Economical Matters 1. A Common Market in Malaysia would only be implemented if Singapore surrenders its free port status and imposes a tax on its imports. While the common market could potentially benefit Singapore, the Concessionaire General (CG) is unsure if it would benefit the other states as much as Singapore.
CG aimed to safeguard industries in Peninsular Malaysia and prevent uneven development across the states. Singapore SG refused to give up its free port status and impose taxes on imports. The state government of SG was discontented with CG for delaying the common market, which was a crucial factor behind the merger. 2. Taxation & ?
Revenue Contribution: Malaysia and Singapore. The CG (Country Government) proposed the implementation of new taxes in Singapore (SG) and an increase in SG's contribu
...tions to the Federal revenue from 40% to 60%. This was in response to the heightened defence expenditure caused by the Confrontation. The People's Action Party (PAP) government considered these decisions unfair, as they believed that agreeing to the proposal would result in SG shouldering a disproportionate burden for defence costs. Furthermore, the taxes proved to be detrimental to SG's industries and businesses, which were already impacted by trade restrictions with Indonesia due to the Confrontation.
The closure of BOC in Singapore and Malaysia raised concerns that China was using the bank to send financial aid to communists in Malaysia. The bank's operations were disallowed in Malaya for security reasons, and Singapore was urged to cease its operations as well. Singaporean businessmen, who had long been customers of the bank and relied on it for their business operations, wer
unhappy with the closure. The closure also drew protest from the PAP government, as it was expected to cause significant loss in potential revenue and investment.
The political system in Singapore (SG) aimed to promote the welfare of Malays, while also focusing on social issues. In Malaysia, there were differences in ideas between the People's Action Party (PAP) and the Alliance on how communities should be governed. Malays enjoyed special privileges in Malaysia, with UMNO claiming to protect them from marginalization. The fear was that the Chinese majority in Singapore would threaten Malay rule in Malaysia. Both MCA and UMNO viewed PAP's participation as an exercise of their rights as Malaysian citizens. In Singapore, most government officials were Chinese, which posed a threat to MCA as it accused them of prioritizing wealthy Chinese interests over underprivileged ones. PAP was also seen as a threat to UMNO as it aimed for racial equality and equal rights for all races in Malaysia. Lee challenged the belief that Malays had a special position in Malaysia during the 1964 general elections by claiming PAP's participation would secure Chinese votes against MCA, which threatened MCA's support among the Chinese community.The PAP proposed to work together with UMNO in order to gain support from urban Chinese voters. This led to the initiation of an anti-PAP campaign during the 1963 Singapore State elections and the 1964 Malaysian General elections, when the Alliance took part.
PAP won three seats from UMNO-SG alliance in Geylang Serai, Kg Kembangan, and the Southern Islands, which were considered Malay Heartlands. One possible factor for their victory could be the gratitude of Malays towards PAP for their efforts
in merging Singapore with the rest of Malaysia. PAP challenged the alliance by advocating for equal treatment of Malays and non-Malays and rejecting the special position for Malays provided in the Federal Constitution of Malaysia. Anti-PAP sentiments intensified when PAP organized the Malaysian Solidarity Convention (MSC).
UMNO was challenged by the idea of a "Malaysian Malaysia" as it went against the special position of Malays protected by the Federal Constitution. This led to widespread anti-PAP campaigns, which PAP claimed caused the racial riots in 1964. UMNO extremists wanted to arrest LKY for "treason" while Singapore PAP questioned Malay special rights and promoted the concept of a "Malaysian Malay," which made PAP appear anti-Malay. PAP called for a "Malaysian Malaysia" at a MSC formed and led by PAP in May 1965.
The UMNO extremists posed a threat to both UMNO and increased ethnic tensions in Singapore (SG) and Malaysia (MY). Their actions involved encouraging Malays to oppose the People's Action Party (PAP) and the Chinese population. This resulted in Tunku Abdul Rahman blaming Lee Kuan Yew (LKY) for various issues resulting from policies such as the Malaysian Solidarity Consultative Committee (MSC) and the concept of Malaysian Malaysia. Despite this, Tunku Abdul Rahman chose not to arrest LKY out of respect for the constitution and preservation of democracy. As a consequence, SG was excluded from being part of the Federation. The UMNO extremists accused PAP of neglecting to improve living conditions for Malays in SG and challenging their special rights and privileges. These allegations, along with anti-PAP sentiments, led to racial riots in July 1964. PAP argued that offering free education for Malays
aimed at improving their status in SG. Following the riots, both PAP and UMNO agreed to put aside their differences and collaborate towards rebuilding social unity in SG while reintegrating affected Chinese and Malay communities. However, anti-PAP sentiments were not entirely eradicated; they were simply reduced.
Both parties showed their willingness to participate in the upcoming elections leading up to the end of 1964. Nonetheless, separate incidents in July and September created concerns about potential racial riots in Singapore. The leaders of the People's Action Party (PAP) and Malaysia were unable to find common ground, and Tunku Abdul Rahman, Prime Minister of Malaysia, appeared to be losing control over his United Malays National Organisation (UMNO) party. Consequently, Singapore was separated from Malaysia in 1965.
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