Malaysia-Singapore Leaders’ Retreat: What both PMs agreed on to resolve airspace, maritime boundary issues

KUALA LUMPUR: Malaysia and Singapore have agreed on an “indicative timeline" on determining the precise location of their maritime boundaries in the Johor Strait, with joint technical works starting this year.

On a separate issue of airspace management, they also agreed that delegation arrangements for the provision of air traffic services over Southern Peninsular Malaysia do not affect sovereignty.

These were what Malaysia Prime Minister Anwar Ibrahim and Singapore Prime Minister Lawrence Wong agreed on over the two outstanding bilateral issues, according to a joint statement released in the early hours of Wednesday (Jan 8).

The leaders’ statement came after Tuesday’s 11th Malaysia-Singapore Leaders’ Retreat in Putrajaya, where the leaders said their countries were committed to finding “durable, win-win” outcomes on such bilateral issues.

On the maritime issue where leaders said both sides had made “good progress”, the boundaries are being looked at by a technical working group between both countries.

The group is working to “delimit precisely” the territorial waters boundary in accordance with the Straits Settlements and Johore Territorial Waters Agreement 1927 (1995 Agreement) and has met four times since June 2023.

It held its fourth meeting held in Singapore on Nov 11 and Nov 12 last year, and both countries had agreed to and signed the terms of reference and scope of works for the technical working group.

“In this regard, both countries also agreed to an indicative timeline with joint technical works starting in 2025,” the joint statement said.

“Both leaders urged the technical working group to continue the effort in determining the actual location of the international boundary in the Johor Strait under the 1995 Agreement.”

The maritime dispute between Malaysia and Singapore came to a head in 2018 when Malaysia unilaterally extended its Johor Bahru Port Limits off Tanjung Piai, overlapping with Singapore's port limits off Tuas.

Singapore protested Malaysia's extension in October 2018, saying it led to repeated incursions by Malaysian government vessels into Singapore waters. The Republic later extended its own port limits in response, saying this was still in its territorial waters.

In 2019, both sides agreed to suspend the extensions and revert to former limits. They agreed to suspend and not authorise all commercial activities in the area, and not to anchor any government vessels there.

They also agreed to set up a committee to study the legal and operational issues relating to the maritime dispute and provide a basis for negotiations.

AIRSPACE MANAGEMENT

On the airspace issue, Mr Anwar and Mr Wong said they reaffirmed their commitment to review the delegation arrangements for the provision of air traffic services over Southern Peninsular Malaysia.

These arrangements were recommended and approved by the International Civil Aviation Organization (ICAO) in 1973 and implemented through the Operational Letter of Agreement between Kuala Lumpur and Singapore Area Control Centres concerning Singapore Arrivals, Departures and Overflights in 1974.

“The leaders agreed that the delegation arrangements do not affect sovereignty and that the review should be in accordance with ICAO’s requirement for safe and efficient air traffic management as well as to accommodate both countries’ current and future operational needs,” the joint statement said.

“Both leaders tasked the Transport Ministers to guide the civil aviation authorities to further progress the discussions, and to meet regularly to exchange views on issues of shared interest.”

In 2018, Malaysia objected to new landing procedures proposed for Singapore’s Seletar Airport, saying this would affect development and shipping operations in Pasir Gudang, Johor. It also imposed a “permanent restricted area” in the airspace over Pasir Gudang, effectively introducing a no-fly zone in the approach path to Seletar Airport.

Singapore's Ministry of Transport responded by saying that the new landing procedures for Seletar Airport would not impose height restrictions. The Republic also said it respects Malaysia's sovereignty and that cross-border airspace management "is not incompatible with sovereignty".

While both sides agreed to suspend their moves in January 2019, Malaysia transport minister Anthony Loke said at a joint press conference with his then-Singaporean counterpart Khaw Boon Wan in April that year that Malaysia already has the capabilities to manage its own airspace.

"That is our sovereign airspace which has been a long-standing issue and we wish to manage our own airspace,” he was quoted as saying by the Malay Mail.

"We think that after 45 years of delegating that airspace to Singapore, it’s high time right now for us to review the agreement.”

At the 10th leaders’ retreat held in Singapore in October 2023, Mr Anwar and then Singapore Prime Minister Lee Hsien Loong welcomed Singapore’s withdrawal of its instrument landing system procedures for Seletar Airport and Malaysia’s suspension of its permanent restricted area over Pasir Gudang “indefinitely”. 

They also noted that a high-level committee had been set up to review the Operational Letter of Agreement between Kuala Lumpur and Singapore Area Control Centres concerning Singapore Arrivals, Departures and Overflights signed in 1974.

PEDRA BRANCA, MIDDLE ROCKS AND SOUTH LEDGE

The leaders also gave an update on the implementation of the International Court of Justice (ICJ) judgment on Pedra Branca, Middle Rocks and South Ledge, islets at the eastern entrance to the Singapore Strait.

Mr Anwar and Mr Wong said the attorneys-general of Malaysia and Singapore had submitted a joint report on the issue, and commended the efforts made by both delegations in a joint meeting on Mar 14, 2019, on the implementation of the ruling and boundary delimitation.

“Both sides remain committed to resolve the outstanding maritime boundary issues between the two countries,” they said.

In 2008, the ICJ ruled that Pedra Branca belongs to Singapore while Middle Rocks belongs to Malaysia. It also ruled that South Ledge belongs to the state in the territorial waters of which it is located.

Malaysia has protested Singapore’s decision to develop Pedra Branca, saying this could affect the environment and Malaysia’s borders with Singapore. It has also launched a royal commission of inquiry into its then-government’s decision in 2018 to drop an application to review the ICJ ruling.

In response, Singapore has said that its development works on Pedra Branca are needed to improve maritime safety and security as well as search and rescue capabilities in the area, although it had agreed to pause the works to listen to Malaysia’s concerns in the spirit of mutual cooperation and good faith.

At the previous leaders' retreat in Singapore, Mr Anwar said he had Mr Lee's “agreement to hear our arguments in the near future”.

In a written parliamentary reply on Tuesday, Singapore’s Minister for Foreign Affairs Vivian Balakrishnan also said that Malaysia’s royal commission of inquiry is an internal matter for Malaysia, and should not affect good bilateral relations between both countries.

JOHOR-SINGAPORE SPECIAL ECONOMIC ZONE

On the Johor-Singapore Special Economic Zone (JS-SEZ), Mr Anwar and Mr Wong said on Wednesday that the JS-SEZ is a “key milestone” in Malaysia-Singapore relations.

The zone will “enable both countries to tap on their complementary value propositions to drive innovation, enhance productivity, compete for global investments, create jobs, and bolster economic growth”, they said.

To achieve the JS-SEZ’s goals, Malaysia’s Ministry of Economy and Singapore’s Ministry of Trade and Industry said in a joint statement on Wednesday that both countries have agreed to “leverage complementary value propositions”.

“Under this agreement, Malaysia and Singapore will work together on the basis of mutual benefit to strengthen economic co-operation, facilitate cross-border movement of people and goods, improve the ease of doing business, and support talent development in the JS-SEZ to better compete for global investments,” the statement said.

The JS-SEZ, which was first mooted in July 2023, will cover an area “defined precisely” in the agreement and include the Iskandar Development Region and Pengerang on the south-eastern top of Johor, the ministries said.

Malaysia has indicated that the JS-SEZ will span 3,571 sq km and comprise nine “flagship areas” catering to different economic sectors.

Besides the Iskandar region and Pengerang, they are the Johor Bahru city centre, Tanjung Pelepas-Tanjung Bin, Pasir Gudang, Senai-Skudai, Sedenak, Forest City, and Desaru.

Malaysia and Singapore will promote and facilitate investments in 11 economic sectors: Manufacturing, logistics, food security, tourism, energy, the digital economy, the green economy, financial services, business services, education, and health.

These investments will enhance economic complexity, promote and advance digital vibrancy and technology adoption, and achieve net-zero aspirations in the JS-SEZ, the ministries said.

Malaysia and Singapore will also facilitate the development of renewable energy projects to accelerate renewable energy trading with each other, and consider the development of new areas for free zones and facilitating the application for licensed manufacturing warehouses in the JS-SEZ, they added.

In a joint statement on Wednesday, Malaysia’s Finance Ministry and the Johor state government said the tax incentive package for the JS-SEZ is designed to drive high-value investments into Johor, tailored to meet the evolving needs of global and domestic investors.

Effective Jan 1, these include a special corporate tax rate of 5 per cent for up to 15 years for companies undertaking new investment in qualifying manufacturing and services activities, such as artificial intelligence and quantum computing supply chain, medical devices, and aerospace manufacturing.

“Knowledgeable workers” employed in the JS-SEZ will also get a special personal tax rate of 15 per cent for 10 years, while additional tailor-made incentives will be allocated to businesses operating in certain flagship areas in JS-SEZ.

Further details on the tax incentives and the flagship zones will be announced in “due course”, the statement said.

Singapore and Malaysia will work also together to attract talents aligned with industry needs to work in the JS-SEZ, the ministries from both countries said, including by enhancing industry-ready skills training and education programmes and pursuing these initiatives in collaboration with the Johor Talent Development Council and other relevant institutions.

These include partnerships to strengthen cooperation in technical and vocational education and training initiatives to meet industry demands, such as Memorandums of Understanding (MOUs) between Singapore Polytechnic and the Federation of Malaysian Manufacturers, and Singapore’s ITE Education Services and the Johor Skills Development Centre.

Mr Anwar and Mr Wong said in their joint statement on Wednesday that both leaders recognised the promising prospects for further collaboration on the development of Iskandar Malaysia, particularly with the establishment of the JS-SEZ.

The zone will lay the foundation for a “dynamic and sustainable business ecosystem”, they said, reaffirming ongoing discussions to refresh the Joint Ministerial Committee for Iskandar Malaysia platform to better support the ambition and implementation of the JS-SEZ, while reinforcing bilateral cooperation on other fronts, such as transport and environment.

Mr Anwar and Mr Wong witnessed the exchange of several MOUs in areas like education, urban development and transport at their retreat on Tuesday.

“The leaders encouraged their respective officials to take prompt follow-up actions under the MOUs to ensure that the commitments made are translated into tangible outcomes,” they said in Wednesday’s joint statement.

“Both leaders expressed confidence that by maintaining a proactive and results-oriented approach, the initiatives outlined in the multifaceted MOUs will be successfully implemented.”