What Is Going on in Malaysia—and Why Does It Matter to the United States?

December 18, 2018 Topic: Security Region: Asia Tags: MalaysiaPoliticsNational SecurityChinaBelt And Road

What Is Going on in Malaysia—and Why Does It Matter to the United States?

Malaysia’s political transition has coincided with a rapidly changing and challenging regional security environment.


But drama aside, what does it all mean? The consequence and implications fall along three dimensions: for Malaysia, itself, and for Malaysia’s relations with both China and the United States. Together, there is the potential for a significant impact on the geopolitics of Southeast Asia and East Asia as a whole.

BEFORE THE poll, there was ample reason for deepening pessimism concerning the future of the Federation. Money politics, habitual and corrupting, had become entrenched. Communal comity between Malays, Chinese and Indians, the foundation of social and political stability, was increasingly frayed. Nearly fifty years of official government bias in favor of one community (Malays/Bumiputera) over others had taken its toll. A great many citizens, including a number of young Malays, saw the system as not just biased, but fundamentally rigged. Substantial numbers of young, talented Chinese chose to emigrate. By suppressing any investigation into the 1MDB scandal, the government sent a clear signal: social justice and the rule of law had become a bad joke.


Now it appears that the fever has broken. Entrenched moneyed interests supporting UMNO have been politically sidelined. Mahathir has set in motion a full investigation of the 1MDB affair—and has insisted it will be conducted in full conformance with legal procedures and requirements. A new attorney general has been appointed—a respected lawyer who will be the first non-Malay in that post. The opposition slate that Mahathir led is genuinely multi-communal. It received wide support from young voters who wanted to move past traditional politics where every policy and every person is identified in terms of race, religion or ethnicity. They are tired of being compartmentalized as Malays, Chinese and Indians; they simply want to be Malaysians. Anwar, the presumed future prime minister, has the sort of protean personality that gives him authentic appeal across the communal divide. Anwar’s personal trajectory has taken him from a young Malay-rights champion to the halls of international finance. He is the real architect of the opposition coalition at home and widely respected overseas. Most important, he is extremely capable—the one prominent figure in Malaysia who is a match for Mahathir intellectually and personally.

Mahathir, himself, is obviously key to Malaysia’s future. He became prime minister in 1981 unexpectedly when his predecessor, Hussein Onn, resigned from office due to ill health. UMNO originally selected Mahathir as deputy prime minister in order to broaden the electoral appeal of the political establishment to include younger Malay voters. He had a reputation as a “radical” champion of Malay rights based on a book he had written as a young man entitled The Malay Dilemma. The government initially banned it as a racist tract that could incite Malay discontent. That judgment was unfair in that Mahathir had written an analysis of why Malays were “backward” and what should be done. He assigned much of the “blame” for the Malay’s condition on the Malays themselves and much of his solution required that community to pull up its socks and acquire greater self-discipline and ambition. At the end of the day, Mahathir’s vision for Malaysia is that of a fully modern country where communal identity has become largely meaningless because all are competing and participating on an equal basis.

CHINA HAS always and inevitably loomed large in Malaysian foreign policy. At independence in 1957, ethnic Chinese comprised nearly 40 percent of the population of the Federation of Malaya and nearly 90 percent of next-door Singapore. The influx was a product of British colonial rule. The Crown needed a labor force—stevedores at the docks, tin miners in the interior, bookkeepers for government and business accounts—and migrants out of southern coastal China were more than happy to meet that need. The native Malays preferred to stay in their villages as agriculturalists and it did not take long for the British to conclude that there was a natural division of labor between the two communities. Meanwhile, ethnic Indians also migrated to Malaya in substantial numbers to fill another need—plantation workers on the new rubber and palm oil estates.

During World War II, ethnic Chinese in Malaya and Singapore were jolted into political consciousness by Japan’s invasion and occupation of their homeland. The most effective resistance organizations were led by local, ethnic Chinese Communist Party cells and included clandestine paramilitary groups. Soon, communist–led insurgents were harassing the occupying Japanese in peninsular Malaya. Following the defeat of Japan, communist guerrillas turned their guns on the returning British. It was part of a Comintern-directed campaign to try to seize control of formerly colonial territories in Southeast Asia. The result was a bloody counterinsurgency campaign (“The Emergency”) led by the British but with the manpower coming largely from local Malays. The whole experience engrained in the new Malayan political elite a view of “Communist China” as an existential security threat. And for the first decade of independence under Prime Minister Tunku Abdul Rahman that view remained unchallenged.

Mao’s recurring ideological campaigns culminating in the Great Proletarian Cultural Revolution only served to validate Kuala Lumpur’s view of China as fanatical, hostile and deeply unattractive—the very antithesis of the values represented by a democratic, Anglophile, politically conservative government in Kuala Lumpur. That government provided low-key but explicit public endorsement for the U.S. role in the Vietnam War as part of an effort to thwart Communist expansion in Southeast Asia. Malaysia became a founding member of the Association of Southeast Asian Nations (ASEAN) in 1967 for the same reason.

Rahman retired after serious race riots in 1969. His deputy, Tun Abdul Razak, became prime minister with a mandate to prioritize domestic programs (the “New Economic Policy”) designed to give the Malays a greater stake in the modern, urban economy. It was an ambitious, even draconian, effort at social engineering and income redistribution. Foreign policy, while not a priority, acquired a new tone. Razak wanted Malaysia at least to sound more like other “third world” countries. Malaysian policymakers began talking about nonalignment and championed proposals for the “neutralization of Southeast Asia” and a “South Pacific Nuclear-Free Zone.” Malaysian policy retained its anti-communist, Western-oriented core and the result was a bit schizoid and ill-defined.

The one clear departure involved China. Razak put his personal stamp on foreign policy by having Malaysia in 1974 become the first ASEAN country to normalize diplomatic relations with China. Soon Malaysian and Chinese diplomats were referring to a “special relationship” between the two countries. Special or not, the content of relations had changed dramatically—as had the regional context. China under Deng Xiaoping prioritized economic development, as did the ASEAN governments. Deng championed trade and investment and with it, full diplomatic normalization with the region. The days of Chinese-sponsored communist insurgencies were long gone. Malaysia’s normalization of relations with China signaled the commencement of nearly four decades of relative strategic tranquility across the region. The end of the Vietnam War and the U.S. Navy’s withdrawal from the Philippines was of a piece. China was a factor in Malaysian foreign policy largely in economic terms as commerce between the two countries grew steadily.

In this benign environment, the prevailing view of China in Malaysia improved markedly. A recent opinion poll found 70 percent of the public had a favorable view of China. Government officials, business leaders and scholars spoke glowingly of relations with China through the 1980s, 1990s and much of the first decade of this century. However, by the end of that decade, China’s rapid buildup of maritime military power in the South China Sea was beginning to generate disquiet in key sectors of the Malaysian government. In 2009, the United States and Malaysia held their first Senior Strategic Dialogue in Kuala Lumpur—with a small Pentagon delegation meeting with Malaysian security officials. That dialogue featured a surprisingly candid exchange of concerns regarding Chinese ambitions in the region. At the 2010 ASEAN Regional Forum meeting in Hanoi, the Malaysian foreign minister supported Secretary of State Hillary Clinton’s assertion that the sea-lanes through the South China Sea were a “global commons” beyond the sovereignty of any country.

In 2013 China’s new president, Xi Jinping, announced his ultra-ambitious Belt and Road Initiative (bri) that envisioned well over a trillion dollars of Chinese-led infrastructure investment across Central and Southeast Asia, ultimately connecting to Europe. Not surprisingly, neighboring Malaysia became a serious focus of this new strategic vision. Before this, Chinese investment in Malaysia had been relatively modest. Today, the situation is very different; China is Malaysia’s largest trading partner and its largest source of foreign investment. Najib Razak, son of the second prime minister, became prime minister in his own right in 2009. He embraced his father’s legacy regarding China and soon became a regular visitor to Beijing extolling the “special relationship.” In 2016, Najib led a delegation to China that returned with $34 billion in signed deals—including $14 billion for a railroad bisecting the Malayan peninsula with Chinese financed and managed ports on both coasts and two pipelines (one gas and one oil). In the case of the pipelines, the prime minister’s office signed the deal directly with financing coming primarily as loans from the Bank of China. More Chinese money was slated for expensive residential real estate projects that would presumably attract wealthy Chinese seeking a pied-a-terre in Southeast Asia.