Malaysia and Singapore today announced a deal to end a dispute over Singapore's land reclamation activities in their border waters, underscoring a rapid thaw in their once frosty relations.

The compromise allows Singapore to carry on with the reclamation while cooperating with Malaysia to ensure navigational safety and environmental protection in the Straits of Johor, a busy international waterway.

"The positive outcome of the meeting between the Malaysia and Singapore delegations reflects the goodwill and cooperation which exist between them and their respective governments," a joint statement said.

Deep-seated issues dating back to the former British colonies' bitter separation almost 40 years ago remain, but the statement said the compromise "augurs well for the further strengthening of good relations between these two friendly and close neighbours".

Expert advisers

The overall tone of relations has improved and cross-border investment has escalated with the rise of new leaders on both sides - Prime Minister Abdullah Ahmad Badawi in Malaysia and Lee Hsien Loong in Singapore.

In their joint statement, both governments said they accepted the recommendations of a group of expert advisers and agreed to use these "as the basis of a mutually acceptable and beneficial solution."

Malaysia had complained in July 2003 that the reclamation was a threat to the environment and shipping in the busy straits, and asked the International Tribunal for the Law of the Sea (ITLOS) to order Singapore to stop it.

The reclamation includes Pulau Tekong, an islet used by Singapore for military training which is almost literally a stone's throw away from Malaysia's southern Johor state.

The Hamburg-based tribunal allowed the reclamation to continue and asked both sides to set up an independent group of experts, who submitted a report last November which both countries found acceptable.

Negotiators agreed on Jan 9 on the text of a draft settlement agreement to be submitted to the respective governments for formal approval and signing "on a date and venue to be agreed upon," the joint statement said.

Historical baggage

Malaysian Foreign Minister Syed Hamid Albar told Singapore's Straits Times he was "glad that this decision has brought the matter to a successful conclusion, and we can move ahead to look at other outstanding bilateral issues."

"The cabinet has been informed of the matter. The outcome reflects the goodwill and cooperation between both governments," he told the daily.

Other disputes persist, part of historical baggage which can be traced back to the ejection of largely ethnic Chinese Singapore from the Malaysian federation in August 1965 over racial and other issues.

The pending disputes include the price of long-term raw water supplies to Singapore, Singapore's military access to Malaysian airspace, the future of Malaysian-owned railway land inside Singapore, and a proposed new bridge linking the two countries.

The two governments agreed that the Straits of Johor "constitute a shared water body" and they "have a common interest in cooperating to ensure the safety of navigation" in the waterway.

They "recognised that they have a common interest in cooperating to protect the environment" around the reclamation areas, and agreed to exchange maritime and environmental information concerning the reclamation projects.