KUALA LUMPUR Malaysia has decided to stop negotiations with Singapore and is to seek legal recourse for a price review of water supplied to the tiny republic, local media said Saturday.

The New Straits Times reported the cabinet has agreed to stop bilateral discussions and has instructed the foreign ministry's legal department to prepare possible legal action.

Foreign Minister Syed Hamid Albar declined comment on the cabinet decision but told the newspaper there would be no further talks unless Singapore agreed to a price review.

"It would be ridiculous for us to meet when Singapore continues to say we have lost our right. We are looking at how best we can take action in order to achieve our objective of a price review within the law," he said.

"We cannot go on like this. People have started questioning the government's position and I think the time has come for us to make a decision."

Price increase

Malaysia, which supplies resource-starved Singapore with half its daily water needs, seeks a price increase. It now sells raw water to Singapore at three Malaysian sen (less than one cent) per 1,000 gallons (4,550 litres).

Singapore has begun a limited waste water recycling programme to cut its dependence on Malaysian imports and has said it will be able to let one of two water agreements lapse in 2011. The second agreement expires in 2061.

Syed Hamid said Singapore has paid 56 million ringgit for raw water supplied since 1961 but received 86 million ringgit for treated water sold to Malaysia's southern Johor state during the same period.

"We have not moved anywhere in our discussions. Malaysia is the victim of an unfair agreement," he said, anticipating a "positive response" from Singapore to deflect a legal suit.

Key irritant

Water has been a key irritant in bilateral relations since Singapore was kicked out of the Malaysian Federation and gained independence in 1965.

Other disputes include a proposed new bridge linking the two countries, use of Malaysian airspace by Singaporean aircraft and the location of Malaysia's customs, immigration and quarantine facilities in Singapore. AFP