According to George Yeo, Singapore's foreign minister, Lieutenant General Thein Sein, the third-ranking member of Burma's ruling junta, told him during a recent visit that the regime could "be a long-term supplier of sand, cement, granite and other construction materials to Singapore".

Construction costs have risen noticeably in Singapore since Indonesia banned sand exports in January. Last month, Jakarta seized some two dozen barges and tugboats preparing to transport granite to its tiny resource-poor neighbour.

Singaporean contractors, desperate to ensure the nation's recent building boom does not stall through a lack of supplies and skyrocketing prices, have in recent weeks increased imports from as far afield as China.

Jakarta has enjoyed roller-coaster relations with Singapore for decades. Officials said sand exports were banned for environmental reasons and that the granite vessels were impounded because they were being used to smuggle sand. They have also expressed concern over a lack of agreement over the border between the two countries.

Analysts believe, however, that Jakarta's action is driven more by resentment over perceived Singaporean arrogance towards its neighbour, most notably Singapore's refusal to sign a long-debated extradition treaty.

Indonesia has long accused Singapore of sheltering wealthy Indonesians escaping corruption charges at home.

Singapore allegedly fears there would be massive capital flight if an extradition treaty with Indonesia was enacted. Merrill Lynch said last year that Singapore had 55,000 people with assets of more than a $1m, a third of them Indonesians with total assets of $87bn.

"The crux of the problem is the willingness of Singapore to prosecute corrupt Indonesians and help Indonesia do the same," said Todung Mulya Lubis, the head of Transparency International in Indonesia. "Singapore is a centre for commerce and business transactions. They probably just don't give a damn where the money comes from."

Singapore says it is not being obstructive over the extradition treaty but is waiting for the conclusion of a defence cooperation agreement, which officials say is still months away. Both governments agreed two years ago that the two deals would be signed in tandem.

Indonesian legislators have also demanded investigations into investments by Temasek, the Singapore government's investment arm, in Indonesia.

They claim, for example, that the purchase by Temasek subsidiaries of stakes of more than 30 per cent in Indonesia's two largest mobile phone operators could be an attempt to create a monopoly.

Additional reporting by John Burton in Singapore.

                                                      Home