“Malaysia and Singapore enjoy strong ties in terms of trade and investment flows, tourism and labour movement,” said M. Niaz Asadullah, a professor of development economics at Monash University Malaysia. “But there is untapped potential for mutual economic gains if Singapore can leverage its close proximity to natural resources rich Malaysia.”
“[Anwar’s] latest effort to renew bilateral ties with Singapore could be motivated by … a ‘look East’ philosophy,” said Asadullah. “By strengthening economic ties with Singapore, this can help Malaysia accelerate its transition to a high income nation status by 2028.”
Professor Asadullah also hopes the new proposed economic region will help meet growing regional demand for energy while encouraging a mutually beneficial trade between Malaysia and Singapore.
“Land and natural resource-poor Singapore is particularly keen to develop a sustainable pan-ASEAN power grid,” he said. “This will not only pave the way for greater bilateral trade in clean energy, it’ll also encourage FDI from Singapore into Malaysia’s renewable energy sector… and overall development of green infrastructure.”
The practicalities of how the two countries’ different economies, currencies and markets would interact could raise hurdles to seamless trade within the region. For Asadullah, the success of the economic region would rely on lowering cross-border transaction costs and harmonising labour and environmental standards.