There are growing perceptions in Singapore that Malaysia is fanning the island's current economic turmoil by seeking to undercut many of its leading business sectors and attempting to lure overseas multinationals to relocate next door.

Much of the current animosity between the two rivals, with a host of unresolved issues ranging from water charges to land reclamation, stems from their economic rivalry.

Malaysia has already caused considerable angst by shattering the island's dream of replacing Hong Kong, another bitter rival, as the world's leading container port.

Hong Kong is unlikely to be caught in the perennial battle with Singapore for the title of the world's leading container port as an upstart rival in Johor, the port of Tanjung Pelepas, has stolen much of its thunder in the past two years.

Port authorities at Tanjung Pelepas have convinced two of the biggest clients using Singapore's docks, Taiwan's Evergreen Marine and Denmark's Maersk Sealand, to divert some of their cargo to Johor, with drastically reduced handling charges.

This enabled the port to jump from 108th in the world container rankings to 22nd.

The state of Johor has major infrastructure plans in place that pose an even greater threat to Singapore's standing as the leading shipping hub in the region, with new highways and a railway from its two main ports. In addition, plans are under way to turn Senai Airport into a cargo hub to take traffic away from Singapore's Changi Airport.

From undermining Singapore's position as the regional shipping gateway, an immense source of pride for the island, Malaysia is now seeking to compete as an aviation hub.

Kuala's Lumpur's International Airport, so far slow to take off as a regional hub, has thrown down the gauntlet to Changi with a five-year waiver on landing and parking fees for airlines willing to come to Malaysia or extend existing services.

``The decision was made by the government with a view to attracting more airlines to operate from the Kuala Lumpur International Airport as a hub,'' said Transport Minister Ling Liong Sik.

Singapore has been hit by an exodus of foreign companies in the past year, exacerbating economic woes, but Malaysia can only take some of the blame. Most of the departures have been to Hong kong and China. Malaysia, too, has been hurting from the relocation of many leading international electronics manufacturers to China, particularly from Penang.

Despite anecdotal evidence of companies relocating from Singapore to Malaysia, there are no hard figures to suggest an exodus. The only recent example, outside of the transportation sector, of a major company planning to relocate some of its operations to Malaysia is BMW.

Singapore, seeking to redefine itself as an international entrepot, is fighting back, with dramatic tax cuts announced last week.

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