Malaysia and Singapore failed today to resolve a package of longstanding disputes after two days of high-level talks, but pledged to continue negotiations next month.

"The meeting has achieved some progress and provided momentum for both sides to continue the negotiations in resolving the package of issues," according to a joint statement after talks led by Singaporean Foreign Minister S Jayakumar and his Malaysian counterpart Syed Hamid Albar.

In a separate statement, the Malaysian foreign ministry said further discussions were required to iron out disputes that have rankled relations for 37 years since Singapore's independence.

"It is obvious that much work remains to be done to narrow the differences that still exist between the two sides on all the issues before us," the Malaysian statement said.

"Malaysia looks forward to having the second ministerial meeting in Singapore in August 2002."

Key problem

Foreign Minister Syed Hamid Albar has cited the price of the water which Malaysia supplies to Singapore as the key problem.

Although the talks, which focused on the water issue and a proposed land bridge linking the countries, did not end with a solution, they signalled good progress, he told reporters after the meeting.

Syed Hamid said both countries had submitted their formulas for determining the price of water and would resume negotiations at the next meeting in Singapore.

"We have not come to an agreement on the formula to be applied. So this needs to be discussed further.

"It is not easy, but both sides are very interested to make progress," he said, declining to reveal the initial offering prices from both sides.

The two-day meeting was the first ministerial-level attempt to reach a mutually agreeable "package deal" on a number of problems including water.

Syed Hamid said both sides would not stop negotiations until all of the issues in the package were ironed out.

"We are not tackling (issues) individually, so if we don't get agreement on water ... then all the other issues, it will not be a deal," he said.

Proposed bridge

Other issues involve a proposed bridge linking the countries, the use of Malaysian airspace by Singaporean aircraft and the location of Malaysia's customs, immigration and quarantine facilities in Singapore.

Singapore buys half of its daily water from Malaysia's Johor state at three sen (less than one US cent) per 1,000 gallons.

Malaysia has accused its neighbour of profiteering from "cheap" Johor water under agreements dating back to the early 1960s.

The Malaysian foreign ministry said the two countries had presented their own formulas for calculating a new water price.

It gave no details but said Malaysia was prepared to extend the water pact which expires in 2061 by another 100 years "on terms and conditions to be agreed upon including pricing formula."

Some of the problems have strained relations since Singapore was kicked out of the Malaysian Federation in 1965, while new issues affecting ties include Malaysia's bid to replace the tiny island-state as the regional business hub in Southeast Asia. — AFP