PUTRAJAYA - SINGAPORE and Malaysia have agreed to resume talks on a range of thorny outstanding bilateral issues.

Senior Minister Goh Chok Tong and Malaysian Prime Minister Abdullah Ahmad Badawi signalled this small but significant shift in bilateral relations when they agreed yesterday to 'move forward' on issues which had stalled in discussions since October 2002.

At a joint press conference after a morning of talks, Datuk Seri Abdullah stressed the need to look forward, and said it was 'about time' the two sides identified issues that they could start discussing again.

Agreeing, Mr Goh called for a 'new mindset' on old issues.

Their meeting was the first since Prime Minister Lee Hsien Loong appointed him Singapore's representative on bilateral issues in October.

Mr Goh was still prime minister the last time he met PM Abdullah, in Singapore in January, when they also signalled a desire for a fresh start to stalled negotiations.

Datuk Seri Abdullah had promised then that Malaysia would come up with some proposals on how to break the impasse.

Yesterday, it appeared that they had managed to put talks back on track.

But the toughest part - coming up with specific proposals acceptable to both sides and ironing out details - still lies ahead.

One area both leaders agreed on quickly was to abide by two principles in dealing with unresolved issues.

One: to consider mutual, or balanced benefits, when coming up with proposals or solutions. No proposed solution should disadvantage the other party.

Two: not to let outstanding issues hold back cooperation in other areas. 'We should certainly not allow future relations of Malaysia and Singapore to be held hostage by past issues,' said Mr Goh.

With these principles settled, they got into candid discussions during their 100-minute meeting in Malaysia's administrative capital, Putrajaya.

These were followed up during the 20-minute delegation meeting and over lunch. Also present were Deputy Prime Minister and Law Minister S. Jayakumar and Malaysian Foreign Minister Syed Hamid Albar and officials.

On water, Singapore reiterated its aim to be self-sufficient after 2061, when its second water supply agreement with Malaysia runs out. Singapore indicated it would not seek to renew the first water agreement which ends in 2011.

Malaysia has requested a review of the water price under the existing agreements, and that request will be considered. But the final arbiters would be Mr Goh and PM Abdullah, it was agreed.

Progress was made on several other outstanding issues, when Datuk Seri Abdullah said Malaysia was happy to consider allowing Republic of Singapore Air Force planes to enter Malaysian airspace en route to training areas.

Mr Goh said his immediate response to that gesture of goodwill was to reciprocate by saying that if that could be done, he would have 'no hesitation in releasing the Central Provident Funds' of Malaysians who go home after working in Singapore and want to withdraw their CPF savings before turning 55.

Singapore would also be happy to consider joint development of additional pieces of Malayan Railway land, added Mr Goh.

Under the 1990 Points of Agreement on Malayan Railway land, the railway station at Tanjong Pagar has to be relocated to Bukit Timah and the Keppel site would be jointly developed.

Yesterday, Malaysia also put forward a formal proposal to replace the Causeway with a straight bridge, unlike the idea of a 'crooked' structure which was dropped.

Mr Goh said he was shown 'a beautiful map of the bridge' but noted that it would mean disadvantages and costs for Singapore.

Nevertheless, he added: 'I'm prepared to have a look at the bridge to see how we can have balanced benefits that can allow the bridge to proceed.

'I made no promises... I also suggested that Singapore should look at options to the bridge.'

Mr Goh and PM Abdullah will meet again in two months' time to look at detailed proposals.