A ROSY dusk settles on the Johor Strait, separating Singapore from Malaysia. A line of cars stretches along the causeway, waiting for Singapore’s border guards to search them for booze and cigarettes. The queues are not always like this, says a Malaysian in a shared taxi: “Sometimes they’re much worse”.

Some 60,000 vehicles use the causeway between Singapore and Johor Bahru, its scruffy Malaysian neighbour, each day. Lately, drivers are paying more for the privilege. Since August tit-for-tat toll rises have meant a fivefold increase in the price of a return journey by car. The tiff began when Malaysia, which still charges much less than Singapore, raised its toll in response to Singaporean plans to raise a tax on foreign vehicles. It is a distraction from a project supposed to bind the countries more closely.

Malaysia has poured money and effort into Iskandar, a special economic zone three times the size of Singapore that sprawls across the southern state of Johor. The government hopes to snag a little more of the magic dust that has made Singapore South-East Asia’s richest nation. Through corporate sweeteners and a hotch-potch of public projects, authorities want Iskandar’s population to increase from 1.3m in 2005 to 3m by 2025.

Rich Singaporeans, for their part, have been happy to have a new place to park their cash. Until recently, Iskandar’s cheap condominiums seemed like good bets when Singapore’s own property prices were shooting up. Singapore hopes factories can move to Johor, freeing up space and resources for higher-value businesses. Meanwhile, Malaysians commuting daily from Johor can still perform essential work in Singapore—in hotels and shops, for instance—without greatly straining public services.

The Iskandar plan started brightly, with some $40 billion of private money, according to local bigwigs. Legoland Malaysia, which opened in 2012, anchors a busy entertainment district; an outpost of Marlborough College, a posh British school, has helped launch a much-vaunted educational cluster. Though retaining the some of the air of a frontier town, Johor Bahru is scrubbing up.

Yet early optimism is fading. Housebuilding appears to have raced ahead of job creation, and a housing glut looms. Not all Johoreans are happy with the suspension of corporate-ownership rules that elsewhere favour the ethnic-Malay majority. A battering in last year’s general election has made it harder for the Barisan Nasional, Malaysia’s ruling coalition, to ignore their concerns. Singapore hints that foot-dragging is slowing down plans for a cross-strait rail link. Chaotic leadership is one explanation for Malaysia’s decision to push up its toll charges, says Greg Lopez at Murdoch University in Perth—which was bound to prompt Singapore to retaliate.

Malaysia has most to lose from the tit-for-tat. Road links with Singapore bring in roughly half the country’s foreign visitors, with Singaporeans coming for cheap shopping and fuel. Also, higher tolls hurt Malaysians more. Now lawmakers in Johor are threatening an additional levy just for drivers of Singaporean cars. At present the costs are manageable, says a cabbie approaching the causeway. “But what will happen next year?”