It's indeed difficult to view this "merger" (or closure) through a non-political lens. As for how the media portrays it, it seems like Singapore is targeting liberal arts itself. But I think most public sources aren't sensitive to Singapore's social and political climate nowadays. If Singapore is indeed targeting the liberal arts, it would've also clamped down on other universities as well. The reason why the humanities (and liberal arts) survive and thrive in other universities (NTU and NUS), I think, is their assimilation to our local cultures.
First, this merger seems to be in line with the general "merger" trend over the years. A few years ago, many junior colleges had "merged" with one another. And in recent years, NUS has been downsizing its schools. None of these are particularly political. There are just fewer students attending these institutions.
Furthermore, YNUS is mainly made up of international students. When I visited YNUS a few years back, I was told that a significant percentage of the students there aren't local. Local admission was competitive. Plus, many local students are just reluctant to major in a liberal arts subject. After all, we do have a social stigma here that a humanities degree equals unemployment.
But I think a deeper concern exists. And though Calvin doesn't do a good job putting it right: we can't just import an education that works in the West (i.e., America) and assume it works as well in Asia. As you'd know, many of our values are incompatible and mutually unintelligible. For instance, there isn't really an immediately translatable term for "liberal arts" in Chinese (or in Malay.) - Heck, I even have a hard time explaining what "philosophy" is to my parents and relatives.
The truth is liberal arts is an altogether foreign concept here - "taboo" might be more apt. For a proper liberal arts education to work in Singapore (and in Asia), it not only needs to justify itself (which you've done so), it also needs to assimilate into the local culture. In other words, we can't just "brute force" our way in (it's 对牛弹琴).
You ended with, "Yale-NUS showed that a multicultural humanities curriculum is not only possible but crucial in an era in which people of different religions, politics, and ways of life must live and work together." I couldn't agree more. But what it shows us, I think, is that it can't work unless we get the sense we "own" that curriculum. As of now, based on my observations, we don't "own" it. That's why NUS decided to, quite literally, "own" it.