Hiccup in Singapore-Brunei Ties?

Could Singapore be having problems with Brunei -- one of its best friends -- in the midst of its stand-offs with three other bigger neighbours?

In an odd development on Wednesday, Singapore's state-controlled port operator PSA International said it was returning the operations of the Muara Container Terminal in Brunei to the local government prematurely. PSA had only managed the greenfield port in Brunei for six years although the contract was supposed to run for 25 years until 2025. The ostensible reason by PSA was the achievement of its goals and Brunei's on-going review of Muara's longer-term capacity needs.

But it sounds more like a clash of the vision for the port industry in Brunei although PSA had worded the statement nicely. The possible clash could be partly explained by a report that said Brunei's Economic Development Board had identified a nearby island called Pulau Muara Besar in 2002 for another new terminal.

Whatever the real reason for the parting of ways, the development has great political significance as the two countries have very strong and deep-rooted ties.

Brunei is the only country in the world that has its currency pegged to the Singapore dollar. Their currencies are interchangeable. Even the Malaysian currency is no longer interchangeable with the mighty Singapore dollar since the two countries separated in 1965.

In fact, Singapore and Brunei had agreed to join the formation of Malaysia in the 1960s. But Brunei dropped the idea following an internal revolt, while Lee Kuan Yew's Singapore was booted out of the federation by the Malaysian administration of Tunku Abdul Rahman after a brief merger of two years.

Since then, the two small former British colonies have forged very close political and economic ties. They enjoy deep-rooted military and bilateral ties although they are often downplayed. The Sultan of Brunei is known to have many assets in Singapore but the fact is never played up in Singapore.

With the deep ties, one would have expected political considerations to override any differences in the state port deal. In other words, one would have imagined that PSA would continue performing national service regardless of any commercial differences due to the paramount political considerations.

Despite the botched port deal, Singapore and Brunei are expected to continue their warm and friendly ties.

The same cannot be said about Singapore's current soured ties with Thailand, Malaysia and Indonesia.