Malaysia and Singapore: Moving Apart?

Abstract

In mid-September Lee Kuan Yew spoke at the University of Singapore on Singapore: An Exercise in Economic and Political Development. After the speech, when asked about the likelihood of Singapore's reaffiliation with Malaysia, he replied that the possibility of such a development during his tenure in office was dim. The events culminating in Singapore's withdrawal on August 9, 1965, though they made him a wiser man, had been emotionally too trying to conceive of inviting a repetition. One might surmise from the foregoing that as new leaders emerge and memories fade the constants of geography and history will reassert themselves in Malaysian-Singapore relations. Certainly ministers on both sides of the causeway proclaim the two countries' inextricable connection in the important spheres of economics and defense, however numerous the minor issues which crop up to bedevil relations. But the thrust of events in 1968 heightened earlier intimations that translating this general rhetoric into specific cooperation may founder on the obligation of Malaysian and Singaporean policy-makers to promote the national interests of their respective countries as they perceive them. Thus both countries in 1968 found themselves in rivalry for markets and for the wherewithal to support their industrialization programs as they tried to maximize economic growth and security.' Economists' notions of comparative advantage fell by the wayside as Malaysia hastened to lessen its dependence on Singapore's entrepjot facilities by improving its own ports of Port Swettenham and Butterworth. And Singapore decided early in the year to withdraw non-citizen work permits (mostly held by Malaysians) as part of the assault on its pressing unemployment problem. Malaysia had no option but to reciprocate. It was estimated that 50,000 Malaysians were employed in Singapore compared with 60,000 Singaporeans in Malaysia. An swap was launched whereby firms operating in both countries set about, where possible, to shift affected workers into equivalent positions. The operation provoked criticism from many quarters as causing great personal hardship and damaging economic efficiency without alleviating unemployment in either country. It was fortunately cancelled by mutual agreement before gathering much momentum, but not before it had demon-