PETALING JAYA: Relations between Malaysia and Singapore are expected to cool over the coming years under Prime Minister Tun Dr Mahathir Mohamad, although the countries will remain dependent on each other in terms of trade, said BMI Research.
The research house expects Mahathir’s administration to be more confrontational towards Singapore, marking a shift in relations, which had been friendly under the leadership of Malaysia’s previous prime minister Datuk Seri Najib Tun Razak.
BMI Research, which is a unit of Fitch Group, noted that Malaysia and Singapore have had some ongoing minor disputes over issues such as water supply and maritime borders.
“However, from 1981 to 2003, when Mahathir served his first tenure as Malaysia’s prime minister, there were frequent tensions between Singapore and Malaysia, and in our view, this serves as a negative precedent for the relations of the two nations over the coming years,” it said in a report.
The research house said there were already signs that relations between Singapore and Malaysia have cooled since the Pakatan Harapan coalition took over, and said this was likely to persist over the coming years.
It said the two key issues that will likely result in lengthy negotiations between the two countries were the KL-Singapore High-Speed Rail (HSR) project and 99-year 1962 Water Agreement, which is set to expire in 2061.
“However, despite cooler ties, both countries are likely to remain dependent on each other, particularly on trade, given the high degree of geographical proximity,” the research house said.
Malaysia is Singapore’s second largest export destination, even though its share has trended lower from a high of almost 20% in 1994 to 10.6% in 2017.
Singapore is also among Malaysia’s top overseas shipment locations, accounting for 14.3% of total exports in 2017, despite declining from 23.3% in 1991.
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