When then Malaysian premier Najib Razak met his Singaporean counterpart Lee Hsien Loong at their annual leaders’ retreat in January, it wasn’t readily apparent at the time that it would be their last bilateral meeting.

Najib, grinning ear-to-ear, told a press conference that he didn’t expect upcoming elections in his country would “change the nature” of bilateral ties between the two neighbors. “Because you have confidence in the results,” quipped Lee, giving way to chummy laughter.

Both men share a personal chemistry, rapport and common vision that had eluded often prickly cross-straits ties in previous decades. The off-the-cuff exchange between the two leaders’ went viral on social media at the time.

Mahathir Mohamad’s return to the premiership has thus stirred certain anxieties in Singapore in light of his past antagonism towards the city-state. Some commentators felt that Lee had “bet on the wrong horse” at the May 9 polls Najib lost and Mahathir won, and that Lee had failed to nurture meaningful ties with the pre-election opposition.

Singapore’s leaders were nonetheless quick to take a proactive stance on the surprise election result. Lee said the outcome represented “a major change in Malaysian politics,” noting the city-state’s “vested interest in Malaysia’s stability and prosperity” as its closest neighbor. Deputy premier Tharman Shanmugaratnam described it as a “clear vote for change.”

Malaysia's Prime Minister Mahathir Mohamad meets with Singapore's Prime Minister Lee Hsien Loong at the Perdana Leadership Foundation in Putrajaya, Malaysia on May 19, 2018 in this handout photo. Singapore's Ministry of Communication and Information/Handout via REUTERS   ATTENTION EDITORS - THIS IMAGE HAS BEEN PROVIDED BY A THIRD PARTY.
Malaysia’s premier Mahathir Mohamad with Singaporean counterpart Lee Hsien Loong Putrajaya, May 19, 2018. Photo: Singapore Government/Handout via Reuters 

Lee was the second foreign leader, after Brunei’s Sultan Hassanal Bolkiah, to visit Malaysia following the country’s first-ever power transition. He held a half-hour discussion during a courtesy call with Mahathir – which Lee said did not address “substantive” bilateral issues – and made overtures to Anwar Ibrahim, who was recently released from prison and is regarded as Mahathir’s designated successor.

Ties with Malaysia during Mahathir’s first premiership from 1981 to 2003 – previously characterized by Najib as an era of “confrontational diplomacy” – are remembered by many in Singapore as being fractious and at times sour. A pricing dispute over a water agreement in which Malaysia supplies Singapore severely strained ties in the early 2000s.

Though a familiar figure is back at the helm in Putrajaya, the country’s new political context brings with it unknowns that Malaysia’s closest neighbors are eager to manage and understand. Pakatan Harapan, Mahathir’s new ruling coalition, has certain roots in a combative reformasi street protest culture that would not be tolerated in nearby states.

Singapore and Brunei, both being small nations in geographic proximity to Malaysia with outsized wealth and politically-conservative governments, suddenly find themselves next door to a Malaysian government intent on deep-reaching political reform.

What impact that drive will have on outstanding and pending joint projects and bilateral matters generally is unknown. What is known is that Mahathir intends to review agreements, deals and mega-projects initiated under Najib’s watch.

Malaysia's Prime Minister Najib Razak with Singapore's Prime Minister Lee Hsien Loong (R) in Singapore in s file photo Reuters/Edgar Su
Malaysia’s then Prime Minister Najib Razak with Singapore’s Prime Minister Lee Hsien Loong (R) in a file photo. Photo: Reuters/Edgar Su

Putrajaya is now conducting a reassessment of the Kuala Lumpur-Singapore High-Speed Rail (HSR), a 350 kilometer rail system that aims to cut travel time between the two cities from about four hours by car to 90 minutes by train.

Singapore and Malaysia already signed a binding agreement to construct the HSR in 2016. If completed, it would be one of Southeast Asia’s costliest ever bilateral infrastructure projects, with an estimated price tag of US$11.9 billion. Mahathir has already questioned the viability of the mega-project, citing cost concerns and debt constraints.

Putrajaya has reopened graft investigations into the 1Malaysia Development Berhad (1MDB) state development fund, believed to be linked to billions of dollars in pilfered losses. Singapore is among various global nations investigating the scandal.

Lim Guan Eng, Malaysia’s new finance minister, claims federal government debt and liabilities currently stand at 1 trillion ringgit (US$251.70 billion), amounting to 80.3% of GDP.

As such, the Malaysian government now appears intent on drastically cutting costs to ease its debt burden, raising the possibility that previously accepted projects could be axed on austerity grounds.

Mahathir suggested as much in a recent interview, where he raised the possibility of reducing the large compensation costs that would be owed to Singapore if Malaysia unilaterally withdrew from the legally binding HSR deal.

Singapore has already acquired private land intended for the line’s terminus and would be expected to defend the deal’s compensation clauses. Lee has called for any “contingencies” to be worked out within the framework of the deal.

Singapore's Prime Minister Lee Hsien Loong speaks at the International Conference on The Future of Asia in Tokyo, Japan, September 29, 2016. Photo: Reuters/Kim Kyung-Hoon
Singapore’s Prime Minister Lee Hsien Loong in Tokyo, Japan, September 29, 2016. Photo: Reuters/Kim Kyung-Hoon

The air route between Singapore and Kuala Lumpur is reportedly the world’s busiest, with seven airlines operating up to 84 flights a day. Few question the tangible demand for an express rail link between Singapore and Kuala Lumpur, and analysts believe an HSR link between the two cities would strengthen their positions as regional business hubs.

The Malaysian government will announce its position on the matter soon. But should this prove to be a bone of contention, other testy bilateral issues from the Mahathir era, such as Singapore’s use of Malaysian airspace or pricing disputes over water supplied by Malaysia, could very well rise to the fore, reversing the trend of bilateral ties set by Najib.

Malaysia’s fast-moving political changes are already having reverberations in Singapore.

Until earlier this month, both countries had been governed by a single dominant party: the United Malays National Organization (UMNO) headed every ruling coalition in Malaysia since independence in 1957, while Singapore’s ruling People’s Action Party (PAP) has ruled the island state since 1959.

UMNO’s historic loss has prompted much reflection and discussion among Singaporeans. Days after the election, Lee remarked during a parliamentary session that the PAP did not have a “monopoly of power” and that “opposition parties keep Singapore’s politics contestable.”

James Chin, a professor at the University of Tasmania, described the triumph of Malaysia’s Pakatan Harapan opposition as a “warning shot” to the PAP in a recent article.

“No corruption allegations akin to 1MDB have been made about the PAP leadership, but there is persistent unhappiness among Singaporeans over the escalating cost of living and the paternalistic style of PAP rule,” he claimed, drawing comparisons to economic and political gripes widely cited by voters in Malaysia who embraced the opposition.

Traffic passes a 1Malaysia Development Berhad (1MDB) billboard at the Tun Razak Exchange development in Kuala Lumpur, Malaysia, July 6, 2015. Photo: Reuters/Olivia Harris
Traffic passes a 1Malaysia Development Berhad (1MDB) billboard at the Tun Razak Exchange development, Kuala Lumpur, July 6, 2015. Photo: Reuters/Olivia Harris

Political conditions in Singapore, however, differ from Malaysia in significant ways. The PAP continues to have widespread support and credible performance legitimacy, even as certain recent controversies have buoyed perceptions of entrenched elites misusing state organs for political benefit.

Singapore’s opposition parties are marginalized, disparate and do not operate within a coalition. The opposition Workers’ Party, which aspires to be an effective check on the ruling party, has a mere 9 parliamentarians compared to the PAP’s 82. Opposition parties also lack prominent PAP defectors who could lend credibility to a political alternative.

The two neighbors are also moving in different economic policy directions. While Malaysia intends to scrap an unpopular goods and services tax (GST) set at 6% to ease living costs, authorities in Singapore – which routinely ranks as being among the world’s most expensive cities – will be raising their GST from 7% to 9% in coming years.

Malaysia’s Cabinet ministers will also be taking a 10% salary reduction as part of budgetary belt-tightening, while ministers and parliamentarians will soon be required to declare their assets. Singapore’s ministerial salaries are the world’s highest and – while unpopular – are defended on grounds of luring talent into the public sector and deterring corruption.

Despite ample legislation to regulate and stifle public discourse, Singapore intends to introduce laws to stop the spread of “fake news,” which many fear will be used to curb legitimate dissent. Malaysia’s new communications minister Gobind Singh Deo, by contrast, has vowed to abolish Malaysia’s new “fake news” law and improve press freedom.

As Malaysia charts a fresh course for change, Singaporeans may well regard what they see as a politically desirable trajectory.