This article details the history of Singapore as part of Malaysia from 1963 to 1965.

Prelude to merger

Singaporean politicians, beginning with David Marshall in 1955, repeatedly sought merger with the Federation by approaching Tunku Abdul Rahman but were turned down on multiple occasions. Tunku was initially opposed to Singapore's inclusion in the Federation. His main concern was the need to preserve the racial balance in Malaya, UMNO's position in the Alliance Party and the broader framework of Malay political dominance. Adding Singapore with its majority Chinese population would have tipped the demographic scale, and the new federation would see 3.6 million Chinese outnumbering 3.4 million Malays which Tunku considered a "serious risk".

Tunku's greater concern was an independent Singapore outside the Federation especially if it aligned with hostile or communist forces. As part of the decolonisation process and Britain's gradual withdrawal from Malaya, constitutional talks between the British Colonial Office in London and the Legislative Assembly of Singapore had already led to the 1958 State of Singapore Constitution. This established a fully elected and self-governing 51-seat Legislative Assembly in 1959. Tunku feared that further constitutional changes would take Singapore beyond the influence of either Malaya or Britain. British officials warned that a "batik curtain" might descend across the Straits of Johor and that Singapore could become a Southeast Asian version of communist Cuba. This concern grew stronger on 29 April 1961 when Ong Eng Guan of the United Peoples' Party defeated the PAP in the Hong Lim by-election. Ong, a former PAP minister, had tapped into growing dissatisfaction and posed a real political challenge.

Tunku was also watching Indonesia which under Sukarno's Guided Democracy had become more nationalist and expansionist. Its military campaign in the West New Guinea conflict suggested further ambitions in the region, and Tunku feared that Malaya could be next. With these concerns in mind, he had already begun to consider merger as early as June 1960, though this was not public knowledge. At a Commonwealth of Nations prime ministers' meeting, he told David Drummond, 8th Earl of Perth of the Colonial Office that a wider plan might be workable if it included not just Singapore but also British Borneo. This "Grand Design" appealed to Tunku as it would add population and resources and the combined number of indigenous Borneans and Peninsular Malays (collectively called Bumiputera) could help offset the number of Chinese from Singapore.

Referendum

Following Singapore's attainment of self-government in 1959 and a major split within the PAP in 1961, the splinter party Barisan Sosialis (BS) challenged the government's push for merger with Malaya. To affirm public support, the PAP held a referendum on 1 September 1962 offering three options, all involving merger under different terms. Option A, backed by the PAP, proposed full internal self-government and automatic Malaysian citizenship. Options B and C offered less favourable arrangements. BS opposed the lack of a choice against merger and urged voters to submit blank ballots. Voter turnout was over 90 percent, with Option A receiving about 71 percent of valid votes, while roughly 26 percent of ballots were left blank. Although the referendum did not include a rejection option, the result gave the PAP political legitimacy to proceed with merger negotiations with Malaya.

Malaysia Agreement

Singapore–specific provisions included: Singapore would retain control on education and labour. Defence, external affairs and internal security would come under the jurisdiction of the federal government. Singapore would have only 15 seats in the Parliament of Malaysia instead of 25 seats as was entitled by the size of its electorate. In return for this, increased autonomy was guaranteed. Singapore would get to keep its own language policies with English, Malay, Mandarin and Tamil as official languages. Singapore would pay 40% of its total revenue to the federal government. It would disburse a $150 million loan to the Borneo territories, of which two-thirds would be interest-free for five years. A common market would be implemented over twelve years. Singaporean citizens would become Malaysian citizens while retaining their Singaporean citizenship, but they would be allowed to vote only in Singaporean elections and not in elections held elsewhere in Malaysia. Conversely, Malaysian citizens from other parts of Malaysia would be unable to vote in Singaporean elections.

Merger The merger between Singapore and Malaya was originally scheduled for 31 August 1963 to coincide with the official independence day of Malaya. However, it was postponed by Tunku Abdul Rahman to 16 September 1963 to accommodate a United Nations (UN) mission to North Borneo and Sarawak to determine whether the people there genuinely supported joining the Federation. This delay was prompted by strong objections from Indonesia, which opposed the formation of Malaysia and questioned the legitimacy of the merger in the Borneo territories.

Nonetheless, on 31 August 1963, Lee Kuan Yew stood before a crowd at the Padang in Singapore and unilaterally declared Singapore's full independence from Britain, to the annoyance of some British and Malaysian leaders who felt that such an announcement was premature. On 16 September 1963, Malaysia Day, which also marked Lee's fortieth birthday, he returned to the Padang and this time proclaimed Singapore's entry into Malaysia. Pledging his loyalty to the federal government, Tunku and his colleagues, Lee called for "an honourable relationship between the states and the Central Government, a relationship between brothers, and not a relationship between masters and servants."

Reasons for merger

Full independence from Britain Singapore sought merger with Malaya as the only viable path to complete independence from British colonial rule. Although Singapore had attained self-governance in 1959, it remained under British control in matters of defence and foreign affairs. Anti-colonial sentiment had deepened since the British colonisation of Singapore in 1819, especially after the British failure to defend Singapore during the Japanese invasion in February 1942. These grievances were further reflected in labour unrest and civil disturbances, including the National Service riots and the Hock Lee bus riots of the 1950s. Such events symbolised the growing desire among the local population for decolonisation and self-rule. By merging with Malaya, Singapore would eliminate the British justification of continued rule on the pretext of containing communism, thereby achieving full sovereignty.

Economic security Singapore also pursued merger with Malaya for strong economic reasons. In the early 1960s, the island was grappling with severe unemployment, which had become the most pressing concern for the PAP government following its assumption of power in 1959. A shortage of natural resources, a relatively low literacy rate among the local population and the absence of a hinterland all contributed to the worsening employment crisis. Malaya, by contrast, was a much larger territory endowed with abundant natural resources. Singapore sought to capitalise on Malaya's economic strengths by proposing a common market that would benefit both parties. The PAP government believed that merger would ease the burden. This economic policy formed a key part of the PAP's broader strategy to stabilise the economy and maintain its political mandate in Singapore.

Anti-communism

The merger was also conceived as a strategic measure to suppress communism in both Singapore and Malaya. The state of emergency declared by the British from 1948 to 1960 reflected the perceived intensity of the communist insurgency by the Malayan Communist Party (MCP), which aimed to overthrow colonial rule and establish a communist regime across Peninsular Malaysia. Although emergency rule was formally lifted in 1960, the broader anti-communist sentiment persisted throughout Southeast Asia. Malaya viewed merger as a means of consolidating political stability and bolstering resistance to communist influence within the region.

Merger era Although the merger between Singapore and Malaya was initially met with optimism, underlying tensions soon began to surface.

Economic disagreements

The Singapore state government and the Malaysian federal government came into conflict over key economic matters. Under the terms of the Malaysia Agreement, Singapore undertook to contribute 40 percent of its total revenue to the federal government and to extend largely interest-free loans to Sabah and Sarawak, in return for the establishment of a common market. However, in July 1965, the Malaysian Finance Minister Tan Siew Sin proposed increasing this contribution to 60 percent and insinuated that unless Singapore acceded to the higher payment, progress on the common market would be deliberately delayed. This proposal was firmly rejected by Singapore's Finance Minister, Goh Keng Swee, who criticised the federal authorities for failing to uphold their end of the agreement and for imposing tariffs on Singaporean goods in breach of the common market spirit. The two parties also clashed over the disbursement of the loans, ultimately agreeing to submit the matter to the World Bank for arbitration.

Political disagreements

The Malaysian federal government, led predominantly by the United Malays National Organisation (UMNO), was increasingly apprehensive that Singapore's continued presence within the Federation would jeopardise the implementation of the Malay supremacist bumiputera policy. This policy of affirmative action, favouring the Malays, was central to UMNO's agenda of "redressing socio-economic imbalances" between the ethnic groups. However, this position was fundamentally at odds with the People's Action Party's (PAP) persistent call for a "Malaysian Malaysia", the principle that all Malaysian citizens ought to be treated equally by the state, irrespective of racial or economic background. Additionally, there was growing concern within the federal leadership that Singapore's economic strength, centred on the Port of Singapore, would in time eclipse that of Kuala Lumpur, thereby shifting both economic and political influence southwards.

Racial tensions Racial tensions also escalated sharply within a year of merger. Although the federal government had granted citizenship to large numbers of ethnic Chinese living in Malaya following independence, many Chinese had expressed discontent with the government's policies of affirmative action, particularly those enshrined in Article 153 of the Constitution of Malaysia, which conferred special privileges upon the Malays. These included preferential access to education, employment and business opportunities among other factors, while Islam was recognised as the sole official religion of the Federation. Although freedom of religion was officially maintained for non-Muslims, the perception among the Chinese was that such policies was institutional racism. At the same time, Malay Singaporeans and Muslims were being stirred by Kuala Lumpur's persistent accusations that the PAP was "marginalising" the Malay community in Singapore, further inflaming communal sensitivities.