Malaysia`s Relations with Major and Middle Powers

O B S E R VAT O I R E A S I E D U S U D - E S T 2 0 1 4 / 2 0 1 5
étude
Malaysia’s
Relations with
Major and Middle
Powers
Cheng-Chwee Kuik, National University of Malaysia (UKM)
Étude trimestrielle « pays » n°1/8, cycle 2014/2015, Observatoire Asie du Sud-est
Mars 2015
Cette étude sur la Malaisie lance une série de publications
sur les relations entre États sud-est-asiatiques et grandes
ou moyennes puissances périphériques. Kuala Lumpur se
présente comme un (possible) partenaire privilégié pour
la France, notamment pour la vente d’armes et d’avions,
d’où l’importance de prendre connaissance avec précision
de tout son spectre diplomatico-stratégique grâce aux
travaux de Dr. Cheng-Chwee Kuik.
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Biography
Kuik Cheng-Chwee is an associate professor at Strategic
Studies and International Relations Program at the National
University of Malaysia (UKM) and an associate member of
the Institute of China Studies at the University of Malaya
(UM). From September 2013 until July 2014, Dr. Kuik
was a postdoctoral research associate in the PrincetonHarvard China and the World Program at Princeton
University. Cheng-Chwee has researched and published
on China-Southeast Asia relations, regional multilateralism,
weaker states’ alignment choices, and East Asian security.
He holds a PhD from the Johns Hopkins University and
an M.Litt. from the University of St. Andrews. He has held
visiting fellowships at the Chinese Academy of Social
Sciences, Shanghai Institutes for International Studies,
Lee Kong Chian Reference Library (Singapore), American
University’s ASEAN Studies Center, the Centre for Strategic
and International Studies (Jakarta), and the Oxford
University. He can be contacted at [email protected].
Introduction
As Malaysia assumes the chairmanship of the Association
of Southeast Asian Nations (ASEAN) and a non-permanent
seat on the United Nations Security Council (UNSC) in
2015, growing attention has been focused on how the
smaller state could steer towards promoting greater
regional integration, reducing tensions in the South China
Sea, and managing its multifaceted relations with powers
at the global and regional levels.
This paper analyzes Malaysia’s relations with and policies
toward major and middle powers, mainly China and the
United States, but also Japan, India, Republic of Korea
(ROK) and the European Union (EU). These relationships
are among the key components of the smaller state’s
external policy. They have been fostered side-by-side
with Putrajaya (Malaysia’s administrative capital)’s ties with
the neighboring fellow members of ASEAN, which have
remained the cornerstone of Malaysia’s foreign policy.
Malaysia’s relations with the major and middle powers are
vital for the ruling Barisan Nasional (BN) coalition’s pursuit
of “national” interests in virtually every aspect of policy
domains. As discussed below, these include trade volume
and investment, defense and security, technology and
human capital development, language and sociocultural
exchanges, and perhaps indirectly, political development
as well. China, the United States, Japan, EU, and Korea
are among Malaysia’s top trading and investment partners.
America and its allies have been Malaysia’s traditional
security partners. China and India are the ancestor
countries of about 25% and 7% of Malaysian population,
respectively. The United States, Europe, Korea, Japan,
China, and India are among the main sources of popular
culture and education opportunity for Malaysians, shaping
the values of the country’s young and older generations.
1. A Glimpse into the Past
Malaysia’s history, in many ways, is a history of great power
politics. It is a history of how the great powers of the day
have affected the fates and shapes of a small territory on
the southern extremity of the Asian continent between
the two oceans of the Indian and the Pacific. The land’s
strategic location and natural resources have been both
a blessing and a curse to the successive polities on the
territory. While bringing about opportunities for commercial
and civilizational exchanges, they have also attracted
unsolicited attention and competition for domination
among the powerful actors of different eras. This recurring
theme is well illustrated by the country’s historical timelines:
the rise and fall of the Malacca Sultanate (seen by many
Malaysians as the predecessor polity of the country), the
successive colonial rules by the Portuguese (1511-1641)
and the Dutch (1641-1795, 1818-1825) and then the
British (1795-1818, 1826-1957), the changing shapes of
colonial Malaya after the 1824 Anglo-Dutch Treaty, the
Japanese occupation (December 1941-August 1945), the
independence of the Federation of Malaya as a sovereign
state in 1957, and finally, the very creation of Malaysia in
September 1963, when Malaya merged with the other
former British colonies of Singapore, Sarawak, and North
Borneo (now Sabah) to form a larger pro-West, antiCommunist (anti-Soviet and anti-China) federation at the
height of the Cold War.
While different powers have come and gone, the inherent
vulnerability of the territory remains. Although the presentday Malaysia is not threatened by the militarily stronger
powers the same way as its predecessor polities
experienced during the age of European colonization and
the Pacific War, its existence and wellbeing as a sovereign
actor has continued to be affected by the actions and
interactions among the great powers of the contemporary
era, particularly the United States and China.
2. Relations with the United States and China
Relations with the United States and China are among the
most vital aspects of Malaysia’s external policy. Both sets
of bilateral relations are, fundamentally, asymmetric power
relations.1 In part because of this structural attribute, the
smaller state’s perceptions and policies toward the two
major powers have been characterized by enduring
ambivalence.2 It was ambivalent in that the weaker state’s
successive leaders have held mixed feelings about both
America and China.
In the case of Malaysia’s U.S. policy, the Lilliputian
has long viewed the superpower as a key partner for
its economic wellbeing and security, but paradoxically,
also a source of political pressure and irritation. This was
so especially under the country’s fourth Prime Minister
Mahathir Mohamad, who ruled the country from 1981
to 2003. Although Malaysia is never a formal U.S. ally,
the United States has been one of the most important
economic and military partners of Malaysia since the
Cold War decades. It was during the Mahathir years
that the U.S.-Malaysia trade and investment cooperation
developed in leaps and bounds, and the bilateral security
ties institutionalized. Politically, however, Mahathir saw the
U.S. post-Cold War “liberal internationalist” strategy and its
tendency to interfere in others’ internal affairs as a source
of threat to his rule.3 Bilateral political ties sank to a low
point in the late 1990s. Political tensions emerged over
Mahathir’s currency control policy during the Asian financial
crisis as well as his treatment of his deputy Anwar Ibrahim.
Pamela Sodhy, The U.S.-Malaysia Nexus: Themes in Superpower-Small States Relations (Kuala Lumpur: Institute of Strategic and
International Studies, 1991); James W. Gould, The United States
and Malaysia (Cambridge, MA: Harvard University Press, 1969).
2
Cheng-Chwee Kuik, “Malaysia’s U.S. Policy Under Najib:
Structural and Domestic Sources of a Small State’s Strategy,” Asian
Security 9, No. 2 (2013): 143-164.
3
Helen E. S. Nesadurai, Malaysia and the United States:
Rejecting Dominance, Embracing Engagement, IDSS Working
Paper Series no. 72 (Singapore: Institute of Defense and Strategic
Studies, 2004).
1
2
However, post-Mahathir era witnessed an improvement in
bilateral relations. Under Abdullah Ahmad Badawi (20032009), Mahathir’s immediate successor, Putrajaya’s ties
with Washington made progress on multiple fronts.
A more significant progress has been made under
the current Prime Minister Mohd Najib Tun Razak
(2009-present). Under Najib, Malaysia’s U.S. policy has
been more cooperative in gesture and more pragmatic
in tone. Substance wise, he has made a more concerted
effort than all his predecessors to cultivate a stronger
and more comprehensive partnership with the global
superpower, with marked progress in all key domains
(discussed below).
U.S. President Barack Obama’s visit to Malaysia in April
2014 – the first by a sitting American President since
President Lyndon Johnson’s visit in October 1966 – was
a testimony to this transformed relationship. Nevertheless,
despite this observable progress, the Anwar factor and
the U.S. government’s occasional statements over the
country’s rule of law and religious freedom have continued
to push Malaysian elites to view America as a source of
political pressure. In late 2014, when the United States
expressed concerns over Putrajaya’s use of the colonialera Sedition Act to clamp down on dissent and stifle the
opposition, many BN elites hit out at Washington for trying
to “interfere” with Malaysia’s domestic affairs.4 In February
2015, after the Malaysian Federal Court announced its
decision to convict and sentence Anwar for sodomy, the
U.S. embassy expressed that “[the] United States are
deeply disappointed and concerned” by the decision and
Anwar’s conviction.5
Malaysia’s relations with China are even more complex.
The bilateral ties have been shaped not only by vast power
asymmetry as in the case of Malaysia-U.S. relations, but
also by longer historical links, geographical proximity, and
demographic structure (about a quarter of its populations
are ethnic Chinese).6 Malaysia’s relations with China
have gone through an even bigger transformation, from
mutual hostility during the Cold War to close and cordial
partnership in the post-Cold War era.7 Notwithstanding
their ideological and political problems against the
backdrop of East-West confrontation, Malaysia – under its
second Prime Minister Tun Abdul Razak Hussein – was
the first ASEAN state to establish diplomatic relations with
Joseph Sipalan, “Don’t ‘pressure’ Malaysia over Sedition Act
use, Home Minister tells US,” Malay Mail Online, October 19,
2014. Available at: http://www.themalaymailonline.com/malaysia/
article/dont-pressure-malaysia-over-sedition-act-use-homeminister-tells-us#sthash.SY1h5kNp.dpuf.
5
“US, Australia tick off M’sia over sodomy verdict,”
Malaysiakini, February 10, 2015. Available at: http://www.
malaysiakini.com/news/288872.
6
Stephen Leong, “Malaysia and the People’s Republic of China
in the 1980s: Political Vigilance and Economic Pragmatism,”
Asian Survey 27, no. 10 (1987): 1109-1126; Cheng-Chwee Kuik,
“Making Sense of Malaysia’s China Policy: Asymmetry, Proximity,
and Elite’s Domestic Authority,” Chinese Journal of International
Politics 6, no. 4 (2013): 429-467.
7
Joseph Liow Chinyong, “Malaysia-China Relations in the
1990s: The Maturing of a Partnership,” Asian Survey 40, no. 4
(2000): 672-691; Abdul Razak Baginda, “Malaysian Perceptions of
China: From Hostility to Cordiality,” in Herbert Yee and Ian Storey
(ed.), The China Threat: Perceptions, Myths and Reality (London:
Routledge Curzon, 2002), 227-247.
4
China back in the 1970s. It has also been one of the most
active ASEAN members to engage China in the postTiananmen, post-Cold War era.
Despite their overlapping claims in the Spratlys in the South
China Sea, Malaysian leaders from Mahathir onwards have
repeatedly declared that Putrajaya does not see Beijing
as a threat, but an opportunity. Abdullah and Najib have
both chosen China as the first country outside ASEAN to
visit upon assuming their respective premierships. Since
2009, China has been Malaysia’s largest trading partner,
and Malaysia China’s largest trading partner in the ASEAN
region.
In October 2013, during President Xi Jinping’s visit to
Malaysia, the two countries agreed to elevate bilateral ties
to a “comprehensive strategic partnership.” The bilateral
relations seemed to be reaching a new height. Few
months later, however, the relationship was tested in a
big way by two unprecedented events. The first was the
reappearance of Chinese military vessels in James Shoal
(Beting Serupai in Malay, 80 kilometers from the Malaysian
coast) in January 2014, after a similar occurrence in March
2013. The second was the mysterious disappearance in
March 2014 of Malaysia Airlines flight MH370, two thirds
of whose passengers were Chinese citizens. The furious
reaction in the Chinese media and cyberspace as well as
the pressure from the Chinese government caught many
Malaysians by surprise. As emotions ran high in China
with netizens posting angry comments against Malaysia,
certain groups taking to the streets, and some even calling
for a boycott of all things Malaysian, many in Malaysia
felt rattled. The backlash came at a time when the two
countries were celebrating the 40th anniversary of their
diplomatic ties. Although the troubled relations appear
to have recovered from a low point after Najib’s visit to
China from May 27 to June 1 that year, Malaysia’s concern
about the downsides of living with an increasingly powerful
neighbor may have deepened.
In order to better evaluate the impact of the recent
developments on Malaysia’s overall strategic position visà-vis the two major powers, it is important to pay attention
to the structural and domestic conditions underpin the
weaker state’s interactions with the United States and
China since 2009 under Najib Razak.
When Najib came to power in April 2009, Malaysia
was confronted with a different domestic and external
environment. Internally, the March 2008 general elections
severely weakened the ruling BN coalition, when it lost its
two-thirds majority control of Parliament and 5 of 13 states
to the oppositions. This took place when Malaysia was
struggling to cope with economic difficulty in the wake of
the 2008 global financial crisis. The political and economic
challenges combined to make performance legitimacy
an even more salient pathway of political authority for
the United Malay National Organization (UMNO)-led BN
coalition. The May 2013 general elections, which saw BN
returning to power with a reduced majority in the Parliament
and losing the popular vote, further deepened this trend.
Externally, the post-2008 environment has witnessed a
number of changes. Chief among these are China’s rapidly
expanding influence, its more assertive behavior over the
maritime disputes, as well as the Obama administration’s
“pivot” to Asia strategy. The U.S. rebalancing signals
3
Washington’s greater resolve to push back Beijing’s
growing regional clout by revitalizing its alliances and
partnerships in the Asia-Pacific region, by enhancing its
involvement in the ASEAN-led forums and other regional
multilateral platforms, and by promoting the Trans-Pacific
Partnership (TPP) as a high-standard, 21st century trade
agreement. These structural changes – along with Japan’s
and India’s respective enhanced activism towards ASEAN
– have engendered a growing power competition, thereby
presenting both challenges and opportunities to regional
countries, Malaysia included.
2.1. Malaysia’s U.S. policy under Najib
Najib has moved to grasp the opportunities unleashed
by the U.S. rebalancing, with the aim of using a
strengthened partnership with the global superpower
to solidify Malaysia’s security fallback position. Perhaps
more importantly, the move is also motivated by domestic
economic and political calculations. Besides eyeing at
maximizing commercial gains from America, Putrajaya has
also hoped to capitalize on the increasingly warm bilateral
ties as a leverage to reduce Washington’s support for the
Anwar-led opposition and civil society movements, which
are posing a growing challenge to BN after 2008.
These structural and domestic factors have coalesced to
push the Najib government to embrace a friendlier posture
towards the United States. Accordingly, Malaysia has taken
steps to improve its political relations with the superpower,
enhance the bilateral trade and investment links, and
strengthen their long-standing military cooperation. Under
Najib, there have been more Malaysian security personnel
taking part in military programs in America, more U.S.
ships visiting Malaysia, as well as more joint exercises and
more high-level defense consultations being conducted.8
On political and diplomatic domains, Putrajaya has
collaborated with Washington on issues that the Obama
administration is most concerned about. These issues
range from Iran, North Korea, and Iraq, to nuclear nonproliferation and human trafficking. By cooperating with
the U.S. on these issues, Putrajaya seeks to showcase its
value while giving deference to the superpower to enhance
Malaysia-U.S. relations.
Economic consideration is one of the key drivers of Najib’s
U.S. policy. At a briefing for Malaysian journalists during his
U.S. visit in April 2010, Najib said: “Economic and trade
investment will be a key component of our bilateral ties
as we move forward because the U.S. is a big source,
not only in terms of export market for our manufacturing
industry but also a source for new technology such as
ICT and biotechnology.”9 Indeed, despite the economic
downturn, the United States has remained one of the top
foreign investors and trading partners for Malaysia.10
Beyond economic and structural drivers, Najib’s U.S.
policy has been motivated by domestic political motives
as well, i.e. a calculation to mitigate the political challenge
Andrew J. Shapiro, U.S. Assistant Secretary of State, Remarks
at the Malaysian Armed Forces Defense College, Kuala Lumpur,
February 15, 2012.
9
Lim Ai Lee, “Obama congratulates Najib on his stance on
weapons of mass destruction,” The Star, April 13, 2010.
10
United States Census Bureau website. Available at: http://www.
census.gov/foreign-trade/balance/c5570.html.
8
arises from the U.S. tendency to comment on the BN
government’s treatment of political dissents and handling
of human rights issues. The U.S. tendency to express
concerns on those issues is not new. They were voiced
in a stronger tone against the Malaysian government in
the late 1990s, as noted earlier. But unlike Mahathir who
reacted to U.S. interference in an antagonistic way, the
Najib administration has adopted a different approach.
It has attempted to “neutralize” the political challenge by
forging deeper collaboration with Washington, particularly
on issues that would enhance its value to the superpower.
Thus far, this approach seems to have yielded desired
results to Putrajaya. During Secretary of State Hillary
Clinton’s visit to Malaysia in November 2010, although she
did comment on the Anwar trial, the Secretary however
chose not to meet the opposite leader. During Obama’s
high-profile visit to Malaysia in April 2014, the President
also chose not to meet Anwar, drawing criticism that the
leader was putting trade deals and other interests above
democratic principles.11
Najib’s push to enhance Malaysia’s ties with the United
States, however, has been constrained by several
imperatives at different levels. Structurally, as a weaker
state, Malaysia is concerned about the danger of being
entrapped in potential U.S.-China conflict, the uncertainty
in U.S. long-term commitment, as well as the risks of
antagonizing the proximate rising power. These concerns
together have prevented Malaysia from fully supporting
and aligning militarily with America. A case in point is
Putrajaya’s reaction to the international news reports in
September 2014, which quoted the U.S. Navy’s chief of
naval operations Admiral Jonathan Greenert’s speech in
Washington that Malaysia “has offered to host” U.S. Navy
P-8 Poseidon aircrafts at a base close to the South China
Sea to conduct surveillance activities over the disputed
areas where China operates.12 Malaysian Defense Minister
Hishammuddin Hussein denied this.13 Defense analyst
Dzirhan Mahadzir writes that Malaysia’s foreign military
cooperation activities are often conducted on a “caseby-case” and an “ad-hoc” basis. He describes the option
of allowing America to set up a base in East Malaysia for
the purpose of monitoring China as politically infeasible
and strategically “counter-productive”, as it “would only
provoke the Chinese to set up their activities in the area,
further taxing the RMN and RMAF.”14
Domestically, there is also a political rationale on the part of
the ruling elites of not wanting to appear too closely aligned
with America, in order to avoid alienating Malaysia’s Muslim
majority voters, many of whom have been critical of U.S.
policies in the Muslim World. Other domestic factors
have compelled Najib to adopt a cautious approach in
interacting with Washington. This is so not only in military
and security cooperation, but also in economic matters,
including the TPP. Some business groups, political parties,
and individuals (e.g. former premier Mahathir) have strongly
P. Ramani, “PKR disappointed Obama not meeting Anwar,”
The Free Malaysia Today website, April 22, 2014. Available at:
http://www.freemalaysiatoday.com/category/nation/2014/04/22/
obama-will-not-be-meeting-anwar/.
12
Trefor Moss, “Malaysia offers to host U.S. navy aircraft,” Wall
Street Journal, September 12, 2014
13
Jane Perlez, “Malaysia risks enraging China by inviting U.S.
spy flights,” The New York Times, September 13, 2014.
14
Dzirhan Mahadzir, “No, Malaysia would never host a US spy
base,” The Diplomat, September 19, 2014.
11
4
opposed against the TPP. Najib said in October 2013 that
he was “prepared to stay out of the deal if Malaysians
oppose it.”15
2.2. Malaysia’s China policy under Najib
In the case of Malaysia-China relations, Najib – a son of
Tun Razak who established diplomatic relations with
China in 1974 – has pursued a policy that is marked
by an increased pragmatism in all key domains. This is
evidenced by Putrajaya’s greater readiness to collaborate
with Beijing in economic, transnational security, and even
defense domains, despite Malaysian defense planners’
growing concern over China’s increasing assertiveness.
This pragmatism is chiefly rooted in the BN elites’ desire to
further enhance the overall bilateral ties and, accordingly,
further maximize economic benefits from China. This is
not purely a foreign policy or economic matter, but also
an issue of crucial political significance for Najib. To regain
political ground for BN, Najib has adopted measures
aimed at enhancing his government’s performance in
ensuring and delivering economic growth, alongside other
pathways of legitimation. BN’s weakened position after the
cliffhanger May 2013 elections has further increased the
salience of performance legitimation for Najib.
It is in this light that maximizing economic benefits from
China and other major markets is deemed a crucial
domestic political matter. China has emerged as
Malaysia’s largest trading partner in recent years, as
noted. Under Najib, Malaysia has not only sought to
strengthen the already robust bilateral trade, but it has also
taken steps to enhance bilateral investment and financial
cooperation. These include: creating industrial parks in
Qinzhou and Kuantan, setting up a Bank Negara Malaysia
representative office in Beijing, and renewing their bilateral
currency swap deal for RM90 billion. Malaysian Minister
of International Trade and Industry Mustapa Mohamed
remarked in October 2013, as “China is becoming an
important source of investment in the world compared with
the United States, European countries and Middle-East”,
Malaysia wants to tap in its stronger bilateral relations to
capture US$25 billion worth of investment from China
over the next five years.16 Malaysia also eyes at boosting
Chinese tourist arrivals in the coming years.17
The BN elites’ economic cum domestic political
motivations, however, are not the only drivers of Malaysia’s
move to develop cooperative and comprehensive ties with
China. There are geopolitical and strategic considerations
at work as well. As a weaker state, Malaysia’s perceptions
and policies toward China have always been shaped by
long-term geopolitical considerations. The twin realities of
geographical proximity and power asymmetry – intertwined
with the elites’ historical memory of Malacca-China
interaction and the Malaysia-China Cold War hostility – have
a deep impact on the elites’ belief that China could help
and hurt Malaysia much more than any other actor (with
Barry Porter and Chong Pooi Koon, “TPPA: Najib may stay
out If Malaysians oppose it,” New Straits Times, October 12, 2013.
16
“Malaysia hungry for Chinese investments,” Free
Malaysia Today, October 5, 2013. Available at: http://www.
freemalaysiatoday.com/category/nation/2013/10/05/msia-hungryfor-chinese-investments/.
17
“Malaysia eyes 1.4 million Chinese tourist arrivals in 2015:
Nazri,” New Straits Times, December 22, 2014.
15
the exception of the United States). Accordingly, Malaysia
has since the early 1990s exhibited a noticeable readiness
to recognize, accommodate, and whenever possible,
capitalize on China’ growing power. For instance, the two
countries’ collaboration in promoting the institutionalization
of East Asian cooperation throughout the mid-1990s
and 2005 – a period that witnessed the creations of the
ASEAN Plus Three (APT) and the East Asia Summit (EAS)
– indicates that Malaysian elites have increasingly come to
view the rise of China as a long-term geopolitical trend that
Malaysia must adapt to and benefit from. China’s growing
influence after the 2008 global financial crisis seems to
have reinforced such a view. As enunciated by a former
Malaysian envoy recently: Putrajaya wants to develop
a strong relationship with Beijing so as to “invest in the
emerging China”, because the rising power is playing an
increasingly vital role in regional and global affairs.18
Indeed, Malaysia under Najib has expanded bilateral
cooperation with China in virtually all sectors. These
include security and defense realm, which has long been
the least developed aspect of the bilateral ties. In October
2014, Malaysian Defense Minister Hishammuddin Hussein
and the visiting Chinese State Councillor Yang Jiechi
declared that both countries “need to beef up their military
cooperation and defense industries”, as well as “work
together to fight militancy in all forms”.19 In November
2014, Hishammuddin attended the Xiangshan Forum, a
biennial security forum hosted by China to compete with
the Western-backed Shangri-La Dialogue. In December
2014, the Malaysian Armed Forces (MAF) and the People’s
Liberation Army (PLA) held their first joint table top exercise
at the MAF’s Joint Warfare Center to develop a common
framework for humanitarian and disaster relief operations.20
2.3. An equidistance posture
For these multiple reasons, Malaysia is determined to
maintain its cordial and productive relationship with China
despite its concern about Beijing’s increasing maritime
assertiveness. Hence, although the maritime concern is
one of the reasons leading Putrajaya to welcome the U.S.
pivot and upgrade its cooperation with Washington, the
Najib government has taken great care to do so without
hurting its relations with China.
It is on the basis of this “equidistant” posture that the
Najib government has sought to concurrently enhance
Malaysia’s relations with America and China, building
stronger bilateral relationships with both powers without
departing from its non-alignment stance, with effects
serving to reinforce its fallback position. In August 2014, in
responding to a question from one of the delegates at the
Malaysian Student Leaders Summit about “who should
Malaysia choose” between the two major powers, Najib
said Malaysia’s foreign policy “is based on principle” and
the country “did not really need to choose between the
United States and China” because of “the strength of both
countries.”21
Personal communication with a former Malaysian envoy,
Kuala Lumpur, August 12, 2014.
19
“Malaysia, China to work together to fight militancy in all
forms: Hishammuddin,” The Straits Times, October 8, 2014.
20
Nicholas Cheng, “Malaysia and China hold first-ever joint
military exercise,” The Star, December 23, 2014.
21
“Najib: Why should Malaysia choose between US and China?”
The Star, August 24, 2014.
18
5
2.4. Impact on Malaysia’s evolving South China Sea
policy
What are the implications of such equidistance posture
for Malaysia’s South China Sea policy? Unlike Manila and
Hanoi who have moved closer militarily to Washington and
used it as the main leverage to counter Beijing, Malaysia
has continued to prioritize its productive ties with China
and emphasize the use of diplomatic means in managing
the disputes, even after the James Shoal incidents in 2013
and 2014. On March 26, 2013, four Chinese vessels led
by the Jinggangshan amphibious landing ship appeared
near the shoal, the southernmost tip of China’s expansive
territorial claims. On January 26, 2014, a three-ship flotilla
from the Chinese Navy conducted maritime exercises in
the disputed waters. These incidents have pushed the
elites in Putrajaya to begin questioning their long-held view
that China has a benign policy towards Malaysia in the
South China Sea. Such concern has propelled Putrajaya
to adjust its policy by hedging more deeply vis-à-vis the
increasingly powerful and assertive Beijing, largely via
taking steps to beef up its defense posture in the areas
(e.g. by announcing the establishment of a marine corps
and a new naval base in Bintulu), enhancing its military
partnerships with the United States and other players, and
promoting ASEAN unity on the South China Sea issue.
Nevertheless, despite these adjustments, Malaysia has
adopted a seemingly contradictory stance of simultaneously
developing a closer and more comprehensive relationship
with China. It has done so by sending positive signals to
Beijing that Malaysia has not diverted from its equidistant
position and non-confrontational policy towards China,
while taking pragmatic steps to deepen bilateral
collaboration on areas highlighted under the comprehensive
strategic partnership framework. When interviewed by the
Japanese media during his visit to Tokyo in May 2014,
Najib responded: “We must look at the big picture and
not define relations with China on a single-issue basis but
look at the broad spectrum of the relations, and recognize
the strategic importance of our bilateral relationship with
China.”22 About a week later, in a joint communiqué
issued by Najib and his Chinese counterpart Li Keqiang,
the Malaysian and Chinese governments “reaffirmed their
commitment to handling bilateral relations with a strategic,
comprehensive and long-term perspective.” On the South
China Sea, both sides “emphasized that all sovereign states
directly concerned shall exercise self-restraint and settle
their differences by peaceful means”, and “recognized the
fact that intervention or involvement of parties not directly
concerned could be counter-productive and further
complicate the aforementioned differences.”23 These
statements reflect the Najib government’s persistence of
not letting the territorial issue affect the overall MalaysiaChina ties. They also reflect the weaker state’s insistence
of not taking sides and not wanting to be entrapped in
great power conflict.
“Najib stresses China ties despite growing Asia territorial
disputes,” The Star, May 22, 2014.
23
Joint Communiqué between the People’s Republic of China
and Malaysia in Conjunction with the 40th Anniversary of the
Establishment of Diplomatic Relations, Beijing, May 31, 2014.
22
3. Malaysia’s Relations with “the Other Powers”
In comparison, Malaysia’s relations with “the other
powers” – i.e. Japan, South Korea, India, and the EU –
are strategically less intense. They are more economically
and functionally-driven than survivability-oriented, at least
under the current scenario. These relations are steered
primarily by the ruling BN elites’ calculation on: to what
extent should Malaysia interact with each of these powers
in ways that would help boost the country’s development
and Putrajaya’s governance performance. This is not to say
that strategic dimension is absent in Malaysia’s ties with
these powers. Rather, the point is that Malaysia’s policies
towards these players are motivated more by maximizing
development returns than by mitigating existential risks.
3.1. Malaysia-Japan relations
Malaysia’s policy towards Japan has been marked by
economic pragmatism. Despite the memory of Japanese
brutality during the World War II, Malaysia’s successive
leaders all want to develop a close and productive
relationship with Japan. The country’s first Prime Minister
Tunku Abdul Rahman decided not to allow the issue of
war reparation from affecting Malaysia-Japan relations.
His successor Tun Razak sought to develop a stronger
economic tie with Japan to boost his New Economic
Policy (NEP) policy. The leaders’ pragmatism is shared by
a segment of the local Chinese business elites. Despite
the ethnic Chinese community’s resentment of Japanese
atrocities during the Japanese occupation, some Chinese
capitalists ventured with their Japanese counterparts in
resource-processing sectors, which laid the foundation
for the robust bilateral trade and investment links in the
subsequent decades.24 By 1970s, Japan emerged
as Malaysia’s largest commercial partner.25 Economic
pragmatism was a particularly salient theme during the
Mahathir era. Shortly after taking over the leadership from
Tun Hussein Onn, Mahathir launched the “Look East
Policy” (LEP), which aimed to emulate Japan’s efficient
style of management and designate Japan Incorporated
as a model of development for Malaysia.26 Under this
policy, the Mahathir government endeavored to attract
more investment and technology transfer from Japan
to help accelerate Malaysia’s industrialization process.27
Throughout the 1980s, Japan was the most dominant
economic partner of Malaysia, accounting for about a
quarter of the country’s exports and imports as well as
the largest source of its foreign direct investment (FDI),
Khadijah Khalid and Lee Poh Ping, Whither the Look East
Policy (Bangi: Penerbit UKM, 2003), esp. 45-48.
25
Johan Saravanamuttu, Malaysia’s Foreign Policy The First
Fifty Years: Alignment, Neutralism, Islamism (Singapore: ISEAS,
2010), 132-136.
26
David Camroux, ‘Looking East’ … and Inwards: Internal
Factors in Malaysian Foreign Relations During the Mahathir Era,
1981-1994, Australia-Asia Paper no. 72 (Centre for the Study of
Australia-Asia Relations, Griffith University, 1994), esp. 30-36;
Khadijah and Lee, Whither the Look East Policy.
27
Fumitaka Furuoka, “Malaysia-Japan Relations under the
Mahathir Administration: Case Studies of the ‘Look East’ Policy
and Japanese Investment in Malaysia,” Asian Survey 47, no. 3
(2007): 505-519.
24
6
especially in the manufacturing sector.28 The appreciation
of Yen following the 1985 Plaza Accord further increased
the inflow of Japanese capital to Malaysia over the next
decade.
Although Japan has lost its dominant lead in Malaysia’s
economy since the 1990s due mainly to its “lose decades”
at home, it is still an important partner for Malaysia. During
the 1997 Asian financial crisis, in the wake of the spurned
IMF and other Western assistance, Japan’s US$2 billion
worth of aid under the Miyazawa Initiative was one of the
factors “that ensured the economic and political survival
of the [BN] regime in the midst of a debilitating crisis.”29
Under Abdullah Badawi, Malaysia entered into a bilateral
Economic Partnership Agreement (EPA) with Japan in
December 2005, which came into force in July 2006.
This was the first bilateral FTA Malaysia had signed with
a trading partner. Under Najib, Malaysia has proposed to
implement “Look East Policy’s second phase (LEP2)” as
a framework to enhance bilateral relations. Najib’s efforts
to deepen Malaysia-Japan cooperation overlap somewhat
with his Japanese counterpart Shinzo Abe’s determination
to strengthen Japan-ASEAN ties. Their driving motives,
however, differ. While Najib is motivated primarily by
economic considerations, Abe’s move is driven chiefly
by strategic calculations: to solidify Japan-ASEAN
partnerships in the face of China’s expanding power and
its increasing assertiveness in the East and South China
Sea.30 Given these diverging motives, and given Malaysia’s
insistence of avoiding confrontation in the disputed
waters, it is not surprising that Najib is lukewarm about
Abe’s strategic agenda. A Japanese analyst observes that
while Putrajaya “carefully but steadily deepens security
cooperation with the US as a hedge against a rising China,
it obviously sits on the fence with Abe’s new agenda.”31
term programs, and educational exchanges.32 Bilateral
trade increased more rapidly from this period onwards,
particularly in the post-Cold War era.
The new era has witnessed Malaysia-Korea interactions
at the regional multilateral level, alongside the traditional
bilateral channels. The creations of various regional forums
since the end of the Cold War – namely APEC, ARF, APT,
the parallel ASEAN-Plus Ones, EAS, ADMM-Plus – have
provided Malaysia and Korea (or for that matter, Malaysia’s
interactions with the other East Asian players and major
powers, including Japan) the additional platforms to pursue
multi-sector collaboration in multilateral settings. Such
multilateral processes have contributed to closer bilateral
cooperation. The East Asian-wide APT cooperation, for
instance, has reinforced the “East Asian” identity and
created numerous opportunities for Malaysian and Korean
officers to cooperate directly on various regional issues. In
addition, the ASEAN-Korea FTA offers a basis for Korea to
propose a bilateral FTA with Malaysia. In 2013, MalaysiaKorea trade rose by 13.7% to US$18.04 billion. In the
first half of 2014, total bilateral trade increased 11.4% to
US$10.76 billion compared to the corresponding period of
2013.33 The two countries’ decision in 2014 to implement
the bilateral currency swap facility is expected to further
boost the bilateral trade. Beyond these inter-governmental
domains, Malaysia-Korea relations have progressed
vigorously at the people-to-people level in recent years. As
a result of the Korean cultural wave created by popular
Korean films, TV dramas and pop songs, there has been a
greater interest among Malaysians in things Korean.34 This
interest has in part led to a marked increase in educational,
tourism, and socio-cultural exchanges between the two
countries.
3.3. Malaysia-India relations
3.2. Malaysia-Korea relations
Malaysia-ROK ties similarly have focused on economic
cooperation, albeit at a relatively lower scale and pace.
Developed on the basis of a stable political relationship,
Malaysia’s trade with Korea has gradually increased
since the two countries established diplomatic ties in
1960. Malaysia persistently enjoyed a trade surplus
throughout the first two decades, thanks in large part to
Korea’s huge demand for Malaysia’s resources and raw
materials. Over time, bilateral trade structure had evolved
from predominantly commodity-based to manufacturingbased. Bilateral investment ties took off much later, when
the Koreans began to invest in Malaysia in the 1980s.
Although Mahathir’s LEP anchored principally on Japan,
Korea was part of the “East” the Malaysian leader had
in mind. Many Malaysian students, engineers and other
professionals, and government officials were sent to
Korea (though comparatively less than those going to
Japan) for university education, industrial training, short-
Malaysia’s relations with India, although not as vibrant
as the country’s ties with the three Northeast Asian
economies, have a longer history dating back well before
the pre-colonial period. The Indianized kingdoms in the
Malay Peninsula were important ports on the ancient
maritime trade route between India and China before
the arrival of Islam in Southeast Asia.35 Several waves of
migrations of people from India into the Malay Peninsula
made ethnic Indian a fixture in Malaysia’s present-day
demographic structure. The community’s socio-cultural
linkages with the subcontinent are both a heritage and
an asset for the ongoing construction of commercial and
strategic cooperation between the two countries. During
the early independence years, Malaysia’s relations with
India were underpinned by shared democratic value and
solidarity. Kuala Lumpur supported New Delhi in the 1962
Sino-Indian border war. Malaya openly criticized China’s
actions and launched a Save Democracy Fund to “help
Cho Chul Ho, “Korean Wave in Malaysia and Changes of the
Korea-Malaysia Relations,” Malaysian Journal of Media Studies
12, No. 1 (2010): 1-14, esp. 4.
33
“Currency swap to boost Malaysia-South Korea bilateral ties,”
The Malaysian Insider website, November 22, 2014. Available at:
http://www.themalaysianinsider.com/business/article/currencyswap-facility-to-boost-malaysia-south-korea-bilateral-ties#sthash.
VYzRD6oy.dpuf.
34
Cho, “Korean Wave in Malaysia.”
35
Veena Sikri, India and Malaysia: Intertwined Strands (New
Delhi: Manohar, 2013).
32
Khong Kim Hoong, “Malaysia-Japan Relations in the 1980s,”
Asian Survey 27, no. 10 (1987): 1095-1108.
29
Karminder Singh Dhillon, Malaysian Foreign Policy in the
Mahathir Era 1981-2003: Dilemmas of Development (Singapore:
NUS Press, 2009), p. 179.
30
Ayame Suzuki, “Dissonance in Malaysia-Japan Relations,”
New Mandala, June 3, 2014. Available at: http://asiapacific.
anu.edu.au/newmandala/2014/06/03/causes-to-dissonance-inmalaysia-japan-relations/.
31
Ibid.
28
7
India defend itself against Chinese aggression.”36
Nonetheless, Malaysia-India ties only made very gradual
progress in the subsequent decades. The bilateral relations
trailed behind Malaysia’s relations with China and other
key Asian players not only in terms of trade and economic
exchanges, but also diplomatic and regional collaboration.
In 2013, India was Malaysia’s 11th largest trading partner
with a total bilateral trade of RM42.12 billion (3.1% of
Malaysia’s total trade), as compared to China-Malaysia
trade of RM203.23 billion (14.8% of Malaysia’s total trade)
and Japan-Malaysia trade of RM136.1 billion (9.9%).37
Throughout the post-Cold War era, the frequency of highlevel visits and the scope of bilateral cooperation between
Malaysia and China far exceed that between Malaysia
and India. In terms of regional cooperation, while Malaysia
and China shared eye-to-eye on the promotion of East
Asian cooperation (as evidenced by their collaboration in
promoting APT and EAS), Malaysia and India sometimes
diverged in their positions on certain regional arrangements.
Examples include Malaysia’s opposition to the proposal
of creating a separate India-ASEAN Summit in the early
2000s, as well as India’s opposition to Malaysia’s request
to include fellow Muslim country Pakistan into the ARF.38
In the more recent years, however, Malaysia and India
have made some headway in several key domains. Among
the bright spots are economic and defense cooperation. In
terms of commercial linkages, Malaysia and India entered
into a landmark Comprehensive Economic Cooperation
(CECA) in 2011. There has been a surge in two-way
investment flows. In terms of defense, the scope of bilateral
cooperation has grown steadily. About ten years after the
signing of the 1993 MoU on Defense Cooperation (the first
such MoU of Malaysia with a country outside of ASEAN), the
Malaysian and Indian armed forces have gradually moved to
enhance and institutionalize their collaboration in domains
ranging from policy consultation, military exchanges,
training, procurement, and logistic support.39 Over the
past decade, the two countries have institutionalized the
annual Malaysia-India Defense Cooperation Committee
(MIDCOM) meetings, regularized staff talks between their
three services, and increased high-level military visits and
exercises.40 Because of the two countries’ shared strategic
importance in the Andaman Sea and the Malacca Straits,
interactions between the navies are the most intense.41
Because of their possession of several common weapon
systems, Malaysia has been seeking training assistance
from India on the equipment. Under a 2008 agreement,
India helped trained Malaysian military personnel on the
induction and operation of the SU-30MKM.42 Malaysia has
also expressed interest in procurement of the supersonic
cruise missile BrahMos.43 India’s growing technological
base, its familiarity with Russian defense systems, as well
as its experience in licensed production and its capability
in missiles and communication systems make it a potential
partner for Malaysia’s effort to develop defense industry.44
3.4. Malaysia-EU relations
Malaysia’s relations with the EU – much like the broader
ASEAN-EU relations – have been shaped by the interplays of
enduring historical legacies, evolving economic importance,
and changing geopolitical dynamics. As the only Southeast
Asian nation that was colonized not by one but by three
European powers consecutively, Malaysia’s policy towards
Europe in general and the EU in particular have been colored
by its ruling elites’ collective memory of its colonized past.
This memory in part explains Malaysia’s sensitivity about
sovereignty when dealing with the more powerful actors
from the “West”. At a more micro level, the longevity of the
British rule and the endurance of British influence in the
immediate post-independence Malaya/Malaysia explain
why, for a considerable period of time, Malaysia’s contact
and interactions with Europe had remained concentrated
mainly on the United Kingdom, much more than countries
in continental Europe. The post-war geopolitical realities of
decolonization and the presence of an overwhelming U.S.
military power in Asia – as a countervailing force to check
the expansion of communist powers – further reduced the
necessity for Malaysia to expand its relations with other
European countries.45
This pattern, however, has gradually changed over the
decades. Not only that Malaysia has developed more
institutionalized linkages with the EU, it has also stepped
up its engagement with individual EU countries. These
developments are in part because of the emergence
of the EU in the post-Cold War world affairs, and in part
the growing economic importance of the individual EU
members, most notably Germany and France. The above
factors have combined to push Malaysia to pursue a more
balanced policy towards the EU and its key member states,
a trend that has continued and deepened in the postMahathir era. In 2003, the EU opened the EU Delegation in
Kuala Lumpur. In 2010, Najib and the EU leaders launched
the negotiations for two major EU-Malaysia initiatives,
namely the FTA and the Partnership and Cooperation
Agreement (PCA). The PCA is aimed at “creating a new
strategic dimension for the EU-Malaysia political dialogue
and economic cooperation.”46 At another level, Malaysia’s
bilateral ties with some individual EU members have
Vivek Raghuvanshi, “India training Malaysian pilots in Russian
jets,” Defense News, January 7, 2008.
43
“India’s navy chief to visit Malaysia,” Bernama, September 23,
2013.
44
K. S. Nathan, “India-Malaysia Defense Relations,” in Ajaya
Kumar Das (ed.), India-ASEAN Relations, RSIS Monograph No. 28
(Singapore: RSIS, 2013), 225.
45
Ruhanas Harun, “Reinvigorating Malaysia-Europe Relations in
the New Era,” in Abdul Razak Baginda (ed.), Malaysia’s Foreign
Policy: Continuity and Change (Singapore: Marshall Cavendish
Editions, 2007), 133.
46
Delegation of the European Union in Malaysia Website,
“Political and Economic Relations.” Available at: http://eeas.
europa.eu/delegations/malaysia/eu_malaysia/political_relations/
index_en.htm.
42
J. Saravanamuttu, The Dilemma of Independence: Two Decades
of Malaysia’s Foreign Policy, 1957–1977 (Penang: Penerbit
Universiti Sains Malaysia, 1983), p. 27
37
Malaysian Ministry of Finance website. Available at: http://
www1.treasury.gov.my/data/le/jp3_3.pdf.
38
Faizal Yahya, “Challenges of Globalization: Malaysia and India
Engagement,” Contemporary Southeast Asia 27, no. 3 (2005): 472498, esp. p. 475.
39
High Commission of India in Kuala Lumpur. Available at: http://
www.indianhighcommission.com.my/Defence.html.
40
Ibid.
41
Suseela Devi Chandran, “Malaysia-India Defense Cooperation:
Need for a Paradigm Shift before Strategic Partnership,” Strategic
Analysis 38, no. 1 (2014): 79-90.
36
8
progressed faster than the institutional development of
EU-Malaysia relations. Malaysia-France ties, for instance,
have grown impressively in multiple sectors, particularly
defense and economic cooperation. Malaysia is France’s
second largest commercial partner in ASEAN region, with
some 260 French companies operating in the country.
It has continued to attract French investors. Among the
recent investments are: a biotech firm in Terengganu and a
US$135 million factory in Negeri Sembilan to manufacture
carbon discs for aircraft brakes for the entire Asian market.47
Defense cooperation between the two countries is even
more thriving. France has been one of the main suppliers
of Malaysia’s military equipment and a main partner for
defense training and technical assistance. Malaysia has
partnered with France in its effort to create a submarine
force. Two Scorpene class submarines were purchased
from France, in an arrangement that included training
of 160 Malaysian crews since 2004. Other purchases
included: the A400 M aircraft, the EC 725 helicopters,
missiles, military electronics and equipment in heavy tanks,
and tactical radios of the armed forces.48
Significantly, Malaysia’s effort to develop more
institutionalized ties with the EU was not only made
bilaterally, but also at inter-regional level. As one of the
founding core members of ASEAN, Malaysia has been
committed to strengthen the regional organization’s
linkages with other key players, including the EU. As
the ASEAN Chair in 2015, Malaysia has sought to work
towards reviving negotiations on the stalled ASEAN-EU
FTA. Najib remarked at the close of the ASEM in Milan in
October 2014 that the inter-regional FTA “can complement
and value add to the existing EU’s FTA with Singapore as
well as the EU FTAs to be concluded with several other
ASEAN member countries.”49
Conclusion
As a smaller state, Malaysia’s growing interactions with the
more mighty powers on multiple domains are increasingly
presenting both opportunities and vulnerabilities to its
quest for survival and the ruling elites’ domestic political
functions. This paradox is likely to persist, mainly because
of the ambivalent nature of all power relations, but also
because of the Lilliputian’s inherent internal weaknesses,
its heavy dependence on foreign trade, and its location
at a center of international maritime interests and power
contestation.
Zuhrin Azam Ahmad, “Malaysia continues to draw French
investors,” The Star, July 30, 2013.
48
Embassy of France in Kuala Lumpur Website, “Franco
Malaysian bilateral relations.” Available at: http://www.
ambafrance-my.org/Franco-Malaysian-bilateral.
49
Esther Ng, “Malaysia to work towards reviving ASEAN-EU
FTA talks, says Najib,” The Star, October 17, 2014.
47
9