Singapore and Malaysia said on Monday they have resolved long-standing disputes over land and water that have plagued ties between the two neighbours for the past 20 years.

Malaysia will relocate its railway station near Singapore’s central business district to an area close to one of the two bridges linking the two countries, freeing up land in the city-state for redevelopment.

Malaysia has sovereignty over the site on which the Tanjong Pagar station is located, as well as land on both sides of the railway tracks that run through Singapore, under agreements dating back to British colonial rule.

Singapore said in turn it would not seek to extend a water agreement dating back to 1961, which allowed the city-state to buy water from the southern Malaysian state of Johor at below-market rates.

Singapore will also hand over the waterworks it operates in Johor to the Malaysian state government when the current agreement lapses.

The agreement between the two countries emerged after a meeting between Malaysian Prime Minister Najib Razak and Singapore Prime Minister Lee Hsien Loong.

“It’s a big breakthrough. It paves the way for closer ties now that long-standing sore points have finally been resolved,” said Citigroup economist Kit Wei Zheng.

The two countries said the Malayan Railway land will be developed by a joint venture between Malaysian sovereign wealth fund Khazanah, which will hold 60 percent, and Singapore state investor Temasek, which will own the balance 40 percent.

Other agreements reached by the two countries include the building of a rapid transit link between Singapore and southern Malaysia, and the joint development of an “iconic project” in Malaysia’s Iskandar region by the two countries.

Malaysia has been promoting the Iskandar region, a showcase economic zone just north of Singapore, that it hopes can become a hinterland for its wealthy neighbour just as China’s booming Shenzhen complements neighbouring Hong Kong. The zone has, however, attracted relatively few investments from Singapore.

“The points of agreement would facilitate resolution of the issue which has been outstanding for more than 19 years,” the two countries said in a joint statement.

(Reporting by Kevin Lim; Editing by Jeremy Laurence)