I think you misunderstand me Odie. What I'm saying is that the Malaysian government has complete control over their airspace, and can, if they wish to, stop SIA from flying over their airspace if the airline wishes to fly to Israel. Personally, I've got absolutely no problem with that. It's Malaysian airspace, and the Malaysian government does what it likes.
I mentioned a love-hate relationship, not a hate relationship. As neighbours, we have more than our fair share of quarrels. A number of examples come to mind. For example, a number of years ago, there was the question of the CIQ issue, whether the Malaysians should be allowed to keep their CIQ facilities at Tanjong Pagar when Singapore had already moved theirs to the Woodlands checkpoint. Then more recently, there's the entire tudung or headscarf affair, and the water issue. Dr Mahathir is unhappy with the price Singapore is paying for water, and is demanding more even though the price had been agreed on when he met with our Senior Minister a number of months ago.
Of course, as you correctly mention, we do derive many benefits from each other as well. For example, Singapore is Malaysia's second largest foreign investor, and tens of thousands of Malaysians flock to Singapore each day either to work or study.
The competition between the two countries only arose recently, but this might change as we move towards different industries. Singapore is clearly trying to move towards a very knowledge-based economy with its focus on intelligent sciences and services. We're moving away from labour intensive industries for the simple reason that our labour costs are way too high compared to Malaysia or China. Malaysia is still able to depend on these sorts of industries because of their significantly lower labour costs.
I don't know, but I'm not really sure as to whether Malaysia is concerned about losing Singaporean investors or not. Singaporean companies often become the scapegoat for much that happens. One example that comes to mind is how the Malaysian Transport Minister Ling Liong Sik blamed SIA for MAS's failure to turn in a profit. He said that SIA was under cutting MAS's fares, thus more people chose to fly SIA instead, thus MAS couldn't keep to its original timeline to turn in a profit. In other areas, Singaporeans are blamed for pushing up Johor's cost of living up so high it's even higher than the Capital Territory. The list goes on. But anyway, we really shouldn't be discussing Malaysian-Singapore relationships here.