Singapore expects no change in relations with neighbouring Malaysia when veteran leader Dr Mahathir Mohamad steps down next year, acting Foreign Minister Lee Yock Suan said today.

"We see no reason for any significant change in bilateral relations either immediately or in the long-term," Lee said in parliament.

He described Malaysian Deputy Premier Abduallah Badawi, who will succeed Mahathir in October 2003, as "well known" to Singapore, and added: "The fundamentals of Singapore-Malaysia relations are not dependent on personalities.

"As close neighbours, we will work with whoever is in charge."

The two Southeast Asian countries have had a prickly relationship ever since Singapore broke away from the Malaysian Federation in 1965, exasperated by Malaysia's drive to replace Singapore as the regional business hub.

Water war

One of the major issues to be resolved is a formula to determine a mutually agreeable method to calculate the price Singapore will pay for importing water from Malaysia.

Singapore buys half of its daily water needs from Malaysia's Johor state at three sen per 1,000 gallons, and has been accused by Kuala Lumpur of profiteering from "cheap" water under agreements dating back to the early 1960s.

Apart from water, other thorny issues include a proposed bridge linking the countries, the use of Malaysian airspace by Singaporean aircraft, and the location of Malaysia's customs, immigration and quarantine facility in the city-state. -AFP