"Both countries feel it is more beneficial for now to build confidence in improving bilateral ties through cooperation in various fields," Malaysia's Deputy Foreign Minister Joseph Salang was quoted as saying by the national news agency, Bernama.

"With confidence from both nations, we hope to resolve the outstanding issues," he said.

Salang was responding in Parliament to a question about whether both sides planned to hold further talks on issues such as the price of water that Malaysia sells to Singapore, and a dispute over Malaysian-owned railway land in its southern neighbor.

Salang could not immediately be reached for comment, his office said, and a transcript of Tuesday's parliamentary proceedings was not yet available.

Malaysia and Singapore enjoy close economic and cultural ties, but have had a history of diplomatic spats.

Relations generally improved after Malaysia's ex-Prime Minister Mahathir Mohamad, who frequently criticized Singapore, retired in 2003 and handed power to Abdullah Ahmad Badawi.

Talks on long-standing bilateral disputes have broken down several times in recent years.

One of the most pressing issues had been a proposal for a new bridge that Malaysia wanted to build to replace an existing causeway link with Singapore.

However, Abdullah announced in April that the Cabinet was scrapping the project, saying Malaysians were unhappy with Singapore's preconditions for the plan. Mahathir has since accused his successor of compromising national interests and bowing to Singapore's desires.

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