PRIME MINISTER'S MEETING WITH MALAYSIAN PRIME MINISTER

Mr Chuang Shaw Peng asked the Prime Minister whether he will elaborate on the win-win proposals in the recent negotiation with the Malaysian Government.

Mr Zulkifli bin Baharudin asked the Prime Minister (a) what were the specific requests made by the Malaysian Prime Minister to the Singapore Government to help the Malaysian economy; and (b) whether the meeting between the Prime Ministers and the request for greater help and co-operation reflect the change in the Malaysian government's attitude to restore and improve ties with Singapore.

Mr Shriniwas Rai asked the Prime Minister during his recent meeting with the Prime Minister of Malaysia in Kuala Lumpur, whether the question of water supply to Singapore was raised.

The Prime Minister (Mr Goh Chok Tong): Mr Speaker, Sir, may I have your permission to take Questions 9, 10 and 11 together as they are related?

Mr Speaker: Yes.

Mr Goh Chok Tong: Thank you. The essence of what Prime Minister Mahathir and I discussed has already been reported in the newspapers.

Prime Minister Mahathir sought Singapore's co-operation to raise funds to help Malaysia meet its financial needs.

Prime Minister Mahathir also reaffirmed Malaysia's commitment to provide water to Singapore beyond 2061 when the

1962 Water Agreement expires.

At Malaysia's request, Singapore submitted its draft Agreement on Water to the Malaysians on 14th November 1998. Malaysia in turn sent its draft loan agreement to Singapore on 20th November 1998.

Officials from both countries are now negotiating the two agreements. It is, therefore, premature to go into the details today. But as they are major agreements between two states, they will be tabled before our respective Parliaments for approval after Dr Mahathir and I have signed them. However, I must caution that negotiation is still in progress and we cannot assume yet that we will reach agreement on the details.

The two proposals are win-win because Singapore will provide or raise funds for Malaysia on very favourable terms. These funds will help Malaysia meet its financial requirements and overcome its economic challenge. In turn, with the new water agreement, Singapore's long term supply of water will be secured. Water from Malaysia is also a cheaper alternative than desalination.

The meeting between Dr Mahathir and I to discuss bilateral co-operation does represent a change in attitude on both sides towards restoring and improving bilateral ties. There is a greater chance now that such improvement in ties will be sustained, especially if we conclude the loan and water agreements.

Mr Leong Horn Kee (Bishan-Toa Payoh): Sir, may I ask the Prime Minister whether it is possible for him to disclose some broad outline of the nature of the two agreements that are being discussed, for example, the amount of loan that the Malaysian have now stated in their agreement and is there any proposed period in the water agreement that we would like to ask for?

Mr Goh Chok Tong: Mr Speaker, Sir, as I have explained just now, negotiation is in progress. I do not think it is wise for me to go into details of the two agreements. The main point is that once the agreements are signed, they will be tabled for approval by Parliament.

Mr Zulkifli Bin Baharudin (Nominated Member): I would like to ask the Prime Minister whether Singapore has been asked to provide funds directly or provide guarantees, or is it to be raised through private institutions, or whether we are also looking at the resolution of bigger issues like the CIQ and release of CPF funds belonging to West Malaysians. Is this part of the comprehensive agreement that we now have in place?

Mr Goh Chok Tong: Mr Speaker, the exact nature of the financial assistance which we will give to Malaysia is being discussed. It can be a direct loan from the Singapore Government. It can be Singapore Government buying bonds from Malaysia. It could be a guarantee. These are matters being discussed at the moment.

The CIQ issue is separate. It is not part of this discussion. We have decided, when I met Dr Mahathir, to defer discussion on the CIQ and the Points of Agreement to a later date.

Mr Chuang Shaw Peng (Nominated Member): From the reports, it was quite clear that the US is not very happy with Malaysia. It was also reported that the US is probably trying to block some loans to Malaysia because they said the loans would only be given to those IMF-backed countries.

Mr Speaker: Mr Chuang, could you ask your question?

Mr Chuang Shaw Peng: Yes. I would like to ask the Prime Minister whether our help to Malaysia would jeopardise our relationship with USA, especially when they are not in favour of helping Malaysia.

Mr Goh Chok Tong: Mr Speaker, Sir, I do not know how the US would react on this particular issue, but here we take into account our own national interest, and our interest in helping the Malaysians. I myself do not expect the US to object to our assistance to Malaysia in this particular case, because we are getting something in return, which is of tremendous importance to us over the longer term.

Mr Low Thia Khiang: Sir, instead of providing loans to the Malaysian Government, if Malaysia is prepared to sell the piece of land at Tanjong Pagar Railway Station, would the Government consider buying the land from Malaysia and help them in terms of financial assistance?

Mr Goh Chok Tong: Mr Speaker, Sir, if Malaysia is keen to sell that piece of land to Singapore, it has to put it on the market and interested buyers would have to tender for the piece of land. I do not know how much the land would fetch. It may or may not be sufficient to meet the needs of the Malaysian Government.

Mr Simon Tay: May I ask the Prime Minister, given that there is a possibility of obtaining water more cheaply than desalination, does this mean that if the deal is signed, desalination would not go ahead, and that pending negotiations, there will be no progress on desalination?

Mr Goh Chok Tong: Mr Speaker, Sir, we have decided to go ahead with the desalination plant, and we will go ahead. This is a pilot plant which will yield about 30 million gallons per day and it is useful for us to have this plant so that we know how it works. As I cautioned just now, we do not know as yet whether the discussion now will lead to fruition.