Fast track to economic union?

The Feb 19 announcement of a high-speed rail (HSR) link between Singapore and Kuala Lumpur, with a commute of only 90 minutes, has raised the prospect of closer economic integration between the two cities. Speculation has led some to wonder whether the trajectory could even lead, eventually, to an economic union between Singapore and Malaysia.

Prime Minister Lee Hsien Loong and his Malaysian counterpart Najib Razak whet appetites on both sides of the Causeway when they disclosed their agreement in-principle to pursue the HSR link by 2020.

It is the most exciting joint proposal to have come from the two countries in many years.

Both leaders conjured up the image of “twin cities” and a “virtual urban community” in which people “can go up there, do business, meet friends, have a meal, and come back all the way at the end of the day”.

Indeed, Singapore and KL could be akin to what London and Paris are to each other, linked by the Eurostar train across the English Channel. It promises to be the most impactful bilateral project, as the benefits of improved ties will percolate down to the people level.

Singaporeans and Malaysians will feel the power of better relations as they get to move more swiftly between the two cities, opening up vistas for unprecedented interaction. In the longer term, these will have a positive effect on political ties. This is what ASEAN leaders mean when they talk of “connectivity”: Borders become porous and countries seamless, as key nodes of society and community get linked by land, air and sea. What may follow is social, cultural, economic and political interconnectedness.

TWO CITIES, ONE ECONOMY?

Most significantly, the proposal promises to be hugely substantive in terms of bringing about economic integration. Greater mobility will lead to growing ease of doing business, opening up a host of economic opportunities from greater tourism to property booms.

As a result of the permeability between London and Paris thanks to the Eurotrain, tourism between the United Kingdom and mainland Europe through France has boomed. Through land links like this, Europe is connected in ways that reinforce its cohesiveness in the full sense of the word — politically, economically, socially and culturally.

We can imagine the same effect when the Singapore-KL HSR link gets moving by 2020 or thereabouts, though details are yet to be finalised. But the idea and the political will to push it through are already triggering high hopes and enthusiasm, within their two societies as well as business and industry.

We can expect a surge in tourism, as more visitors will come to both Singapore and KL, and even beyond KL to other cities in Malaysia, simply because of the ease of travel. There will be other business, economic and cultural spin-offs, with the multiplier effects spreading to touch-points along the HSR route, such as the Iskandar region in Johor, Malacca and Negri Sembilan.

The property and hospitality sectors will also grow, industry players say: Singapore’s manpower crunch can potentially be eased with employers engaging Malaysians who can work here but shuttle home on a daily basis.

Indeed, by 2020, Singaporeans and Malaysians, as well as business executives and tourists from ASEAN and the rest of the world, would even get to travel seamlessly to other parts of Asia, because by then, the ASEAN connectivity grid would be in place.

By 2015, the vision of an ASEAN Community is due to be realised, with rail links all the way to Kunming in China and, in future, possibly westward to other parts of Asia. The Singapore-KL speed train will be a fast-track to bigger things.

INTEGRATION OR UNION?

It is too premature to talk about a possible economic union between Malaysia and Singapore arising from the HSR project. Still, the integrationist undertow of the idea cannot be ruled out, particularly with the ASEAN Community only two years away from a promised region also interconnected economically through an ASEAN Free Trade Area, socially, culturally and politically.

The idea of an economic union between Singapore and Malaysia has long been in the consciousness of scholars and politicians, even though it has not been seriously pursued.

In 2000, when then-Opposition leader Chiam See Tong rehashed in Parliament his proposal for an economic union, then-Foreign Minister S Jayakumar, quoting Prime Minister Goh Chok Tong, said the “economic logic” of his proposal was “correct” but “cooperation takes two willing parties”.

In other words, the idea was never completely ruled out. Now that there are two willing parties on both sides of the Causeway to kick-start the catalyst for economic integration between Singapore and KL — that being the HSR link — will there be the long-term political will on both sides to bring about an economic union?

Yang Razali Kassim is Senior Fellow with the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.