace of ASEAN’s integration by pushing for the realisation of the ASEAN Economic Community (AEC), which is included in the Bali Accord II as one of the key pillars of the ASEAN Community. When realised, the AEC will make for a

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more competitive and dynamic ASEAN economic region. My delegation and I would once again like to thank Your Majesty for the warm welcome accorded to us during our stay. We are looking forward to the rest of our visit to Malaysia and to Sarawak, to where we will be travelling later this week. I would also like to take the opportunity of this state banquet to formally extend an invitation to Your Majesty and Her Majesty, to pay a State Visit to Singapore as soon as is convenient to Your Majesties. I look forward to the privilege of receiving Your Majesties in Singapore. I am confident that the close links between Malaysia and Singapore will be enhanced through Your Majesty’s benevolence and guidance and the efforts of our two governments and the natural kinship of our peoples. Your Excellencies, Distinguished guests, Ladies and Gentlemen It is now my great pleasure to invite you to join me in a toast to the health and happinese of Their Majesties, the Yang Di-Pertuan Agong and Raja Permaisuri, to continued peace and prosperity in Malaysia and to the enduring friendship between the governments and peoples of Malaysia and Singapore.

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APPENDIX B Speeches by Singapore’s President and Malaysia’s Agong Singapore, 23 January 2006

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Speech by President S. R. Nathan at the State Banquet Held in Honour of Their Majesties the Yang di-Pertuan Agong Tuanku Syed Sirajuddin and the Raja Permaisuri Agong Tuanku Fauziah at the Istana, Singapore, 23 January 2006.

Your Majesty, the Yang di-Pertuan Agong of Malaysia, Tuanku Syed Sirajuddin, Your Majesty, the Raja Permaisuri Agong, Tuanku Fauziah, Your Royal Highness, the Regent of Perlis, Tuanku Syed Faizuddin, Your Royal Highness, the Crown Princess of Perlis Tuanku Shareen, Your Highness, the Tengku Putri Mahkota Perlis Dato’ Seri Sharifah, Honourable Ministers, Excellencies, Distinguished Guests, It gives my wife and me and the Government and people of Singapore great pleasure to welcome Your Majesties, Your Royal Highnesses, Your Highness and the distinguished members of Your Majesties’ delegation to Singapore. I would like to express my sincere appreciation for the warm welcome extended by Your Majesties to my wife and me during our State Visit to Malaysia last April. I recall with much fondness the warmth and kindness which we experienced during our visit. We returned with many happy and enduring memories. It is therefore a special privilege for us to be able to reciprocate Your Majesties’ gracious welcome and friendship during your State Visit to Singapore. We hope Your Majesties will have a memorable stay here. Your Majesties’ State Visit symbolises and reaffirms the warm and close ties between our two countries. The long-standing ties of history, geography, economics and kinship have endured the test of time and continue to bind us together. In recent years, our relations have broadened and deepened, marked by greater contact and cooperation between our leaders, officials and businesses. Our close interdependence continues to commit us to a common future in the region.

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Your Majesties, A new world is emerging right before us. Globalisation and new challenges confront us. The growth of China and India unfolds new opportunities, as well as fresh challenges, to both our countries. We must take a more enlightened view and focus on this larger context, so that we can work together to respond to it. As two neighbours who live and work as closely together as we do, differences of perspective and interests from time to time are natural. However, our relationship is stronger today, because we have kept such differences in perspective, and have not allowed unresolved issues to define our relations or prevent us from cooperating to exploit the opportunities that came our way. Your Majesties’ visit symbolises the close linkages between our two countries at all levels. Exchanges between our two peoples continue to grow. We remain each other’s key drivers of tourism. In the field of Security we have worked closely ever since we became two separate sovereign nations. The past year has seen many high-level visits by our leaders. There have been frequent contacts at the working level. Our officials in the Civil Service and Armed Forces meet often, not just to discuss work matters, but also to participate in bilateral games. These exchanges go a long way in strengthening personal friendships amongst our people. Such relationships will greatly enhance our ability to work together, especially in tackling problems such as terrorism, security in the Straits of Malacca and avian flu. Our economies are increasingly interdependent. We benefit from each other’s prosperity. Malaysia is Singapore’s biggest trading partner, and is also a favoured destination for Singapore investors, who make up the second largest group of investors in Malaysia. Malaysian companies also have significant economic interests in Singapore. Last year, Malaysian government-linked and private companies such as Khazanah, CIMB, TM International, Scomi Bhd, and OSK Holdings invested more than S$1 billion in Singaporean companies. Our businesses are also looking at joint venture opportunities in third countries. Through such business collaboration and partnerships, we can grow and prosper together.

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Your Majesties, One important area where our interests coincide is the progress and prosperity of South East Asia. We have always had vested interests in greater cooperation in this region. To achieve this, Malaysia and Singapore must play active roles to strengthen ASEAN and accelerate its integration. This is vital to ensuring ASEAN’s competitiveness as a group. As two of the more developed economies in ASEAN, Singapore and Malaysia should work together to position ASEAN for the future. Malaysia did an outstanding job hosting the ASEAN Summit and the inaugural East Asia Summit (EAS) last December. The EAS has strengthened the links between ASEAN and key countries in the region, and will be an important component of the regional architecture. It has also demonstrated the continued centrality and effectiveness of ASEAN as the driving force in regional affairs. A key milestone in mapping ASEAN’s future is the drafting of the ASEAN Charter. Having always shared a common vision for an integrated and united ASEAN, it is imperative that Malaysia and Singapore take an active part in this process and harmonise our efforts, as we did at the founding of ASEAN. Through this, we can help push ASEAN towards realising the establishment of an ASEAN Community. I am confident that with the impetus from Your Majesties’ State Visit to Singapore, our two countries can forge an even stronger partnership to realise our common goals and vision for the prosperity and benefit of our peoples. Your Excellencies, Distinguished Guests, Ladies and Gentlemen, It is now my great pleasure to invite you to join me in a toast: • •

to the good health and happiness of Their Majesties, the Yang diPertuan Agong and Raja Permaisuri; and to the close friendship between the governments and peoples of Malaysia and Singapore.

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2. Speech by Yang di-Pertuan Agong Tuanku Syed Sirajuddin at the State Banquet Hosted by President and Mrs S. R. Nathan at the Istana, Singapore 23 January 2006.

Your Excellency S. R. Nathan, President of the Republic of Singapore, and Mrs S. R. Nathan; His Excellency Lee Hsien Loong, Prime Minister of the Republic of Singapore; Excellencies, Distinguished Guests, Ladies and Gentlemen, The Raja Permaisuri Agong joins us in expressing to Your Excellency, our deep gratitude for your kind words of welcome. We would also like to convey our sincere appreciation for the warm reception and generous hospitality extended to us as well as for the excellent arrangements made for our visit. We certainly look forward to a most memorable visit to your progressive and dynamic country. 2. We would also like to congratulate Your Excellency once again, for your re-election as the President of the Republic of Singapore in August last year. Your re-election for another six-year term illustrates the confidence of the people of the Republic of Singapore in Your Excellency’s wise and benevolent guidance. We believe that, Your Excellency has played an excellent and exemplary role from which the Government and the people of Singapore has benefited and will continue to benefit immensely. We also believe that given these circumstances, the close relations and cooperation between our two countries will be further strengthened.

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Your Excellency, 3. During Your Excellency’s State Visit to Malaysia in April 2005, Your Excellency has kindly extended an invitation to us to make a State Visit to Singapore. We had noted that the last State Visit from Malaysia to Singapore was made 18 years ago, in July 1988, by the Seventh Yang di-Pertuan Agong, Tuanku Sultan Iskandar Ibni Al-Marhum Sultan Ismail. We are very happy that we are now able to reciprocate Your Excellency’s State Visit this year. This clearly illustrates the warm relations between our two countries. Your Excellency, 4. We are indeed very pleased to visit Singapore at a time when the ties of friendship and bilateral cooperation between the two countries have been enhanced through frequent dialogues carried out in the spirit of good neighbourliness and understanding. We are heartened to note the increased cooperation between our two countries in recent years, especially in the areas of trade and investment, education, agriculture, defence and security, health, environment, information, as well as arts and culture. 5. We are happy to note that Singapore is Malaysia’s largest trading partner in ASEAN. In the past three years, total bilateral trade between Malaysia and Singapore has been increasing steadily. Similarly, the cross-flow of investments between the two countries has also risen in recent years. In 2004, Singapore was the second largest foreign investor in Malaysia. 6. We also observe that, there has been a marked increase in the exchange of visits between our two countries at the ministerial, senior officials and technical levels. Visits being exchanged at the highest level from both countries in the years 2004 and 2005 have resulted in further promoting friendship and understanding, thus creating the necessary goodwill and positive atmosphere conducive to resolving

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issues and problems. This clearly reflects the excellent state of relations between the two countries. We would like to encourage more exchanges, including through sporting activities between various ministries and agencies from both countries. Such events help to cultivate friendship and improve networking among officials from both countries. Your Excellency, 7. Enhanced people to people relations are also evidenced from the flow of tourists between our two countries. This has been increasingly steadily. Last year, Singapore was the biggest contributor of foreign tourists to Malaysia, representing almost 60 percent of the total share. Meanwhile, Malaysians are among the largest groups of foreign tourists to Singapore, after Indonesians, Chinese and Japanese tourists. Besides encouraging tourism, we believe that in order to foster understanding and increase awareness between the peoples of our two countries, efforts should be made to create more linkages between the peoples of our younger generations, through students and teachers exchange, cocurricular activities and cultural exchange. 8. As close neighbours with shared interests, both Malaysia and Singapore would like to see continued stability, security and prosperity in the region. We are pleased with Singapore’s commitment and support during the ASEAN Summit and the inaugural East Asia Summit last month. We are confident that Singapore and Malaysia would continue to work closely as key players in ASEAN to promote peace, stability and prosperity in the region. Your Excellency, 9. We sincerely wish that the good relations between Malaysia and the Republic of Singapore will continue to be further strengthened and expanded for the mutual benefit of our two countries in the years ahead. No doubt, the positive political environment, growing trade figures and investment flows, increasing exchange of visits and strengthening

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cooperation in various areas, augur well for the future outlook in our bilateral relations. It is our earnest desire that this new momentum which has been created in our bilateral relations would be sustained for the benefit of our two nations and people. Distinguished guests, Ladies and gentlemen, 10. With those words, may we invite all present, to join us in a toast, to the good health and happiness of His Excellency President S. R. Nathan and Mrs S. R. Nathan, as well as for the continued friendship and cooperation between the Governments and peoples of Malaysia and Singapore. Thank you.

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APPENDIX C Malaysians’ Comments on Singapore-Malaysia Relations

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Some prominent Malaysians offered their comments on the present status of relations between Singapore and Malaysia. The following are the responses. Taufik bin Tun Dr Ismail, Chairman, Tun Dr Ismail International School, Malaysia: I was involved indirectly in business with Singapore via the creation of TV3 in 1984. Broadcasting across borders during that time was a challenge to the Singapore Government’s Mandarin policy, since TV3 was sending Cantonese dialect entertainment free on the airwaves. It gave marketers and advertisers on the Malaysian side unparalleled access via a popular medium to the Singapore population, which until then were not enamoured by Malaysia fare. Unfortunately and understandably, there were no statistics available to assess the impact, but the response of the Singapore Government was to improve the quality and choice of programmes, which resulted in a ratings war across borders that must have benefited consumerism on both sides of the Causeway. I believe the media industry in Singapore boomed as a result of this challenge from the Malaysian end — probably the only example of a free product giving immeasurable gains. From 1998, I have been involved directly in the education sector at the International School level, where the challenge has been more difficult, and the response from the other side of the Causeway, one of disinterest. More than 5,000 Malaysian students cross the Causeway every day in attempting to achieve their dreams of getting a world-class education. I sensed a niche existed for expatriates living in Johore Bahru who would welcome a cheaper, but equally satisfying service. Thus far the local response to this initiative has been unsatisfactory because the Caucasian expatriate community in Johore Bahru, hired by corporations, had personal benefits that allowed them to send their children, without much personal financial sacrifice, across the Causeway. On the other hand, there is a sizeable group of East and West Asian parents that find the strong Singapore dollar an inconvenience, and this is where the niche is. Since education is a key infrastructure in Johore’s quest for foreign investment, it also has the potential to grow as long as Singapore continues to be an expensive place to live in.

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The key to mutual success for Johore Bahru and Singapore is to build on complementary strengths: if Singapore aspires to be the New York of Southeast Asia, should not Johore Bahru build itself as the Boston of Southeast Asia, with its green lands, spacious campuses, and quality landed properties — each feeding the other with ideas and, thereby, sharing a common wealth? The business culture between Johore Bahru and Singapore is the result of a dynamic resulting from challenge and response, as Toynbee would suggest. Datuk Dr Ian Chia (Secretary-General, United Nations Association of Malaysia): In cross-border relationships, as in all human relationships, differences and diversity exist irrespective of its size and form of governments. The cross-border issues between the United States of America and Canada are a case in point. Leaders and peoples who rose above such issues for the mutual benefit of future generations have brought peace, progress and prosperity to their nations and this has contributed to the stability in our world. The new leaders, Abdullah Ahmad Badawi of Malaysia and Lee Hsien Loong of Singapore, brought better perspectives for the settlement of past issues and found new avenues for future cooperation. Beginning with the visit of Prime Minister Abdullah Badawi to Singapore, a series of negotiations that followed resulted in resolving some outstanding issues, notably the CPF, environmental effects of land refill and the promise to seek for fresh solutions to other inherent problems. Traditional linkages in terms of trade and investments have improved, and in 2005 investments by Singapore businessmen in Malaysia grew to over 57 per cent of the total foreign investment. This political will to initiate change must be followed by fresh starts in the interactions of corporate, public and private economic sectors and the interchanges between the educational and sporting communities of both sides. I believe that a reciprocal visit of Prime Minister Lee Hsien Loong to Malaysia will culminate in solutions to the remaining outstanding issues. The Independence of both Malaysia and Singapore has been built upon the conviction of the respect of diversity and differences in pace of development in each country. Each country has

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grown in stature and influence as the world evolved in the era of globalization and ICT. In these difficulty times, both nations stand to gain from the waves of change if the will to improve is combined with a blend of wisdom and compassion to see the future for the betterment of the next generation. Tan Sri Dato’ Seri Dr Jeffrey Cheah (Chairman, Sunway, Malaysia): I believe that the traditional, historical, trade and fraternal ties between Malaysia and Singapore have definitely strengthened after Dato’ Seri Abdullah Badawi became Prime Minister of Malaysia. As a businessman with close business relations with Singapore, especially through Sunway’s collaboration with GIC, I feel confident that trade and investment with Singapore will continue to grow impressively. We are encouraged by the more professional relations and warmth that are shown by our leaders and people from both countries in recent times. All this will, I am sure, lead to stronger relations in the future and will enable both Malaysia and Singapore to set higher standards for ASEAN unity and deeper business relations within AFTA, and the rest of the world. With China and India becoming more recognised as world economic powers, both our countries need to further strengthen our rich traditional ties to move forward together, to tap into this huge potential for greater peace and prosperity in the region. I sincerely believe that our people and leaders will rise to the challenges of globalisation, for more mutual benefits in the years ahead. Dato’ Abdul Azim Zabidi (Chairman, Bank Simpanan Nasional, Malaysia): After fifty years of political ups and downs, during which our economic ties have grown steadily stronger, it is time to summon a fresh idealism which is at the same time a clear-eyed realism in our approach to the Singapore-Malaysia relationship. Idealism and realism coincide in this case because the best way forward is also the only rational way forward, given where we have come from and who we want to be. It is time to recognize that our ties are inextricable and our destinies linked. This is not just because, as is often noted, we are linked by history and culture and are each other’s

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closest neighbour and biggest trading partner. It is also because this relationship can only grow, and must grow, not just in volume of trade but in new and creative ways. We have chosen broadly similar approaches of openness and engagement with the world and, because our national strengths are in so many respects complementary, that choice sets us up as partners more than as competitors. We must both make our way in an extremely competitive and fast-changing global environment. In our most hardnosed calculations, the leaders of both countries know that in each case national prosperity is anchored in shared prosperity across the Straits. Even as we speak of an economic strategy for the ASEAN region as a whole, for our two countries those regional relationships are prefigured by this most important bilateral relationship. The re-emergence of China and India should give us pause for reflection on a future for which our past sets our coordinates. The ancient prosperity of the Peninsula and the Straits, well before the coming of the Western powers, was based on trade between India and China. We are neither strangers to trade nor to prosperity centred in Asia. I think I am justified in my hope that in the new world order that is forming in our midst, the old ties between Malaysia and Singapore may be renewed accordingly. Dato’ Tan Chin Nam (Honorary Life President, Tan & Tan Development, Malaysia): The question asks whether business and people-to-people ties between Malaysia and Singapore have improved. In short, have fairly good relations gotten better? I do not know the answer, not having tried to monitor fluctuations in a generally highly cordial relationship, especially compared with relations among countries in other regions of the world. In truth, relations have never been as bad over the past 40 years as they seemed at given moments during that period. The bottom line is that there has never been a single “crisis” between Malaysia and Singapore since 1965 that does not appear in retrospect to have been relatively unimportant, a mere pothole on the road forward. That is because the fundamental interests of the two nations — building trade between each other and maintaining a zone of peace, freedom and neutrality —

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are nearly identical. Our business and political leaders have always understood this point. Instead, then, of trying to decide whether good relations have become better, I have a modest set of suggestions to assuage the surface “irritations” that develop. 1. Both sides need to adopt win-win as the philosophy, which is a businesslike way of thinking. If one side comes to a meeting with its minutes and desiderata formidably well organised, this side has to understand that it takes two hands to clap. I know of no bilateral agreements with one signature. 2. The role of social meetings, both competitive and uncompetitive, must be more fully appreciated. I could mention a golf match between the leaderships of the two countries that I helped to organize eons ago, but instead, I want to give another example: the annual Malaysia vs. Singapore chess match featuring about 70 players on each side, from under eight to age 80. This sporting event has no body contact except for the clash of minds. No closer friendships are created than those of the mind, and these relationships transcend race, class and national borders. 3. In this age of the Internet, the idea of banning the newspapers of each other makes nearly no practical sense. The Internet knows no borders. Banning information is, then, both hostile and meaningless because the act cannot achieve its goal. 4. Let us be careful how we use words. Let us keep in mind that contrary to the childhood taunt, “sticks and stones may break my bones but names will never hurt me,” the truth in the real world is different. Unfriendly words and gestures may wound. 5. I favour establishment of a permanent seminar of academic, business and government leaders from both nations to discuss economic and political relations, to publish papers and offer recommendations. Dr Paul Chan (Chairman, HELP, Malaysia): The relationship between Singapore and Malaysia was somewhat tumultuous before Badawi’s premiership. This had distracted both governments from focusing on the areas of opportunities where both could collaborate to advance the

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two nations. Despite the closeness of the two economies, the absence of conscious efforts to collaborate to enhance the common wealth of the two economies means that both have lost opportunities to become economically stronger and politically friendlier. One consequence is that major Singapore investment flows into other ASEAN countries and the rest of the world. As the Malaysian climate did not seem so welcoming, the Malaysian economy did not benefit from some useful injection of Singapore investment and technology. Singapore and Malaysia are trapped by the legacy of the British colonial rule. But when this is aggravated by leadership style and the growing differences about the perspective of their respective future, there is thus no common paradigm (except those arising from international challenges like terrorism) to be the basis for constructive collaboration. Under Prime Minister Badawi, the climate changed somewhat. In change management, the first act of a CEO is to create the climate and the context for transformation and growth. He did this by lowering the tension. There were no sharp exchanges in the public media and a more reconciliatory approach to resolving issues emerged. Dialogue and not recriminations became the conversation of the respective leaders. A calmer relationship between the two nations has now thus prevailed. This has an immediate impact: it allows for some major investments in strategic sectors to be possible. Thus Singapore Government-linked investment was approved in the banking and telecommunications sectors. More could have happened; this could be a prelude. Still, residual issues about the bridge and other legacy matters about water supply, railway land, and air space are awaiting resolution. Though Badawi has contributed to a friendlier conduct in dealing with so-called sensitive issues, these outstanding challenges are not likely to be resolved in the near future. Other investment potential, from the government or private sector, may be encouraged, if not facilitated, but definitely not obstructed. Cooperation in international issues, like containing terrorism, will be facilitated using ASEAN and other regional frameworks. How far the relationship can progress forward depends on some critical factors, which I call the four Cs: these include the overall

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global climate, the contextual issues, the character and competency of the leaders of both nations. Unless and until there is a right fit, it is unlikely that the legacy issues mentioned above will be resolved in the near future. It will be unfortunate that this friendlier relationship is not fully appreciated and the opportunity not used to identify opportunities for mutual benefits. I can think of a regional development project that both can explore. For instance, Johore has its vision for its future development. It has a huge land bank. Can a similar Singapore-Suzhou industry park be developed in Johore that complements what the latter wants to do and what Singapore is already doing in China and elsewhere? Singapore can provide the finance, technology and management. Malaysia can provide the land bank and labour, plus migrant workers. In this way, a new industry hub with the benefit of lower wage migrant workers can be developed to challenge China and other low wage competitive economies. It can also benefit from the US-Singapore and soon US-Malaysia free trade arrangements. The dynamics and the spinoffs are immeasurable. As an entrepreneur, I believe that to succeed, Malaysia and Singapore must think bolder and outside the legacy paradigm. Otherwise, we will be left behind by more dynamic forces now emerging in China, India, Vietnam and soon Sri Lanka.

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APPENDIX D Singapore Businessmen’s Comments on Singapore-Malaysia Relations

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The Business Times interviewed some top management from companies in Singapore on whether they saw an improvement in people to people ties across the Causeway, and how can such ties be improved, in particular with respect to business in particular. The following are some responses that appeared in the Business Times on 23 May 2005. Poh Mui Hoon (CEO, Nets): Malaysia and Singapore have had close ties for as long as anyone can remember. Our people share a great deal historically and culturally. Many of us have colleagues, friends and family on both sides of the Causeway. Moreover, trade — particularly between private enterprises — has been flourishing for decades and we value one another as important trading partners. Malaysians and Singaporeans spend tens of millions of dollars in each other’s shops, hotels and restaurants every year. Johor Baru alone welcomes an estimated one million Singaporeans every month. I believe the recent relaxation of regulations allowing businesses to cooperate, compete and take stakes in important but sensitive sectors such as banking and telecommunications will further improve social and economic links. Indeed, my company is actively pursuing opportunities with Malaysian partners that allow Singaporeans the security and convenience of using their Nets cards to withdraw cash and make purchases across the Causeway. We are simultaneously working to enable Malaysian visitors to our shores to enjoy the same privileges with their local bank cards. I believe the enormous economic benefits will continue to be the primary driver of moves to further strengthen relations between Singapore and Malaysia. This economic imperative will help us find practical solutions for long-standing and potentially divisive issues. Joey Chang (CEO, AXS Infocomm): I can see in my business dealings in Malaysia that the attitude of thebusiness executives are getting friendlier towards Singapore and Singaporeans. In general, the people are always nice. But the feeling I get, and some Malaysian contacts shared this with me, is that they are never too keen to engage services or business from Singapore companies, if they can. I believe this stems mostly from the competitive nature that defines our relationship and the fact that we, as their closest neighbour, are seen as their ‘main rival’.

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These kinds of feelings are similar to those seen in sports, where the next-door team is the most ‘hated’. With a new government in place in Malaysia and its ‘nicer’ view of Singapore, things have got much better. And I can see that the true businessmen there are really looking at thingsin the economic sense and are very open to dealing with anyone, including those from Singapore. I look forward to enjoying this better atmosphere there. Of course, a few golf games between the two would also be a good idea. Theresa Chew (CEO and co-founder, Expressions International): Like all close neighbours, Singapore and Malaysia have their fair share of ups and downs in their relationship. But, thankfully, we are always able to reconcile our differences, reach an agreement and move on from there. The latest example is the expeditious manner in which both countries reached an amicable settlement on the reclamation issue at Pulau Tekong. Our proximity, historical ties and strong economic links have resulted in a large number of Singaporeans working in Malaysia, and vice versa. Many of us have relatives in Malaysia as well. This familiarity and closeness put Singaporeans and Malaysians in an advantageous position when it comes to venturing into each other’s markets. Business people from either country should maximise the strengths of both countries and use this knowledge to grow their businesses further in the region. Many local businessmen have set up companies in Malaysia to take advantage of the low production costs there. And we have also seen Malaysian companies acquiring stakes in local companies, for example, Star Cruises and Valuair. All this reflects the enormous confidence that businessmen from both sides have in both countries. Perhaps companies from both countries should further collaborate and pool resources to create the kind of synergy, clout and dynamism that will enable them to compete with other corporate giants and play an integral role in the markets of the economic giants of the future — India and China. Stephen Lim (Founder & CEO, SQL View Pte Ltd; Chairman, Singapore Infocomm Technology Federation): Businessmen are very agile people. They survive under the most trying conditions, but they

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particularly flourish when the environment in which they operate is warm and conducive to collaboration. Businessmen form partnerships based on mutual synergy and win-win conditions. Even during trying times, I must say that businessmen across the straits maintained excellent relationships with one another. While business conditions can be affected by government policies, and those times might have been stressful on cross-straits partnerships, our businessmen had no doubt that this storm in a teacup would pass over, and it would be business as usual again. The general public in both countries may be more affected by their governments’ positions and influenced by their mass media. Consequently, with strengthening ties between the two nations, the general public has responded accordingly. Businessmen will no doubt take the cue from their political leaders and build upon the goodwill they have already created, or develop new ones. There is cautious optimism, of course, in view of the past ebb and flow in relations. But even the most cautious of us must admit that the natural synergies between our two countries will provide a strong foundation for mutual profit and benefit. Business communities on both sides of the Causeway do understand that we have more to gain by working together than by going it alone. I believe our respective business communities must take advantage of this current favourable environment to sow the seeds of goodwill and build robust long-term relationships that will weather any future ups and downs in political ties. Looking forward, how can the business communities on both sides improve political relations? I believe we can be the lubricant to ease political friction. This requires more interaction between government and business communities from both sides. Tom Cheong (Regional Managing Director, Avaya Asean): Yes, I have seen improvements in people-to-people ties in recent years, and this has been exemplified by the rising number of partnerships and investments between Singapore-based companies and Malaysian ones. The SingaporeMalaysia Business Council was recently established to foster greater networking activities between the business communities of both countries, and I look forward to seeing new ideas and projects resulting from this venture.

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There are always ways to enhance this. We at Avaya would like to see more collaboration and interaction between the countries’ respective industry chambers, trade, and SME-related bodies to further boost business ties between Singapore and Malaysia, thereby opening more doors for the business community here. Ultimately, the deepening of business cooperation between Singapore and Malaysia can be achieved through many channels and involves the interaction of both the government and the private sector, and we at Avaya are happy to see agencies and trade bodies continuing to provide support in terms of creating networks and seed funding.

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Index

A Abdul Azim Zabidi, 85, 86 Abdul Ghani Othman, 10, 52 Abdul Kadir Shaikh Fadzir, 16, 24 Abdullah Badawi, xvi, 5, 10, 15, 57, 59 death of spouse, 19 Abu Aziz bin Abu Talib, 26 Academy of Knowledge for Accounting and Leadership, 50 Ahmad Fuzi Razak, 10 air travel enhanced connectivity, 32 airspace access by Singapore air force, 2, 5, 9, 10 Alliance Bank, 31 AMMB Holdings, 40 Anderson Primary School, 18 Aranda Investments, 31 Ascendas, 44

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ASEAN Charter, 75 role, 65 ASEAN Business and Investment Summit, 57 ASEAN Business Forum, 40 ASEAN Economic Community, 57, 68 Asia General Holdings, 43 Asian Strategy and Leadership Institute (ASLI), 40 Avaya Asean, 95 avian influenza, 2, 68 AXS Infocomm, 93 Azmi Khalid, 19

B Backbenchers Club, 5 Balakrishnan, Vivian, 19, 26, 34, 36 Bali Accord II, 68

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Bandar Wangsa Maju, 41 Bank Simpanan Nasional, 85 Barisan Nasional Wanita, 25 Basic Military Training Centre, 18 Bench and Bar Games, 52 Berjaya Corporation, 44 bilateral issues resolving, 1–11 Boo Cheng Hau, 5 bridge saga, xv, 4–11, 88 Bursa Malaysia, 24, 57, 68 Business Opportunities in Malaysia, 18

double taxation agreement, 36 Dyslexia Centre, 18 Dyslexic Association of Singapore, 18

E East Asia Summit, 75 economic cooperation, 36 economic integration, 57 808 Holdings, 44, 45 Endon Mahmood, Datin Seri, 19 Expressions International, 94 “Eye in the Sky” programme, 56

C CapitaLand, 45, 46 Causeway replacement, xv, 4–11 Central Provident Fund contributions by Malaysians, xv, 1, 5 Chan, Dr Paul, 87–89 Chang, Joey, 93, 94 Channel NewsAsia, 53 Cheah, Dr Jeffrey, 85 Cheong, Tom, 95, 96 Chew, Theresa, 94 Chia, Dr Ian, 84 Chicago Board of Trade, 46 China rise of, xvi Commerce International Merchants Bankers Bhd (CIMB), 30, 68, 74

F Fong Chan Onn, 15 Four National Taps strategy, 3 Fraser Securities, 40 friendly games foreign ministries, 8

D Darjah Panglima Gagah Angkatan Tentera, 19

H Habib Corporation, 41 halal markets, 35

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G games, see friendly games gas supply contract, 32 Genting Group, 30, 45 Gerbang Perdana, 7 GIC Real Estate Pte Ltd, 30 GK Goh Holdings, 40, 68 global system for mobile communication (GSM), 39 Goh Chok Tong, xvi, 5, 6, 8, 15, 25 government-linked companies surge in investments, 30

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Hashim Yaacob, 49 Hawazi Daipi, 51 HELP University College, 87 Hishamuddin Hussein Onn, 16, 50 Ho Ching, 29, 30 Hotel Properties, 45

I India rise of, xvi Informatics, 44 Institute for Development Studies, 58 integrated services digital network (ISDN), 39 interest taxation on, 36 International Court of Justice in the Hague, 4, 55 International Enterprise Singapore, 35, 52 International Law of the Sea Tribunal, 3, 8 inter-university golf, 51 investments private cross border, 42 public cross border, 33 J Jamaludin Jaris, 30 Jaya Holdings, 44 Jayakumar, S., 6, 19 Johore Bahru City Square Mall, 31 Johore Bahru UMNO Youth, 6 joint air patrol, 56 Joint Asian Derivatives Exchange (JADE), 46 Joseph Salang, 52

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K Karim Raslan, 35 Keppel Corporation, 32 Khaled Mohamed, 6 Khazanah Nasional, 58, 76 King Edward VII College of Medicine, 17 Koh Boon Hwee, 30 Kuala Lumpur Business Club, 29 Kuala Lumpur City Centre, 17 KUB Malaysia Berhad, 50 Kuek, Desmond, Major-General, 18 L land reclamation agreement on issue, 55 by Singapore, xv, 9 Landmarks Land and Properties, 41 Lee Boon Yang, 16, 39 Lee Hsien Loong, xvi, 5, 15, 20, 25, 30, 34, 57 Lee Kuan Yew, 1, 2, 17, 23, 25 Leo Michael Toyad, 36 Lim Cheok Peng, 44 Lim Hng Kiang, 30, 40 Lim Hwee Hua, 25 Lim Keng Yaik, 34, 39 Lim, Stephen, 94, 95 Lion Group, 45 Lloyd’s Joint War Committee, 56 Loreno Sdn Bhd, 45 M MAE Engineering, 45 Mah Bow Tan, 17 Mahathir administration demolition of Causeway, 4 relationship with Singapore, xv

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Mahathir Mohamed, 1, 2, 4, 5, 9, 10 Malaysia key role in promoting ASEAN, 65 projects committee by foreigners, xvii Malaysia Airlines, 30 codeshare agreement with SIA, 32 Malaysia Cup, 53 Malaysia External Trade Corporation, 35, 52 Malaysia–Singapore Business Council Committee, 68 Malaysia–Singapore Forum 2004, 40 Malaysia–Singapore Public Service Games, 52 Malaysia–Singapore Third Country Business Development Fund (MSBF), 35, 64, 68 Malaysia–Singapore Tourism Games, 36 Malaysia–Singapore Youth Camp, 26 Malaysian Armed Forces anniversary celebrations, 18 Malaysian Industrial Development Authority, 35, 52 Malaysian Plantations, 58 Mapletree Capital Management, 31 Marina Barrage, 3 MCA Wanita, 25 MCL Land, 41 MediaCorp, 24 Minister for National Development, 17

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Minister for Trade and Industry, 18 Ministry of Foreign Affairs, 7 Ministry of Internal Security, 52 MISC, 44 MobileOne, 34, 43 Moehamad Izat Emir, 8 Mohamed Isa Abdul Samad, 18 Mohd Hassan Marican, 34 Mohd Puad Zarkashi, 9 Mohd Shafie Haji Apdal, 45 Money World Asia, 40 Muhyiddin Yasin, 17 Mustapa Mohamed, 40 Mutual Recognition Agreement, 39

N Najib Razak, 7, 23, 29 Nathan, President S. R., 16, 20, 23, 49, 55 speech at State Banquet, 66–69, 73–75 National University of Singapore centennial celebrations, 49 joint programmes with UM, 49 law faculty, 50 National Youth Council, 26 Nazir Razak, 40 Nets, 93 Newater, 3 newspapers lifting circulation restrictions, 23 Ng Eng Hen, 15, 18 Ng Yet Chung, LieutenantGeneral, 18 1961 Water Agreement, 3 1962 Water Agreement, 3 Ninth Malaysia Plan, 10, 59

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NOL, 44 NUS Business School, 50

O official visits, 15–20 offshore funds new, 41 Ong Ka Ting, 17 Ong Lee Kiat, 26 open skies policy, 30, 56, 57 OSK Holdings, 44, 74 P Palm Oil Industrial Cluster, 58 Pandikar Amin Haji Mulia, 58 Pantai Holdings, 43 Parameswaran, N., 11 Parkway Holdings, 43 Pedra Branca, xv, 4, 55 People’s Action Party Women’s Wing, 25 Petaling Jaya, 31 Petronas Tower, 17 piracy, 56 Poh Mui Hoon, 93 private sector expanding economic links, 39–48 public switched telephone network (PSTN), 39 Q Queenstown Primary School, 18 R Rafidah Aziz, 18, 30 railway land, 1, 10 Raja Permaisuri Agong, 19

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reclamation, see land reclamation RHB Bank, 30, 53 royalties taxation of, 36 RSAF planes, 5

S S-League, 53 Samy Vellu, 7 sand selling, 9 Sarawak, 69 scenic bridge, 7, 10 School Marching Band Competition, 51 Scomi Group, 43, 74 Senators’ Club, 8 Senoko Power, 32 Sentral, 17 Severe Acute Respiratory Syndrome (SARS), xvi, 68 Shahrir Abdul Samad, 5, 8, 52 Shanmugaratnam, Tharman, 16 Shell Refining Company, 31 Sime Darby, 44 Singapore investment in Malaysia, 68 key role in promoting ASEAN, 65 separation from Malaysia, xv, 1 Singapore air force access to Malaysian airspace, xv, 5 Singapore Airlines codeshare agreement, 32 Singapore Cup, 54 Singapore Exchange (SGX), 46, 57 Singapore Infocomm Technology Federation, 94

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Singapore–Malaysia Business Council, 95 Singapore–Malaysia Student Leaders Adventure Camp, 51 Singapore Press Holdings, 24 Singapore Technologies Telemedia, 68 Singapore Youth Festival, 51 Southeast Asia (SEA) Games Kuala Lumpur 2001, xvi Southern Bank, 31, 58 SQL View Pte Ltd, 94 Sri Abdul Aziz Haji Zainal, 18 Star Cruise, 44 Straits of Johore, 8 Straits of Malacca, 56 student exchange programmes, 25, 50 Sulaiman Abdul Rahman, 53 Sultan Azlan Shah, xvi, 17 Sultan Shrafuddin Idris Shah, 31 Sunway Group, 85 Syed Abdullah Syed Kamaruddin, 18 Syed Ali Alhabshee, 8 Syed Hamid Albar, 3, 5–7, 9, 11, 52 Syed Mohamed Yusof Syed Nasir, 31 Syed Naqib Albar, 26

T Tan & Tan Development, 86, 87 Tan Chin Nam, 86, 87 Tan Teong Hean, 31, 43 Tanjung Pagar railway station, xv, 1 Taufik bin Tun Dr Ismail, 83, 84 tax sparing relief mutual, 37

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taxes withholding tax, see withholding tax technical fees tax treatment, 37 Telekom Malaysia, 30, 58, 68 Television Malaysia, 24 Temasek Holdings, 29, 30, 58 Times Square, 17 TM International, 74 trade liberalization, 57 Tun Dr Ismail International School, 83

U UMNO Wanita, 25 United Malays National Organisation (UMNO), 6, 9, 10 University of Malaya centennial celebrations, 49 Chancellor, xvi law faculty, 50 University of Malaya–National University of Singapore (UMNUS) golf tournament, xvi United Nations Association of Malaysia, 84 United Overseas Land, 45 US–Singapore free trade agreement, 89 V Valuair, 44 W water increasing supply in Singapore, 3

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issue, 2 pricing, xv, 2 Wee Ka Siong, 5 Wilderness Adventure Camp, 51 withholding tax rate, 36 Wong Kan Seng, 52 Wu Muyen, 8

speech at State Banquet, 63–66, 76–79 Yeo, George, 3, 8, 10, 11, 52 YTL Corporation, 30 Yusli Mohamad Yusoff, 24 Yusof Annuar Yaacob, 34

Y Yang di-Pertuan Agong, 17, 19

Z Zainul Abidin Rasheed, 52

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