S'pore, Malaysia make up, after Mahathir era ends

S'pore, Malaysia make up, after Mahathir era ends

Jake Lloyd-Smith, Associated Press/Singapore

For decades, Southeast Asian neighbors Singapore and Malaysia
traded barbs about a host of petty differences - from the price
of water Malaysia sells to the city-state to the ownership of a
small islet no larger than a football field.

Many of the disputes were heightened by a personality clash
between the two countries' long-serving leaders - the acerbic
Mahathir Mohamad of Malaysia and Singapore's equally testy
founding father, Lee Kuan Yew.

But Mahathir stepped down in November after 22 years in power
and was replaced by the more moderate Abdullah Ahmad Badawi, who
analysts say is working to improve Malaysia's ties with its
wealthy neighbor. Lee quit the top job in 1990 and was replaced
by current Prime Minister Goh Chok Tong.

Last week, Singapore Home Affairs Minister Wong Kan Seng
visited Malaysia to discuss security affairs, and the two
countries have recently launched economic initiatives amid
growing competition for foreign investment from China and India.

"I think there's a will on the Malaysia side to really try and
put relations on a much better track, and I think that a lot of
that can be traced to the PM (Abdullah) himself," says Manu
Bhaskaran, a director at Centennial Group, a consultancy.

Malaysia and Singapore were united briefly in the Malaysian
Federation in the mid 1960s, but policy differences and
personality clashes between Mahathir and Lee led to a break up
just two years later.

But the quarrels continued, especially over Malaysian
shipments of water to Singapore, which accounts for half of the
city-state's daily needs.

The two countries have also long bickered about who owns Pedra
Branca, a small island in the Singapore Straits, and two nearby
rock formations.

But economic pressures are forcing the two countries to move
closer together, as both grapple with rising challenges from
China and India for foreign investment.

"We must make sure our businessmen talk to their businessmen,
and at the foreign ministry level we hold talks," Abdullah told
the Far Eastern Economic Review magazine last month. "The comfort
level has gone up."

In March, Singapore's powerful state investment fund, Temasek
Holdings, bought a 5 percent stake in Malaysia's Telekom
Malaysia. Temasek may soon follow that with a pioneering deal in
Malaysia's banking sector.

Malaysia's stock market has also opened talks to boost ties
with the Singapore bourse, possibly clearing the way for
companies to list their shares on both.

Abdullah has tried to play down suggestions he is breaking
with Mahathir's policies, but analysts say his less combative
style has help boost the country's economic ties with Singapore.

"Mahathir is less of a factor, less of an issue, so we can
move onto economic issues," says Song Seng Wun, an economist for
GK Goh in Singapore.

The two countries swapped S$77 billion (US$45 billion) worth
of goods last year, and that figure is expected to rise in 2004.

The change in tone is remarkable, said Lee Yi Shyan, the head
of Singapore's trade promotion body, International Enterprise
Singapore.

"In the past we didn't really feel welcome," Lee told
reporters after touring Malaysia last month with a pack of
businessmen. "This time around, the atmosphere is very good."