• Malaysia must keep its options open


    DURING his much publicized recent visit to Beijing, Malaysian Prime Minister Najib Razak pledged to take his country’s relationship with China to new heights. In that trip, Najib signed an estimated $34 billion in investment and infrastructure deals. He also agreed to buy at least four Chinese-made naval vessels.

    This would be Malaysia’s first major arms purchase from China. But does it portend a bolder Malaysian policy of addressing aggressive action by claimants to the South China Sea islands? One recalls Malaysia speaking with alarm and anger about Chinese naval and Coast Guard behavior in the Spratlys and other parts of the SCS.

    It was also reported that while in China, the Malaysian prime minister took the opportunity to excoriate the United States over its perceived meddling in his country’s internal affairs. Because of the publicity the words of Mr. Najib Razak earned, Western countries with abiding interests, including those about security matters, became concerned with the possibility that Malaysia was being swayed into siding with Beijing.

    Like other countries – including ours – some domestic political factors are pushing Malaysia toward China. However, Malaysia’s leaders, as Filipino ones, must also see that they cannot possibly just junk their traditional and treaty ties with the West, mainly the United States.

    Apprehensions that Malaysia has decided to be in Beijing’s orbit should be balanced with the thought that all the countries in Southeast Asia must continue to be in the best friendly terms with China, which has been parading its wealth and might, while also benefiting from deals and actual agreements with the United States.

    A Stratfor analysis has observed that “PM Najib will not want to risk validating the opposition’s claims that he is selling off state-owned assets to the Chinese for short-term political gain. In Malaysia, where the ethnic Malay majority harbors deep suspicions of the country’s own politically and economically powerful ethnic Chinese population, such allegations could be especially damning, all the more so in an election year. As the vote approaches, Najib will play to his ethnic Malay base while also trying to assuage concerns among the Chinese-dominated business community, which Beijing has long used to cultivate economic and political ties in Malaysia.”

    Then there is this consideration, also articulated by Stratfor. “Malaysia’s role as a hub of industry and technology in Southeast Asia — and in the world of Islamic finance — depends on a steady and predictable business environment. Investors look elsewhere when political uncertainty seems to threaten policy continuity in the country. That foreign ownership of Malaysian government bonds is among the highest in Asia reflects investor faith in the country’s long-term prospects and underlying fundamentals, but it also exposes Malaysia to greater volatility if political upheaval erodes this confidence. Najib may hope that his outreach to Beijing will give outside powers pause before delving deeper into the 1MDB affair, but his efforts are unlikely to deter further investigations. Ultimately, Kuala Lumpur’s focus will return to restoring its credibility among investors.

    “Furthermore, the pact’s dim prospects notwithstanding, Malaysia’s participation in the TPP reflects its goal of eventually integrating with the West. The country is intent on moving up the manufacturing value chain, placing greater importance on investment from Europe, Japan, Singapore and the United States; Chinese trade and financing are merely an expedient solution to Malaysia’s immediate problems.”

    And — like Philippine President Rodrigo Duterte — PM Najib “can ill afford being seen by his electorate as selling out his country’s sovereignty in the South China Sea or renouncing vital support from the United States in areas such as counterterrorism. Both the military imbalance with China and the internal jihadist threat will far outlast the current election season. As domestic troubles and regional uncertainty cloud Malaysia’s long-term vision, it has little choice but to keep its options open.”


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