Without Bureaucratic Cobwebs, ASEAN cooperation can now move forward


October 10, 2014

Without Bureaucratic Cobwebs, ASEAN cooperation can now move forward

by Tunku A. Aziz@www.nst.com.my

tunku-azizWHEN ASEAN came into being on August 8, 1967, it was largely driven by considerations of peace and security among neighbours in a troubled region. We Malaysians had just emerged, with scars to show, from Indonesia’s “Konfrontasi”. There were admittedly serious concerns about countries in Southeast Asia being drawn inexorably into the Communist orbit, but Malaysia refused to be stampeded into embracing the “Domino Theory”.

Although the Malayan Communist Party-inspired insurgency was far from over, we were confident that we were in effective control of our country’s security and with the right mix of poverty eradication and industrial development policies, we could manage our own affairs without unwelcome United States intervention.

Malaysians were with their elected government. Embracing the US would have been the kiss of death for us, an emerging nation in search of a role and an identity. We had to develop our own home- grown model for regional cooperation.

We created ASEAN, then made up of Thailand, Malaysia, Singapore, Indonesia and the Philippines, in the confident expectation that it offered the best hope for our vision of a conflict-free region. However, ASEAN’s founding fathers, in envisioning their grand design, had not given sufficient thought to the role that their civil servants would be playing in policy formulation and implementation. The passage towards some semblance of unity of purpose was excruciatingly slow. ASEAN official inertia had to be experienced to be believed.

The private sector in ASEAN wanted to move at a much faster rate and felt that the civil servants were not only dragging their feet but were being totally obstructive. The ASEAN Chambers of Commerce and Industry (CCI) were quick to see the business potential presented by a regional market of more than 250 million people, and took to the new opportunities like duck to water, only to find that the bureaucrats had forgotten to fill up the pond.

Several industry-based working groups were formed and important trade links were made with the US and European Union chambers of commerce and industry. I remember a trip to Washington DC in the ‘70s by the ASEAN CCI and being received in the White House where a meeting with US officials and senior business leaders was arranged in the Franklin Room.

US Vice-President Walter Mondale was to host the meeting but he had to be called away on urgent state business. We were going all out to promote ASEAN to the American business community, but soon realised that we were so far ahead of the ASEAN governments that we were put in an embarrassing position. We cajoled, huffing and puffing, but to no avail. We were stuck in a bureaucratic maze.

We were running out of patience and the inevitable clash was not long coming. On Dec 12, 1979, some 12 years after the formation of ASEAN, 250 top ASEAN business leaders from all the national chambers met in Singapore. This was the opportunity I needed as chairman of the ASEAN CCI Working Group on Industrial Complementation to read the riot act.

Let The Straits Times of Singapore of December 13 echo my disappointment. Under the headline, “ASEAN civil servants rapped — ‘Too rigid an attitude towards cooperation”, it reported:

“Malaysian business leader, Tunku Abdul Aziz, yesterday lashed out at civil servants of Asean for their rigid, uncompromising and hopelessly impractical attitude towards closer regional cooperation.

Tunku Abdul Aziz said: “I have detected of late evidence of disenchantment and disquiet within the private sector with the way in which the question of economic and industrial cooperation is being handled by the economic ministers through their Committee on Industry, Minerals and Energy (Coime).

“A measure of the general euphoria prevailing throughout the ASEAN private sector is that until a few months ago, most of us were satisfied that Coime understood its role and was prepared to exercise its power and authority in a way that would satisfy private sector aspirations.

“What we did not know, of course, was that this body of hardened bureaucrats, sitting collectively in splendid isolation and insulated from the reality of a real world, was no more ready to deal with its appointed task than the Ayatollah is ready to grant the Shah of Iran the freedom of the city of Teheran.”

Questioning the effectiveness of the guidelines laid down by ASEAN civil servants on industrial complementation of regional projects, Tunku Aziz said:

“In spite of the usual pious declarations of selfless devotion to economic cooperation, these guidelines must be seen for what they are. They are rigid and uncompromising and are so obviously intended to protect the national position at all costs.

“These guidelines are a blight on the concept of regional cooperation. It is not surprising that we are beginning to wonder whether our governments are intellectually ready to cope with the rather special demands of a concept that requires a high degree of political will.

“Let us hope the governments of ASEAN will recognise the importance of private sector participation and involvement at all levels of policy formulation so that what emerges is a concerted effort distilled from the best available talents from both the government and the private sector.”

The Business Times Malaysia in its editorial, “ASEAN — useful plain speaking”, said that: “It needed to be said, sooner rather than later. But no one did until Wednesday when Tunku Abdul Aziz, in his capacity as Chairman of the ASEAN CCI’s Working Group on Industrial Complementation, hit out at the official Committee on Industry, Minerals and Energy in which rests the responsibility for reviewing ideas for reviewing ideas in these fields.”

The Asian Wall Street Journal waded in to support my “blast”, reporting my attack on the official guidelines that “are intended to regulate and control rather than promote and encourage private sector participation in and contribution to economic cooperation. These guidelines are a blight on the concept of regional cooperation”.

The tenor of my speech took ASEAN ministers and their bureaucrats by complete surprise, but it had the desired effect. Governments understood our position better and helped to remove much of the cobweb that had befuddled their collective mind.

Today, ASEAN is jogging along nicely and thriving. Successive regional leaders, 4th PM of Malaysiaparticularly Tun Dr Mahathir Mohamad, can take pride in nurturing ASEAN to become a regional force for good.

ASEAN has been well-served by many distinguished secretaries-general, but in my considered opinion, the best ever was undoubtedly Dr Surin Pitsuwan of Thailand, the quiet and thoughtful man of diplomacy, the United Nations Secretary-General we never had because he was in the wrong party and the government of Thailand did not support his candidature for that high office — a great loss to the world.

The ASEAN bureaucrats of my time very nearly scuttled the vision and hopes of millions of Southeast Asians for their rightful place in the larger global scheme of things. Mercifully, in spite of them, ASEAN has arrived.

Symmetrical characters, parallel fates


August 19, 2014

Symmetrical characters, parallel fates

COMMENT by Terence Netto@www.malaysiakini.com

Men of destiny seek proof of their greatness by exercising a license to go too far, and as the fear grows that destiny may have played a terrible joke on them, they double and redouble the stakes on the wheel of fortune. In this way they destroy themselves.-Terence Netto

hype_najib1Now that the cat has sprung out of the bag and is dashing about among a wider public, the only news would be if anyone has died of shock from the revelation that Dr Mahathir Mohamad has withdrawn support for Prime Minister Najib Abdul Razak.

After months of premonitory sniping at the Premier by his satraps, notably A Kadir Jasin and Zainuddin Maidin, the man himself has come out in the open with a formal declaration of hostilities. There is no more cogent example of déjà vu nor self-parody than the producer himself reiterating he is about to re-start a familiar business – the demolition of a sitting PM.

A fortuitous benefit of this incipient extravaganza – to the federal opposition, Pakatan Rakyat – has been the confirmation that their self-destructive shenanigans in Selangor have furnished the opportunity to the premier demolisher of incumbent PMs to fix on this as the most opportune time for the unleashing of his decanal decapitation of national head honchos, not to mention a few deputies as well.

The wonder is that anyone at all, at this advanced juncture of their career trajectories, could be surprised at how the two protagonists, one of the drama about to start and the other of an already running one in Selangor, confirm a truism of classical Greece – that character is fate.

Character here is taken to mean the way in which a person confronts the things that happen to him, a number of which may come about as a consequence of his characteristic behavior. Fate is the sum of the decisive things that happen to a person, whether as a result of his characteristic behavior, or fortuitously, at the behest of some transcendent power.

That the characters of Mahathir and Anwar Ibrahim have fed off each other is by now a staple of Malaysia’s modern history. Malaysians are beginning to realise that the one’s career could not have been possible without the other and vice versa.

Truly, the reformasi movement would not have been catalyzed into something urgent and insistent without what Mahathir did to Anwar in September 1998 and how the latter reacted to the events.

Before September 1998, the movement was an inchoate yearning; after Anwar’s jailing and obloquy, reform became a national agenda. Mahathir would not have been able to prolong his tenancy of the PM’s office – 22 long years – without Anwar’s lieutenancy for 16 years of that tenure.

Certainly, the accretion of power to the office of the PM and UMNO President could not have taken place without Anwar’s tacit support, as heir presumptive to Mahathir.

The long running drama of their interaction since they first met in 1971 and their influence on the life of this nation over the last four decades is so pivotal that our history itself becomes confused with their own biographies which goes to illustrate historian Thomas Carlyle’s theory that humanity advances by means of these demi-gods or ‘heroes’.

Succumbing to the danger of self parody

But as the philosopher Ralph Waldo Emerson cautioned: “Every hero becomes a bore at last”: the two are presently in danger of inducing a yawn in arenas they once bestrode as giants. If it happens it would be due to their succumbing to the danger of self-parody each is tempted to flirt with, Mahathir more so.

Tun Dr. MahathirMen of destiny seek proof of their greatness by exercising a license to go too far, and as the fear grows that destiny may have played a terrible joke on them, they double and redouble the stakes on the wheel of fortune. In this way they destroy themselves.

By claiming at the commencement of his unseat Najib campaign, after the fashion of Brutus, that it is not because he loves his leaders less but that he loves the people and country more, Mahathir is parodying what Anuar Musa, then a young delegate from Kelantan to the UMNO general assembly in 1983, who quoted from the Shakespearean play Julius Caesar the words Brutus used before stabbing Caesar. The Roman emperor was surprised that a friend like Brutus could be part of squad of assassins with regicide in mind.

Anuar cited the quotation in the course of rhetorical flights faintly critical of Mahathir’s leadership of UMNO. Mahathir’s response was characteristically brusque. “Brutus stabbed Caesar” he reminded the UMNO delegates. In other words, back-stabbers are back-stabbers, their lofty motives notwithstanding.

If Mahathir unseats Najib, the wheel would have come full circle in his career: he began his ascent to the top of the greasy pole by destroying one UMNO President (Tunku Abdul Rahman) and is set to end his career by destroying the son of the man (Abdul Razak Hussein) who gave him the chance to rise after a display of Oedipal rage against the Tunku.

If PKR allows Anwar to convert the party into his personal fiefdom, his thrust to the top of the totem pole that began with his rebellion against nepotism, cronyism and corruption in 1998 would flirt with what could well be a fatal contradiction. Not for the first time in history would pivotal allies-turned-adversaries have symmetrical characters/parallel fates.

Happy 69th Birthday, Indonesia


August 17, 2014

Happy 69th Birthday, Indonesia

To All Our Friends, Associates, Bapak Presiden, Government and People of Indonesia

Indonesia's 69 th Year of Independence

indonesiaindependenceday_300Dr Kamsiah and I warmly congratulate your great country on the occasion of its 69th Birthday which falls today. As a major partner in ASEAN, you have a crucial role to play for peace and stability of South East Asia. Your economic prosperity too is vital to all of us. That is why your recent Presidential Elections was closely watched by all of us. It was a resounding success and we can be justifiably proud of what you have achieved in furthering the cause of democratic politics.

August 17, 2014

On this very special day, we pray for your continued success and prosperity, and extend our warm salams to you  all. Dirgahayu, Republik Indonesia –Dr. Kamsiah and Din Merican

The Regional Octopus to merge with rivals to create mega Islamic bank


July 11, 2014

The Regional Octopus to merge with rivals to create mega Islamic bank

by Reuters-www.themalaysianinsider.com

OctopusCIMB Group Holdings Bhd is seeking to acquire two lenders to create the country’s biggest bank in a move that is likely to push larger rival Maybank and others in the region to bulk up too.

CIMB, the nation’s second-largest bank, is likely to offer an all-stock deal to buy RHB Capital Bhd and Malaysia Building Society Bhd although details have yet to be hammered out, a source familiar with the matter said

The three banks confirmed today they had obtained approval from Bank Negara Malaysia to begin merger talks.

The “three parties have entered into a 90-day exclusivity agreement to negotiate and finalise pricing, structure, and other relevant terms and conditions for a proposed merger of the three entities and the creation of a mega Islamic bank,” the three banks said in a statement.

The statement came after shares in all three banks were suspended on Thursday pending an announcement. Shares will resume trade on Friday. The proposal comes ahead of a planned partial integration of Southeast Asian economies that is due to begin by the end of next year, with countries in the 10-nation alliance keen to build national champions to bolster their banking systems.

CIMB has been the most acquisitive of Malaysia’s banks and a deal would be the last major move by CEO Datuk Seri Nazir Razak, brother to the Prime Minister, before he relinquishes the helm in September after 15 years.

A successful deal would see CIMB’s assets climb to RM614 billion, 6% bigger than Malayan Banking Bhd (Maybank), and could help with pricing power in an intensely competitive domestic market.

“We believe that we can structure a value creating combination between our three groups and that is worth taking the next steps,” Nazir told employees according to an internal memo.

“I would urge everyone to look forward to the possibility of a significant scale change for us overall, but specially in Malaysia and Singapore, with the caveat that we have only just begun negotiations.”

But some analysts warned CIMB may pay too much and that there could be too much overlap between CIMB and RHB – the nation’s No. 4 bank, as they have similar portfolio mixes and strengths. RHB and Malaysia Building Society have a combined market capitalisation of around US$9 billion (RM28.5 billion), almost half of CIMB’s US$19 billion market value.

“We opine that such a merger could be value destructive to the merged entity given the degree of operational and revenue duplications between CIMB and RHB Capital,” brokerage UOB KayHian said in a client note.

Representatives for CIMB did not respond to requests for comment while RHB said there was no further update at this stage. Representatives for Malaysia Building Society were not immediately available for comment.

A deal would make CIMB the fourth-largest bank in the Association of Southeast Asian Nations (ASEAN) after Singapore’s three biggest lenders. By comparison, the largest, DBS Group Holdings, has assets of US$337 billion.

CIMB's Nazir3Malaysia’s Top Banker in ASEAN

Nazir is the architect of the bank’s expansion over the past decade that saw it buy domestic rival Southern Bank, the Asia equities and investment banking business of RBS as well as lenders in Indonesia and Thailand.

A new deal is bound to heap pressure on Maybank to acquire a rival too, analysts said, with some speculating that Public Bank Bhd could fall within its sights.

“Maybank might want to take over Public Bank, which compared to RHB Capital, is much better in terms of asset quality, and is well-managed and well-capitalised. This makes Public Bank a vulnerable target,” said Ei Leen Tan, an analyst with Affin Investment.

A key player in any acquisition by CIMB of its two smaller rivals will be the Malaysian state pension fund, Octo2the Employees Provident Fund (EPF). It owns 41.3% of RHB and 65% of Malaysia Building Society. The fund also owns a 14.5% stake in CIMB, according to Thomson Reuters data.

Another will be Abu Dhabi-based Aabar Investment which bought a 25% stake in RHB for RM10.80 per share in 2011 – regarded as a particularly high valuation.

Both CIMB and Maybank walked away from a deal to buy RHB in 2011 after failing to secure support from Aabar. The state fund currently owns nearly 22% of RHB. The EPF said in an email it would not be able to comment on the matter as it is very preliminary in nature and specific details are still pending.

A spokesman for Aabar said it doesn’t comment on any of its investments.While plans for ASEAN integration are widely expected to suffer delays, bankers and analysts expect more deals done as the banks from Singapore, Malaysia and Indonesia prepare for a more competitive landscape.”This will give impetus to other countries in the region to think of something similar,” said a M&A banker who advises on bank deals. – Reuters, July 10, 2014.

China’s James Shoal Claim: Malaysia the Undisputed Owner


July 4, 2014

RSIS Commentaries

RSIS presents the following commentary China’s James Shoal Claim: Malaysia the Undisputed Owner by B.A.Hamzah.  Kindly forward any comments or feedback to the Editor RSIS Commentaries, at RSIS Publication@ntu.edu.sg.

No. 122/2014 dated 1 July 2014

China’s James Shoal Claim: Malaysia the Undisputed Owner

By B.A.Hamzah

Synopsis

Malaysia owns James Shoal, a submerged feature that is within its continental shelf. Being one thousand nautical miles from Hainan, James Shoal is outside the continental shelf of China; it is also outside the continental shelf of Taiwan, Vietnam, the Philippines, Brunei and Indonesia.

Commentary

James Shoal

JAMES SHOAL, a feature that is permanently 22 metres (66 feet) under water in the South China Sea, should not have attracted public attention regionally but for geopolitics and ignorance of international law. Malaysians have been alarmed by recent reports of vessels of the People’s Republic of China Liberation Army (Navy), gathering and celebrating above the feature on more than one occasion.

China cannot appropriate any submerged features that are not part of its continental shelf and in its Exclusive Economic Zone (EEZ). James Shoal is more than 1,000 nautical miles (nm) from Hainan, well outside China’s Exclusive Economic Zone (EEZ) and not part of its continental shelf.

James Shoal and International Law

The whole affair could have been quietly resolved if the PLA Navy commanders acknowledged the international law governing a permanently submerged feature, embedded to the continental shelf of a coastal state. Unlike islands, rocks and low-tide elevations, permanently submerged features, cannot generate any maritime zone under international law.

Islands are entitled to a belt of territorial sea, continental shelf and EEZ. Low-tide Elevations (LTEs), on the other hand, belong to the state in whose territorial sea they are located. LTEs can be used to draw the state’s baseline if they are located within its 12 nm territorial sea.

Map 2--James ShoalMap showing the limit of proposed extended continental shelf of Vietnam and Malaysia jointly submitted to the United Nations Commission on Limits of Continental Shelf (CLCS) in May 2009.

International law defines continental shelf as a natural extension of a country’s landmass to a distance of 200 nm (maximum 350 nm). Drawn from the mainland or any of its islands in the South China Sea, the continental shelf of China is well short of James Shoal. Similarly, contrary to some suggestions, James Shoal is also not part of the extended continental shelf of Vietnam, the Philippines or Taiwan.

In May 2009, Vietnam and Malaysia put up a Joint submission on the Extended Continental Shelf to the UN Committee on the Limit of Continental Shelf (CLCS) whereby Vietnam acknowledged that James Shoal is not part of its extended continental shelf.

James Shoal is 500 nm from Pagasa Island in the Spratlys that the Philippines has occupied since 1971. The Shoal is more than 400 nm from Itu Aba, an island that Taiwan has occupied since 1956. James Shoal is also outside Brunei’s extended maritime zone which the 2009 Letter of Exchange Brunei had with Malaysia attested to. In 1969, Malaysia and Indonesia signed a Treaty on the continental shelf, off Tanjung Datu, Sarawak, which has placed James Shoal on the Malaysian side.

Contiguity not an issue

Map--James Shoal2Map showing limits of EEZ in the Spratlys

James Shoal, located 63 nm from the nearest base point (Batuan Likau) on Sarawak coast, is embedded in the continental shelf of Malaysia and within its EEZ. Although the feature is nearer to Malaysia, Kuala Lumpur’s ownership of James Shoal is not premised on geographical contiguity but on customary international law. In the Island of Palmas (or Miangas) (United States v. The Netherlands), Arbitral Award, 1928 Judge Huber stated, “it is impossible to show the existence of a rule of positive international law” on contiguity to “the effect that islands situated outside territorial waters should belong to the state”.

China claims James Shoal is within the disputed nine-dash line boundary which China has drawn, incorporating close to ninety percent of the South China Sea, and overlapping with the maritime domains of five other states (Brunei, Indonesia, Malaysia, Philippines, Vietnam) as well as Taiwan.

Some experts believe China did not even know of the existence of James Shoal as a submerged feature when it drew the controversial nine-dash line maritime boundary over it in 1947/1948. After all, China was not the first state to conduct any physical survey of the maritime area. Besides, there is no evidence that China discovered and administered the feature.

The British discovered James Shoal

The British discovered the Shoal and its two nearby features (Parsons’ Shoal and Lydie Shoal) in the early 19th Century via many of its surveys. James Shoal first appeared on the British Admiralty Chart in the 1870s; China renamed the feature (as Tseng Mu Reef) circa 1947/1948 (1912 in some documents), when it published the nine-dash line.

The only possibility for China to “acquire” the feature, according to some experts, is via cut- and-paste method. While the international law recognises five traditional methods of territorial acquisition, the cut- and- paste method is not one of them.

The 1982 United Nations Convention on the Law of the Sea (UNCLOS) and 1958 Geneva Convention on the Continental Shelf (Malaysia and China subscribe to both Treaties) stipulate, “The rights of a costal state over the continental shelf do not depend on occupation, effective or notional, or in any express proclamation”. In other words, Malaysia does not have to do anything under UNCLOS to own the submerged feature that is embedded on its continental shelf.

Malaysia’s extensive activities on James Shoal

This notwithstanding, Malaysia has effectively asserted its jurisdiction over its continental shelf including the areas in and around James Shoal, Parson’s Shoal and the Lydie Shoal. As in nearby Laconia shoals, where currently a large chunk of Malaysia’s hydrocarbon resources comes from, the entire area has been explored for gas and oil.

The activities of the Malaysian authorities, which are extensive, peaceful, continuous and public in nature, include the construction and maintenance of a light-buoy on nearby Parsons Shoal on a 24/7 basis; daily patrolling and policing of the area by the Royal Malaysian Navy and the Malaysian Maritime Enforcement Agency; and undertaking economic activities like exploration for and production of hydrocarbon resources on a sustained basis.

Under international law, such display of peaceful and continuous activities over a long period is tantamount to establishing a titre de souverain (acts of the sovereign). This legal principle is critical in determining ownership of disputed islands, rocks and low tide elevations and by inference, submerged features on continental shelf.

Map 3-James Shoal Enlarged Map showing the location of James Shoal (Beting Serupai), Lydie Shoal (Beting Tugau) and Parson’s Shoal (Beting Mukah) (drawn by Vivian Forbes, 2014).

The International Court of Justice (ICJ) and International Arbitration have applied this principle on numerous occasions. Two recent ICJ Cases on territorial disputes, decided on this principle, involved Malaysia with Indonesia (Case concerning sovereignty over Pulau Ligitan and Pulau Sipadan) and Indonesia (2002) and Malaysia with Singapore (Case concerning sovereignty over Pedra Branca and Pulau Batu Putih (2008).

In sum, the activities of the Malaysian authorities (effectivité to some) are by themselves sufficient to demonstrate that Malaysia is the bona fide owner of James Shoal.

BA Hamzah is a lecturer at the Department of Strategic Studies, National Defence University, Malaysia. He contributed this specially to RSIS Commentaries.

Malaysia in 2014–a perspective from Singapore


June 30, 2014

Malaysia in 2014–a perspective from Singapore

MALAYSIA-SINGAPORE-DIPLOMACYFor Singapore, due to history, geography, demography, economy and recent political experiences, Malaysia has perpetually been its lynchpin concern and preoccupation. In the past, S Rajaratnam, the Republic’s first foreign minister, had described Singapore’s relations with Malaysia as ‘special’ and there is nothing to suggest that this has changed in anyway.

If anything, the ‘specialness’ has been intensified and further reinforced due to a whole array of factors, not least being the imperatives of national, regional and international economics. A weakening United States, an assertive China, an unstable Thailand and a new nationalistic leader in Indonesia can change the political and security architecture in the region to the detriment of both states and hence, their bilateral ties.

In the 1950s and 1960s, culminating in Singapore’s expulsion from Malaysia in August 1965, the emotive dimension of Singapore’s view of Malaysia was dominant. Even though this has largely dissipated, it is not totally absent. Still, the pragmatism with which both states have moved forward is definitely a milestone achievement in bilateral ties in Southeast Asia.

For Singapore, continuity rather than change remains its key perspective on Malaysia. This was especially true after the May 2013 general elections where the Barisan Nasional (BN: National Front) was returned to power albeit with a weaker majority. Still, Prime Minister Najib, the United Malays National Organisation (UMNO) and the BN are in power and that is what matters even though the winds of change must also be disconcerting. The disquiet would be more, not so much from the economic aspect as it would be from the rising racial and religious polarisation of Malaysia in the last few years that was brought to the forefront during the last general elections. The ‘Allah’ issue has not been helpful and the recent firebombing of a church in Penang has merely raised the ante of what this will mean for Malaysia and possibly, even multiracial and multi-religious Singapore.

All that aside, the single most important development of late has been the rising warmth in Singapore-Malaysia bilateral ties under Lee Hsien Loong and Najib Tun Razak. While past imperatives of history, geography and demography remain relevant, most dominant in the new narrative has been the personal warmth of the two prime ministers and the strategic nature of their bilateral ties.

Most of the past issues have been addressed or settled such as relocation of Customs and Immigration Complex, land reclamation and even water. Most importantly, has been the breakthroughs that both leaders have made vis-à-vis two issues, namely, the resolution of the Tanjong Pagar Railway Station and the land exchange deal as well as Singapore’s support for the Iskandar Development Project in Johor. Other positive developments in ties include the holding of annual leader’s retreats, re-establishment of links between both countries’ stock exchanges, Malaysia’s agreement to sell electricity to Singapore, the agreement to build high speed train link from Kuala Lumpur to Singapore, the amicable post-Pedra Branca technical talks to resolve legacy issues over the islands’ dispute and finally, the establishment of a Singapore consulate in Johor Baru.

ST-Iskandar

If there is one key factor that has brought bilateral ties to a new height, it is the cooperation in the Iskandar Project. Not only is the Singapore Government supporting investments in the project through Government-linked companies such as Temasek Holding but also playing an important role in encouraging the private sector to invest in the project. Additionally, thousands of Singaporeans are expected to be permanently based in the Iskandar region and Johor as a whole, bringing interdependence to a level that was never seen before. To that extent, Iskandar has been the key game changer in Singapore-Malaysia bilateral ties of late.

The breakthrough in bilateral ties was a function of a number of factors. First, the decision by both sides to adopt a new approach to bilateral ties in order to garner win-win results. Second, the personal warmth of the top leaders was extremely helpful. Third, the calculation of the mutual benefits that would be gained by both sides in view of the increasing regional and global competition. Fourth, over the years, there has also been increasing economic interdependence with Singapore as one of the top investors in Malaysia over the last two decades or so. Two-way trade and investments are among the highest between the two states. Fifth, there is also the realisation of increasing security indivisibility of both states. Finally, the ideological pragmatism of both sides has also helped in boosting bilateral ties.

While Singapore expects Malaysia in 2014 to have a largely ‘normal’ year barring any unexpected events – all the more to be the case as the UMNO annual assembly has opted for status quo – the Republic is also mindful of the many uncertainties that can unexpectedly crop up to affect bilateral ties. While 2014 can expect the warming of ties to continue, this cannot be taken for granted. First, the warm ties of two prime minister, both of whom are sons of two former prime ministers  who were not close, may not survive personalities if a more nationalistic prime minister takes over in Singapore or Malaysia. Second, tensions could surface if the promised cooperation proves futile or produces one-sided benefits, say in Iskandar Project. Finally, growing domestic tensions in Malaysia, especially among the Malay and Chinese communities in Johor or in Malaysia could spill over into Singapore-Malaysia relations.

Hence, for Singapore, while Malaysia in 2014 is expected to continue ‘good business as normal’, there are also potential minefields that might explode, and hence, the need for caution. ‘Special relations’ are important but can never be taken for granted, and this also holds true of Singapore’s view of Malaysia in 2014.

Bilveer Singh is associate professor at the Department of Political Science, National University of Singapore, adjunct senior fellow at the S Rajaratnam School of International Studies and President of the Political Science Association of Singapore.