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FEER: Mahathir Revisits Skeletal Pact
By FEER Intelligence

2/10/2001 10:44 am Tue

Issue cover-dated
October 4, 2001

FEER Intelligence

Mahathir Revisits Skeletal Pact

Singapore and Malaysia may have to renegotiate a skeletal pact on a host of bilateral issues inked after years of bickering. Under the September 4 accord Malaysia agreed to move its downtown Singapore immigration and customs checkpoint on the Kuala Lumpur-Singapore railway line to a site closer to the Johor Strait, which divides the neighbours. Singapore, in turn, agreed to construction of a railway tunnel under the strait. But a senior government official in Kuala Lumpur says Malaysian Prime Minister Mahathir Mohamad decided on September 20 to shelve the tunnel project and terminate the Kuala Lumpur-Singapore line on the Malaysian side of the strait. Mahathir's decision may boil down to economics. Singapore was ready to pay towards construction of a bridge to replace the road and rail causeway link across the strait, but it refused to contribute toward the cost of a costly tunnel and Malaysia couldn't afford it alone. The move will negate the need for a Malaysian checkpoint in Singapore and Malaysia's national railway company stands to profit handsomely from the sale of its property in downtown Singapore's Tanjung Pagar district. The decision to get rid of Malaysian immigration and customs facilities should please Singapore but it could also lead to Malaysia asking for a higher price for the water it supplies to the republic, and this might mean renegotiating the September 4 deal.

Asian Carriers Weather Crisis

Asian airlines are faring better than American carriers as the industry suffers one of its worst crises. Where Asian airlines compete with those from the United States on long- and medium-haul flights to the same destination, the Asian carriers are winning passengers, according Steve Lovato, a leading corporate travel expert for the Asia-Pacific region. Since the September 11 terrorist attacks in the United States, load factors on airliners have been cut sharply, but Asian carriers are still keeping passenger figures comparatively high, he says. But even Asian airlines are having to take aircraft out of route structures--part of a 20% reduction worldwide--as people are reluctant to fly. "Soon after the attacks I had a flurry of phone calls from business travellers asking about route-structure changes," says Lovato.

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