Prime Minister Lee Hsien Loong said Singapore is watching the political developments in Malaysia very closely, and hopes that the country remains stable.

Speaking to former ambassador Chan Heng Chee yesterday in an interview to be aired tomorrow, he said Singapore and Malaysia remain closely inter-connected not just in economic links but also through ties between their people.

Asked about the impact on Singapore of the political crisis unfolding in Malaysia, he said: "Malaysia is our closest neighbour, not just geographically but very big trading ties and investments. We have a lot of people who live and work in Malaysia, a lot of Malaysians work in Singapore.

"I think our Causeway and Second Link are the busiest international borders in the world, in terms of the number of people who go back and forth every day.

"And so when something happens in Malaysia, we watch very carefully and are very concerned how it affects us. We have very good relations with Malaysia, I personally have very good relations with Prime Minister Najib (Razak), so we hope that Malaysia will remain stable, that we will be able to have a government there which we can do business with and cooperate with, as we have been doing the last few years.

"When something happens which could cause either a political upset or social or security worries, I think we have to watch very carefully. The generation which experienced the 60s and 70s knew how intertwined we were, instinctively. The new generations have grown up separate so our societies have become more distinct but, in fact, the inter-relationships are very close and we do have to watch."

Separately, Foreign Minister K. Shanmugam was also asked yesterday about the impact of the situation in Malaysia on Asean stability.

Speaking at a press briefing on the upcoming Asean Foreign Ministers' Meeting in Kuala Lumpur, he told reporters: "Malaysia and Singapore, we are linked by an umbilical cord. We are each other's closest neighbours.

"When any two countries are as close as Malaysia and Singapore, round the world, they will want stability in each other.

"The total trade between Malaysia and Singapore is $111 billion, we are amongst each other's top trading partners, amongst each other's top investors, tens of thousands of Malaysians come to Singapore for work, a lot of Singaporeans do business, go over to Malaysia.

"Any instability in Singapore will deeply affect Malaysia, any instability in Malaysia will deeply affect Singapore, both economically and in other ways. We depend on Malaysia for water every day, protected by a treaty, but we really don't want any instability.

"So what I can say is that we follow developments very closely, we hope that there will be stability - that's good for Malaysia and good for us."