SINGAPORE - Singapore and Malaysia should resolve their dispute on water supplies as soon as possible to allow them to focus on fighting terrorism in Southeast Asia, the city-state's foreign minister said today.

Foreign Minister S Jayakumar however said that if the dispute ended in a stalemate, Singapore was prepared to take the matter to the Permanent Court of Arbitration in the Hague.

"The sooner we can put these issues behind us, the better," Jayakumar said in answer to questions in parliament.

Singapore and Malaysia both face "very serious problems in the region posed by terrorism," he said.

"It is in the interest of both countries to settle these bilateral issues so that we can deal with the real threats and problems that confront us in the region," he said.

"Instead of keeping this (water issue) on the boil and being unresolved, we should really join forces, together with other countries in the region, to address bigger issues," he added.

Cooperation crucial

The two countries are senior members of the Association of Southeast Asian Nations (Asean), whose image as an investment site has been tarnished by the emergence of terror networks in the region.

Both have arrested dozens of militants belonging to the extremist Islamic group Jemaah Islamiah (JI), which regional authorities say has operations in the Philippines, Indonesia, Singapore and Malaysia.

Analysts say cooperation among key Southeast Asian countries is crucial in combating the terrorist threat.

The Singapore-Malaysia dispute centres on the price of water supplied by Malaysia to Singapore under two agreements, one ending in 2011 and the other in 2061.

Malaysia wants the water supply issue to be negotiated independently from other bilateral matters. Singapore however wants the water talks to be part of a package of issues which have rankled bilateral relations since the island was ejected from the Malaya Federation in 1965.

Jayakumar expressed Singapore's readiness if the matter is brought to arbitration, recalling that his Malaysian counterpart Syed Hamid Albar has said Kuala Lumpur would bring the matter to the Permanent Court of Arbitration (PCA) if no solution was reached. AFP