Malaysian Prime Minister Najib Razak said the recent agreement with Singapore over the Malayan Railway Land and train station at Tanjong Pagar is a major breakthrough.
Mr Najib said resolving this outstanding issue is a signal that Malaysia wants to move forward.
He said: "We want to deepen and strengthen our existing ties. We should not be emotional and we should not carry the baggage any more but we should move forward and with a sense of confidence that we can benefit from this new enthusiasm in terms of bilateral ties."
Singapore and Malaysia are expected to conclude a deal on exchanging land parcels in three months.
The announcement came after a meeting between the two prime ministers in Putrajaya, Malaysia last week.
Mr Najib said the areas or opportunities both countries can tap on are "simply enormous".
And one such growth area is the Iskandar Malaysia project in Southern Johor.
Mr Najib added: "If you improve the connectivity, quite a number of people will want to live in southern Johor and work in Singapore and so forth. So you get this natural synergistic relationship. A bit like New York and New Jersey if you like, or of course some people allude this to Shenzhen and Hong Kong, so forth.
“But the point is that there is this natural, mutually reinforcing benefit that we can tap into if we have a relationship that's based on a new sense of confidence and enthusiasm between our two countries."