Singapore enjoys good relations with Malaysia and Indonesia, but Singaporeans need to be more aware of trends and developments in these countries, Foreign Minister K. Shanmugam said yesterday.
His remarks came four days after Prime Minister Lee Hsien Loong said Singaporeans should pay attention to the world around them.
In a speech to media professionals, Mr Shanmugam said the Malaysian economy is not doing too well, even as Malaysia is grappling with rising racial, religious and political polarisation, as well as a weakening economy. These trends may have serious implications for Singapore's own economy and social cohesion, he said.
"Anyone who thinks that 700 square kilometres can exist by itself in a cocoon, unaffected by international or regional economic or sociopolitical issues, clearly doesn't understand how Singapore functions," he said in a speech titled Small State Diplomacy: Challenges And Opportunities For Singapore.
Any economic problem in Malaysia will be a serious issue for Singapore as the two countries are closely linked, he said at a two-hour session organised by the Singapore Press Club and held at the Singapore Press Holdings' auditorium.
While Singaporeans may see the current weak ringgit as a good thing, Mr Shanmugam disagrees. "When your neighbour's economy is in such a state, and your neighbour is your second-largest trading partner, it doesn't benefit us," he said.
He argued that Malaysia's challenge in the medium to long term is to move away from relying on its extractive industries and lift its economy to the next level.
But it needs an educated population to do it, he said, a requirement that highlights another long-term problem: Malaysia's schools are not racially integrated.
Chinese children attend Chinese-medium schools, while Malay children go to mainstream schools "which are becoming more and more Malay and Islamic". "From a very early age, the Malay and Chinese population are apart. How will they integrate later?"
This underlies Malaysia's second problem of rising racial polarisation, seen in how its race-based political parties are increasingly under strain, Mr Shanmugam said.
He highlighted the widening political divide among races, with the opposition Democratic Action Party dominated by ethnic Chinese, while Umno grows more powerful in the ruling Barisan Nasional coalition.
He noted that high-level Umno leaders, but not the leadership, are openly pushing for a fully-Malay government, arguing that as Malays form 65 per cent of the population, there is no need for the Malaysian Indian Congress and Malaysian Chinese Association as in the current coalition government. Also, talk of Umno combining with Parti Islam SeMalaysia has become mainstream as well.
Closely tied to the increasing salience of race is Malaysia's rising Islamisation, Mr Shanmugam said. Broad sections of the Malay population support the adoption of Islamic laws and assess their political leaders in terms of how Muslim they are.
"An honest politician, an upright politician, will find it very difficult to talk about a united Malaysia that is more integrated. The political dynamics are such that he will have to play to the Malay ground," he said.
The Islamisation "has gone past the tipping point now", he added.
Prime Minister Najib Razak is under pressure from his political opponents, said Mr Shanmugam. This weekend's Bersih rally is shaping up into a confrontation between the authorities and the organisers who insist on defying orders.
The upshot is that Singapore will be affected by these trends, Mr Shanmugam said.
One, if investors view Malaysia as not completely stable, they may decide not to invest in Singapore.
Two, with the global stock market uncertainty, anything that creates economic investment uncertainty will be a "double whammy" for Singapore.
Three, as race and religion are emotional issues, Singapore's social fabric may feel the ripple effects.
As for Indonesia, its economy is underperforming compared to its potential, and political players have made many attempts to play to a strong streak of nationalism, Mr Shanmugam said. For instance, illegal fishing is dealt with dramatically, by sinking foreign boats in Indonesian waters. Indonesia has also said it will not renew its investment guarantee agreement with Singapore, which is set to expire next year.
Singapore, he noted, is an easy scapegoat for some parties on issues like extradition, and that it is allegedly a haven for corrupt Indonesians. Both countries have signed an extradition treaty but Indonesia's Parliament has refused to ratify it, and Indonesian officials let some of these "corruptors" travel freely in and out of their country, he said.
Singapore wants to see Indonesia prosper, Mr Shanmugam said, but added: "The level of economic cooperation will inevitably be affected if nationalism takes a wrong turn."