The first joint mission will be in Indonesia on August 22-24, Singapore Trade Minister George Yeo said.

Yeo and his Malaysian counterpart, Rafidah Aziz, signed the Agreement on the Malaysia-Singapore Business Development Fund (MSBF).

The agreement establishes a fund totalling 10 million ringgit (2.6 million dollars) which will be used to help Malaysian and Singapore companies carry out feasibility studies and organise joint missions.

During the mission to Indonesia, the Malaysian and Singaporean business leaders will meet with Indonesian trade officials and network with their counterparts there.

"We hope to see more such increased joint missions to third countries over the next few months," Yeo said in a speech to a seminar here held to promote cooperation between the business communities of the two countries.

"Malaysian and Singapore businesses should actively combine their strengths to become more competitive globally," he said, citing vast opportunities in Southeast Asia, China and India.

The signing of the agreement is another sign of improving ties since Prime Minister Abdullah Badawi was elected in March.

Abdullah succeeded Mahathir Mohamad, whose outspoken comments on several unresolved bilateral issues such as the price of raw water Malaysia sells to Singapore had soured relations.

Yeo noted in his speech that "there is a strong political will to improve bilateral relations" on both sides, and that "the economic relationship between Malaysia and Singapore should become stronger in the coming years."