HC Deb 18 July 1963 vol 681 cc94-6W
Mr. Hornby

asked the Secretary of State for Commonwealth Relations what financial assistance the British Government are affording to the Government of the territories concerned, in connection with the creation of the Federation of Malaysia.

Mr. Sandys

In recent months there has been a series of meetings between representatives of the British and Malayan Governments to review the economic and financial prospects of Malaysia. Particular consideration has been given to the problems which may be created by the addition of extra defence expenditure to the outlay on development to which the Governments that comprise Malaysia are already committed. Certain financial problems were also discussed with Singapore Ministers when they were recently in London.

Defence Aid

2. In the light of these discussions the British Government have offered, subject to Parliamentary approval, the following aid towards the implementation up to the end of 1965 of the Malaysian Defence Expansion Programme:—

  1. (a) Arms and equipment etc. to be supplied from British sources (estimated at £14.5 million).
  2. (b) Certain buildings and facilities in Singapore and Malaya which the British Government have agreed to transfer to the Federal Government for defence purposes (estimated value £0.5 million).
  3. (c) Certain additional costs of British personnel seconded to the Malaysian Armed Forces and assistance in military training (estimated at £3 million).
  4. (d) The cost of raising, maintaining and training (until the end of 1965) two Malaysian battalions to be formed in Borneo.
In addition the British Government have agreed to review the situation with the Malaysian Government early in 1965 in the light of the political, military and financial conditions at that time. The amount of any additional financial contribution by Britain to the Malaysian defence programme would be determined in the light of that review.

Other Aid

3. In addition the British Government have promised the following aid, subject to Parliamentary approval, for other purposes in Malaysia:

  1. (a) North Borneo and Sarawak
    1. (i) a gift of £2 million a year for 5 years from Malaysia Day to help to finance the development programmes of the two territories.
    2. (ii) Under normal arrangements the British Government would provide half the cost of the compensation scheme to be introduced for expatriate officials in the two territories when British sovereignty has terminated. It has, however, been agreed as an exceptional measure to provide also from British funds the other half share which normally falls to be met by the 96 Territories themselves. The total cost of the scheme is estimated at about £3 million.
  2. (b) Singapore
    1. (i) The British Government is prepared to continue to make available to the Singapore Government certain grants and loans, amounting in all to £5.78 million, which had previously been promised to Singapore. They will be subject to the same terms and conditions as before.
    2. (ii) The British Government will release to the Singapore Government certain land occupied by the British Services and will itself bear the cost of providing alternative facilities, where this is necessary.
    3. (iii) The British Government have also offered to pay the cost of raising, equipping and accommodating the Second Battalion of the Singapore Infantry Regiment up to Malaysia Day. The maximum cost of this aid would be 10 million Malayan dollars (£1.17 million).
    4. (iv) The British Government have decided to relinquish certain claims for services rendered and goods supplied to the Singapore Government prior to the formation of Malaysia. These include a claim for approximately £500,000 for hospital services at the Naval Base hospital since 1954.

4. Under these arrangements, taken together, Britain will be making available to the Federation of Malaysia and its territories a total of approximately £30 million of aid over the three years 1963–65 and, so far as can be at present estimated, about £13 million beyond 1965; and there will be a review of Defence Aid in that year. These figures do not however take account of the relinquishment of claims referred to in 3(b)(iv) above or the waiver of reprovisioning costs in 3(b)(ii); nor do they include the cost of technical assistance in the supply of experts and equipment and for training assistance.

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