Across the Causeway in Johor, a launderette in Muar put up a sign last month that says it welcomes only Muslim customers.
"The incident resulted in a harsh rebuke from the Johor Sultan, who felt it was contrary to principles of harmony and solidarity in the state," said Ms Rahayu Mahzam (Jurong GRC).
She cited the case in Parliament yesterday as an example of extremism creeping into the region.
Home Affairs and Law Minister K. Shanmugam agreed with the point Ms Rahayu made during the debate on the parliamentary motion to strengthen Singapore's resolve to stay united against the terror threat.
Such "narrow-mindedness in the name of Islam drives a wedge between Muslims and non-Muslims", said Mr Shanmugam, adding that it cannot be allowed to take root here.
"The tendencies and the risks are there and we need to guard against them," he added.
Religious teachings that promote segregation, like those espoused by extremist Islamic preachers who say that Muslims cannot express good wishes to non-Muslims during their religious festivals or vote for non-Muslim leaders, have no place in Singapore, he said.
The Government has also banned Christian preachers who have made Islamophobic comments, including two foreign preachers last month, he added.
"This is dangerous. Divisive. Our common spaces will shrink and different segments of the community will drift apart. So we make no apologies for taking that approach," he said.
Mr Shanmugam also said that the Government is studying how it can further restrict foreign preachers who do not share Singapore's values of racial and religious harmony from coming here to preach.
He agreed with Workers' Party MP Faisal Manap (Aljunied GRC) that religious teachings must be aligned with national values.
There was also a need to guard against the mixing of religion and politics, which is happening in some countries in the region, said Mr Shanmugam.
"We do need to relook our practices... Do they promote integration or do they tend to divide? We need to draw a clear line between what is acceptable and what is not," he said.
The Government is reviewing the Maintenance of Religious Harmony Act to deal with this issue, Mr Shanmugam said.
"Religion can and has been a source of strength for our society. But we must also watch for exclusivist, intolerant practices because that can deepen our fault lines and weaken our entire society," he added.