A Warming Current; New leaders improve Singapore-Malaysia relations.

Byline: Lorien Holland and Sonia Kolesnikov-Jessop

The billboard had irked Singaporeans for years. Standing beside the train station at the heart of their glass-and-steel city, it boldly read WELCOME TO MALAYSIA--a reminder that, as a legacy of British rule, their neighbor to the north still holds title to the only railway line linking the two countries. Then last month the sign was quietly hauled down, marking a subtle but symbolic thawing in one of Southeast Asia's more chilly relationships. "We want to remove whatever irritations there are, however small they may be," explained Malaysia's ambassador to Singapore, N. Parameswaran.

With new leaders in both nations, the two Southeast Asian neighbors are looking past memories of their painful 1965 separation and toward a more cooperative future. The movement began after Malaysia's light-handed new prime minister, Abdullah Badawi, took power from strongman Mahathir Mohamad last October--putting a friendlier face on Malaysian politics. A recent leadership change in Singapore, where the scion of founding father Lee Kuan Yew became the city-state's third prime minister last month, portends even stronger ties, say analysts. "I have known Prime Minister Abdullah Badawi for many years already. Under him our relations have taken a fresh start," Lee Hsien Loong, the new prime minister of Singapore, declared during his first National Day Rally address on Aug. 22.

The rapprochement runs deeper than upbeat banter. After decades of acrimony, both countries are cooperating in important areas like security, tourism and trade. Last July, Singapore and Malaysia began coordinating sea-lane patrols with Indonesia to combat piracy in the Strait of Malacca. In addition, both governments now actively encourage two-way tourism, and bans have been lifted to allow their businesses to cooperate and compete in key industries like banking and telecommunications.

The list of potentially divisive issues remains long, to be sure. It includes disagreements over military use of shared airspace, Malaysia's terms for providing Singapore with fresh water, sovereignty over a tiny island called Pedra Blanca and a Singaporean land-reclamation project that Malaysia opposes. The latter two disputes will be resolved by the International Court of Justice and the ...