Kuala Lumpur, 8 May 1963
286. Secret
Malaysia
Your 339.1
Although Malayans would hope that Singapore would bow under pressure I am satisfied that at least majority of Ministers are prepared to proceed without Singapore or give up Malaysia rather than make financial concessions that they fear would enable Singapore to dominate Federation. Tunku’s position is more difficult to assess. He may regard proposal as tactical device but earlier concessions to Borneo Territories were resented by Cabinet and U.M.N.O.2 and I doubt whether Tunku or Razak can now afford unpopularity of further concessions, especially to Singapore Chinese.
2. I believe Lee is primarily concerned with political problems created by widespread Chinese prejudice in Singapore that Malays are incompetent spendthrifts and that hard working Singaporeans should not be expected to finance Malay extravagance such as Feudal Courts, Mosques, expensive Houses of Parliament, etc.
3. Federation proposals subject to review after 5 years’ equal share of surplus Federal Revenue in Singapore. This would result in apportionment of 55% of Singapore’s Federal Revenue to Federation. Tan Siew Sin agrees that common market is desirable but insists that Singapore must face same choice as Penang and decide between free port status and entering common market. He agrees that transition period would be desirable and that in any case Singapore’s interport3 trade should be protected.
4. Malayans believe these terms are reasonable and indeed generous in view of prospect of Singapore becoming by far most prosperous unit in Federation. They believe it is up to British to convince Singaporeans that it is in their interests to accept. They may also doubt whether in the event of showdown Britain could afford to give Singapore its independence.
5. I am convinced our interests lie in endeavouring to persuade Britain and Singapore to meet Federation proposals.4 If Singapore refuses I would hope Britain would withhold independence from Singapore but proceed with Malaysia. Even without Singapore or Brunei, Malaysia seems best solution for future of North Borneo and Sarawak. It would also provide framework for eventual solution of Singapore and Brunei which I would hope would not be long delayed. If Singapore were given separate independence, case for Malaysia would become weaker and it would be more difficult to defend. I agree Britain may decide it is all or nothing but there is risk that postponement of Malaysia could mean critical loss of momentum, a serious blow to the Tunku’s prestige and dangerous encouragement to Indonesia.
6. Tory has recommended that his Government should invite Lee and Goh Keng Swee5 to London so that issue can be thrashed out while Razak and Tan Siew Sin are there.
[NAA: A] 838, 3006/10/4 part 3]
1 Document 67.
2 That is, on the safeguards recommended by the Cobbold Commission, and incorporated by the Lansdowne Committee on the constitutional arrangements for Malaysia (see footnote 3, Document 8, and Document 10).
3 Presumably, ‘entrepot’.
4 DEA advised Barwick, on 16 May, that this was ‘too risky’—rather, Australia ‘should wait and see’
5 Singaporean Minister for Finance.