Singapore and Malaya received separate export quotas from Britain, before the formation of Malaysia. In 1964, after Singapore had become part of the new nation, Britain decided to issue a single quota for Malaysia. A verbal spat broke out between Singapore and Malaysia's central government after Singapore Finance Minister Goh Keng Swee blamed Kuala Lumpur for the collapse of textile talks between Britain and Malaysia.

He lashed out at the central government for wanting to give the lion's share of British quotas for textile exports to Malaysian states other than Singapore.

The episode highlighted friction between Singapore and Kuala Lumpur over international trade issues and contributed to thorny relations between them.

It also came at a time of wide unemployment in Singapore, when garment factories were laying off workers.

According to Dr Goh, the collapse was not due to any deadlock between Britain and themselves. It arose from the differences between the central and Singapore governments as to how the latest British proposal is to be handled.

It was preposterous for Kuala Lumpur to allocate the bulk of the quotas to Malaysian states when they did not even export any garments.

He accused Kuala Lumpur of seeing Singapore as a dangerous rival to be kept down at all cost.

Singapore labour chief C. V. Devan Nair also criticised Kuala Lumpur's move, accusing the central government of wanting to create jobs in Malaya at the price of unemployment in Singapore.

Far from Singapore becoming the New York of Malaysia, they shall soon be converted into the largest industrial slum in South-east Asia, he added.

Dr Goh disputed the central government's assertion that the final decision on any textile agreement with Britain lay with it and not with any particular state.

Instead, he said that British trade representatives had stated repeatedly that the acceptance of any British offer must be by both the Singapore and central governments.

Malaysian Minister for Commerce and Industry Lim Swee Aun, who cut short a trip to return and deal with the issue, has certainly weakened their position to bargain with Britain for the best offer, said Dr Goh.

In May 1965, new British quota was accepted by Malaysia. Singapore too had accepted its allocation of a quota but refused to mention the exact the share.