AMDA's extension was necessitated by the formation of Malaysia which embodied Malaya, Singapore and the British-administered territories of North Borneo (later renamed Sabah) and Sarawak. Malaysia was born mainly out of the changing political circumstances in Singapore whose separate constitutional development had been influenced both by socio-economic factors and by its strategic importance to Britain. Singapore's strategic importance to the ANZAM partners was enhanced after AMDA was formed. Singapore provided the loophole through which units of the CSR, based in Malaya, could be redeployed for SEATO purposes. Its strategic importance attracted much interest among the ANZAM partners during the constitutional negotiations of 1956 which collapsed on account of the insurmountable difficulty of separating external defence from internal security.

Internal instability in Singapore in the mid-fifties strengthened Britain's insistence on control over internal security matters to ensure unhindered use of the bases and also created a Malayan interest in Singapore. Although, in 1956, the Tunku saw the protection of Malayan interests in the exclusion of Singapore from the Federation, a network of internal security (and later defence) cooperation between the two territories gradually emerged. The practical realities of their close association were demonstrated by the Singapore riots of October 1956, and given further recognition in 1957 by Malaya's participation in Singapore's Internal Security Council – an arrangement that broke the earlier deadlock in Anglo-Singapore negotiations and effectively placed the casting vote in Malayan hands.