Bitter rivalry between Singapore and Malaysia is good for both

Malaysia and Singapore would hate to admit it, but they are good for each other. Intense rivalry over - well, everything - has propelled both to the top of Southeast Asia's economic tree.

Regular war-like words belie their appreciation of this fact. On Tuesday, Malaysia's Foreign Minister Syed Hamid Albar said Singapore should learn to compromise in disagreements with his country or 'go to war'.

Such an idea seems far-fetched, as both are members of regional security alliances and the Five Power Defence Agreement with Australia, New Zealand and Britain. Yet in recent years, they have steadily been increasing their military budgets. In 2000-01, Singapore spent US$5 billion (HK$39 billion) and had 156 combat aircraft and 37 naval vessels, including a submarine. Malaysia's defence spending was US$1.69 billion and its military hardware included 101 combat aircraft and 56 naval vessels.

Since Singapore pulled out of a union with Malaysia in 1965, citing political differences, these differences have run a wide gamut of issues from water to territorial claims to economic one-upmanship. Malaysia is looked down on as backward while Singapore is regarded as snobbish and uptight.

The latest row involves the islet known to Singaporeans as Pedra Branca and to Malaysians as Batu Puteh, which translates as 'white rock'. This speck of land jutting from the busy shipping lanes of the Singapore Strait has been jointly claimed for more than 30 years.

Singapore's claim hinges on a treaty signed in 1824 by former colonial powers Britain and The Netherlands, while Malaysia says its possession is rooted in the Johore-Riau-Lingga sultanate, which dates to the early 16th century. Both say they will take their claims to the World Court in The Hague, which last month ruled in favour of Malaysia in a dispute with Indonesia over the islands of Sipadan and Ligatan.

The latest spat hinges not so much on land, as economic spying and good old-fashioned jealousy. The island is located off the Malaysia state of Johor near the new port of Tanjung Pelepas, which is stealing business from Singapore. The island state's port is the world's second biggest behind Hong Kong's, but in the past few years has lost to Pelepas some of its main customers, including Taiwan's Evergreen Marine and Denmark's giant Maersk Sealand.