Malaysia is smartly using its non-aligned policy

Like many regional states, Malaysia’s ‘prosper thy neighbor’ foreign policy centres on peace and non-alignment and promotes South-South cooperation among developing world. This neutral approach in last 50 years has leveraged Kuala Lumpur to forge ‘rich and fruitful partnership’ with Beijing and extract benefits for its people and economy.

Over the last decade, this policy has helped Malaysia to beef up its relations with China to comprehensive strategic partnership, considered as one of the ‘most cordial and productive’ relationships in Asia-Pacific. An agreement to exercise self-restraint and settle differences in South China Sea peacefully further reflected its approach to prevent territorial issues from thwarting bilateral ties and aggrandise its economic prowess by taking advantage of the world’s second largest economy.

Malaysian Prime Minister Anwar Ibrahim is a staunch opponent of western efforts to contain China for its potential to aggravate the crisis and sow discord in region. “The obstacles being placed against China’s economic and technological advancement will only further accentuate such grievances,” he said in March, seeing this as an attempt to deny Beijing of its “legitimate place in history”.

Rejecting the ‘fatalistic view’ that great-power rivalry has become a structural feature of regional affairs, he has been and continues to make efforts to temper this deadly phenomenon over its likelihood of jeopardising regional economy and peace by advocating and pursuing a dovish and independent policy to the western world.

In Australia, the Malaysian prime minister defended his country’s relations with China, stating Beijing was Kuala Lumpur’s leading investment and trading partner and his country had not had the Sinophobia. Anwar, in Japan recently, emphasised that Beijing was “too close, too important and too strategic to ignore” for regional states, urging America to abandon protectionism and respect competitiveness.

Bilateral trade between China and Malaysia in first four months of 2024 rose 5.9% to over $32 billion with country’s exports to China surging by 40.5%. This strong economic relationship is evolving into greater people-to-people exchanges as tourist arrivals from China for the same period jumped 217%, making Malaysia one of the top three preferred destinations for Chinese leisure seekers.

China is also a major source of foreign direct investment in Malaysia. In 2023, Beijing was among the five largest sources of investment for Kuala Lumpur with over $3 billion of investments. Chinese investments in 2024 are likely to rush given Anwar during his two visits to Beijing last year witnessed the signing of several MOUs worth billions of dollars.

Through investments, including under Belt and Road Initiative, China is helping build Malaysian infrastructure too. For instance, the $10.6 billion East Coast Rail Link would connect east and west coasts of Peninsular Malaysia and open up new areas of growth and development in addition to providing freight and passenger services and reducing the travel time by almost a half.

Kuala Lumpur’s ambitious New Industrial Master Plan (NIMP) 2030, which seeks to capitalise the China-US trade tensions and make Malaysia a high-tech nation and manufacturing hub, is Anwar’s priority to put his country on the path of economic and industrial rejuvenation. During his China visit, the Malaysian prime minister gained the Chinese support for the initiative and the proposed Asian Monetary Fund that will serve as a lender of last resort in the event of a regional financial crisis and, alongside other mechanisms, aspires to promote local currency in regional trade.

The NIMP envisions to nurturing high-value and innovations-driven sectors such as integrated circuit design and wafer fabrication activities and adding electrical vehicles (EVs) and renewable energy as new growth engines. It’s to fruition with Malaysia emerging as the world’s sixth largest exporter of semiconductors and a favourable destination for EV manufacturers. The European countries, wanting to export their products to China, are also moving their production to Malaysia, which gives a boost to Malaysian economic and industrial transformation.

Amid US and western efforts to hamper China’s tech growth and cooperation with Global South, Malaysia has been committed to having a dual 5G network in the country. While this decision would dismantle monopoly in the sector, Huawei’s participation in Malaysia’s next-generation rollout will allow it to acquire cutting-edge technology at cost-efficient price.

Western feathers ruffled further as Telekom Malaysia and China’s ZTE Corporation last year inked an MOU to collaborate on research and development to propel innovation and digital transformation and with Malaysia’s Digital Nasional Berhad made a groundbreaking advancement in delivering unmatched speed and superior service quality to Malaysians, accelerating digitalization in the country.

Budding trade, increased inflows of Chinese investments, implementation of visa-free policies and steady progress on infrastructure and development projects in Malaysia as well as technology cooperation, people-to-people exchanges and common approach to safeguard regional economy and stability demonstrate that this partnership would play a vital role in Malaysia’s economic transformation and regional geopolitics.

Anticipating China’s rise as an economic power, Malaysia in 1974 demonstrated pragmatism by pitching itself as a non-aligned country. Half a century later, Kuala Lumpur continues to hold the banner of neutrality high so that it doesn’t miss out on economic opportunities presented either by the western trade war against China or the world’s largest economy itself.

Published in The Express Tribune, June 10^th, 2024.

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