Singapore, Malaysia work on water-for-money deal

Singapore, Malaysia work on water-for-money deal

SINGAPORE (AFP): Singapore Premier Goh Chok Tong disclosed on
Monday that Singapore and Malaysia were negotiating deals that
would help Malaysia raise funds and slake Singapore's thirst for
generations to come.

Both governments are looking into draft agreements submitted
by each side on the "related" questions of assistance and water
supply, but it would be premature to release details, Goh told a
parliamentary session.

Cash-rich but resource-starved Singapore submitted a draft
water deal on Nov. 14, while Malaysia, which imposed capital
controls in September to stabilize its failing economy, sent a
draft loan agreement six days later.

The moves followed a surprise visit by Goh to Malaysia in
early November for talks with Malaysian Prime Minister Mahathir
Mohamad.

"The two proposals are win-win because Singapore will provide
or raise funds for Malaysia on very favorable terms. These funds
will help Malaysia meet its financial requirements and overcome
its economic challenge," Goh said in a prepared statement.

"In turn, with the new water agreement, Singapore's long-term
supply of water will be secured. Water from Malaysia is also a
cheaper alternative than desalination," he added, referring to
elaborate plans by Singapore to make sea water potable if
Malaysia rejects a long-term deal.

A senior foreign diplomat in Singapore welcomed the
negotiations as a boon to unity in the Association of Southeast
Asian Nations (ASEAN) which groups the two countries with Brunei,
Indonesia, Laos, Myanmar, the Philippines, Thailand and Vietnam.

"The rest of ASEAN should be happy that one more irritant is
out of the picture and now the rest of the region can turn their
attention to helping Indonesia because (President B. J.) Habibie
is losing his grip," he said.

"The rhetoric when they (Singapore and Malaysia) were
quarreling was not really reassuring and if these two countries
had a falling out, it would be bad for ASEAN," the diplomat told
AFP.

Goh said that in talks earlier this month, Mahathir reaffirmed
his country's commitment to provide water to Singapore beyond
2061, when a 1962 water agreement expires.

He said financial assistance can take the form of a direct
loan from the Singapore government, Singapore buying bonds from
Malaysia, or a guarantee.

Goh said on Monday that there was a "change in attitude"
towards improving bilateral ties, adding "there is a greater
chance now that such improvement will be sustained, especially if
we conclude the loan and water agreements."

The Singapore leader, however, cautioned that the "negotiation
is still in progress and we cannot assume yet that we will reach
agreement on the details."

The two countries' parliaments will have to approve the deals
before they can be signed, he said.

Singapore-Malaysia relations have often been stormy since
their separation in 1965. Largely ethnic-Chinese Singapore was
expelled from the Malaysian federation amid a bitter dispute over
Kuala Lumpur's plans to give preferential treatment to the ethnic
Malay majority.