The Singapore perspective of its economic relations with Malaysia premised as a pure economic thesis is that the duo is a natural economic union as shown in section 2. However, the political economy reality is the enigma of the historical baggage of the 1963 merger and 1965 exit which mires their relations as two sovereign states as section 3 will show. Whatever the issue, from water to the Malaysian Railway and immigration checkpoints, the root causes are not as critically unsolvable and impassable as the political will and mindset involving crucial personalities. The case-study on the water issue in section 4 illustrates the baggage problem. Moreover, big and small brother politics and economics between Malaysia and Singapore may not be so different or unique as between the United States and Canada, for instance, except for the political union and subsequent tumultuous dissolution. Whether time will heal matters is still too soon to tell, as long as senior statesmen on both sides of the causeway who forged the merger and witnessed the divorce still influence policies and processes.

The concluding section shows that political economy realism means that the Malaysia-Singapore economic relations are at best functionally cordial, more neutered and sustainable under the Association of Southeast Asian Nations (ASEAN) and other ASEAN plus regional configurations. These include ASEAN Plus Three (with China, Japan and Korea), ASEAN-CER (Common Economic Relations, Australia and New Zealand), ASEAN-Japan, ASEAN-US, ASEAN-Mercusor, and ASEAN-India where Southeast Asia is valued in itself as an economic package of sorts and as a political and security buffer. In truth, Malaysia and Singapore function better as part of a wider grouping or when faced with a common external threat than economic twinning, complementation, and cooperation would suggest.

TWO COUNTRIES, ONE ECONOMIC NEIGHBOURHOOD

Malaysia was Singapore's top trading partner in 1964, 1970, and 1980 for total trade and exports, first in 1964 also for imports, but second in 1970 and 1980 for imports (Table 15.1). Only in 1990 was Malaysia third to the United States’ first and Japan's as second in total trade. In 2000, Malaysia was Singapore's leading trade partner (total trade, exports and exports) with the United States second. Clearly, Malaysia is Singapore's traditional top ranking trade partner though how Indonesia ranked is unknown as Indonesian trade statistics are not released by Singapore since the 1963 Indonesian Confrontation.