Singapore and Malaysia will begin negotiations to delimit their maritime boundaries in a month, as both countries have taken steps to de-escalate tensions at sea.
This measure was one of several that Prime Minister Lee Hsien Loong and his Malaysian counterpart Mahathir Mohamad welcomed at their Leaders' Retreat yesterday, the first under the Pakatan Harapan government.
Speaking at a joint news conference, PM Lee said he and Tun Dr Mahathir affirmed their commitment to a cooperative and forward-looking bilateral relationship.
"The relationship between our two countries is rooted in our long history, and strong family and business ties," he said. "This remains unchanged even with the new Malaysian government."
The leaders also discussed current bilateral issues, including airspace and maritime boundaries.
Dr Mahathir said: "We agreed that the fundamental principle is to resolve issues of concern in a friendly and constructive manner."
Both PMs welcomed the progress made in implementing recommendations to resolve the maritime dispute. Dr Mahathir said: "As the saying goes, good fences make good neighbours. We will now proceed to maritime boundary delimitation in the area."
Ultimately, Malaysia believes it is important to delimit all outstanding maritime boundaries between Malaysia and Singapore, he added.
Malaysia and Singapore had mutually suspended the extension of their overlapping port limits on Monday, reverting to what was in place before Oct 25 and Dec 6 last year, respectively.
Earlier yesterday, a Singapore Foreign Ministry spokesman said there were no Malaysian government vessels anchored in the area previously covered by overlapping port limits as of midnight. "We will continue to exercise sovereignty and take appropriate enforcement actions in the area," he said.
Dr Mahathir also said at the news conference that Malaysia wants to take back control, in stages, of its airspace over southern Johor that has been delegated to Singapore.
PM Lee said Singapore is willing to discuss this matter with Malaysia, and stressed the key considerations include the safety and efficiency of air traffic operations.
On water, Dr Mahathir said resolving the issue of the price of water sold to Singapore under the 1962 Water Agreement is a priority.
Singapore, on its part, is concerned about pollution of the Johor River as well as its long-term yield, PM Lee said.
Beyond these bilateral issues, the broader Singapore-Malaysia relationship continues to grow, PM Lee said. For instance, the Joint Ministerial Committee on Iskandar Malay-sia is working to further cooperation on multiple fronts.
PM Lee also invited Dr Mahathir and his wife Siti Hasmah Mohamad Ali to this year's Bicentennial National Day Parade at the Padang on Aug 9. Dr Mahathir said he was glad to accept the invitation.
Then Malaysian Deputy Prime Minister Abdul Razak and his wife had attended the National Day celebrations in 1969, on the 150th anniversary of modern Singapore's founding.
Asked if the recent maritime and airspace disputes will have lasting damage to bilateral ties, PM Lee said: "If it is managed well, then it can be productive for both countries and the overall relationship can prosper. If it is not managed well, it can cause a lot of trouble and poison the overall relationship."
PM Lee said he wrote a letter to Dr Mahathir in December as he was worried that things were not going in the right direction. He asked Deputy Prime Minister Teo Chee Hean and Finance Minister Heng Swee Keat to deliver it in person and explain his concerns to Dr Mahathir.
PM Lee said he is very happy that Dr Mahathir took in what they said and took action, which enabled ministers from both sides to meet and turn things around gradually.
In a Facebook post last night, PM Lee said issues will crop up from time to time between close neighbours bound by history and kinship.
"When this happens, we need to keep channels of communication open, build trust, and tackle the issues pragmatically and with an eye to both sides' concerns. Then we can move beyond solving problems to cooperating for mutual benefit," he said.
Read the joint statement below by both leaders.