Malaysia’s dilemma on China

DEMAND AND SUPPLY - Boo Chanco - The Philippine Star

When China declared almost the entire South China Sea as its territory on the basis of their whimsical nine-dash lines, they grabbed the exclusive economic zones not only of the Philippines but of Vietnam, Malaysia and Indonesia. Thus far, it had only been us and occasionally Vietnam fighting for our rights. Indonesia and Malaysia are mostly extremely fearful of displeasing China because of the massive aid and trade benefits they get from the bully.

China has also claimed part of Indonesia’s EEZ. But ever since Indonesia’s display of offshore military might in the summer of 1996, Beijing had been circumspect about pursuing the issue, journalist Bill Hayton reports in his book on the South China Sea. As a result, the issue raises no great passions in the country. Indonesia inaugurated a high-speed train line courtesy of Chinese assistance. Chinese investments have also been pouring into Indonesian mines and other businesses.

On the other hand, China is the largest trading partner of Malaysia for 15 consecutive years and has been Malaysia’s main source of investment. China is an important force in driving Malaysia’s export growth in 2024. Prime Minister Anwar Ibrahim said China is important not only as a neighbor but also as a close trading partner.

PM Anwar, an admirer of our Jose Rizal, warned that any actions to impede the economic rise of China would upset Beijing enough to heighten tensions in the region. However, alluding to increasing Chinese assertiveness in the disputed South China Sea – most of which Beijing claims – the Prime Minister added that allowing a country to grow doesn’t mean ignoring its violations of international law.

Malaysia and Indonesia benefit from the favorable ruling we won from the arbitral court on our rights to our EEZ. But ASEAN cooperation evaporated because our regional allies were blinded by Chinese aid and trade.

Hayton noted in his book that “on the map, Malaysians might have more reasons to be concerned about the disputes. The country claims 12 features in the Spratly group and occupies five of them, all within the U-shaped line…Chinese vessels disrupted oil survey work off the coast of Sarawak, well within Malaysia’s EEZ…But even when Chinese naval vessels stopped at the shoal in March 2013 to try to reinforce their claim, the incident failed to stir emotions…”

But, as the Washington Post pointed out last week, Malaysia’s appetite for oil and gas puts it on a collision course with China. As reserves closer to shore run dry, Malaysia is venturing farther into disputed waters of the South China Sea claimed and patrolled by China.

Washington Post: “China has been harassing Malaysian drilling rigs and survey vessels, leading to standoffs that have lasted months, according to satellite imagery and data that track ship movements. For years, Malaysia’s response has been muted – a calculation shaped by reliance on Chinese investment and the relative weakness of the Malaysian military, said Malaysian security analysts and defense officials. Unlike the Philippines or Vietnam, Malaysia rarely publicizes Chinese intrusions into its EEZ, which extends 200 nautical miles off the coast and withholds how often these incidents occur from journalists and academics.”

Energy demands are testing Malaysia’s long-standing reluctance to antagonize China, according to interviews done by the Washington Post with more than two dozen government officials, diplomats, oil and gas executives and analysts in Malaysia. Some of Asia’s biggest oil and gas reserves lie under the seabed of these disputed waters, according to the US Energy Information Administration.

Since 2021, Malaysia’s state-owned energy company, Petronas, has awarded several dozen new permits for companies like Shell and Total Energies to explore new deposits in so-called “deepwater” clusters more than 100 nautical miles from shore but still within the boundaries of what Malaysia considers its exclusive economic zone (EEZ).

Last year, after Beijing released a new map of the waterway that expanded Chinese claims, Petronas’ chief executive, Tengku Muhammad Taufik Aziz, made an unusually strong statement of objection. Extracting offshore oil and gas is within Malaysia’s sovereign rights, he said. “Petronas,” he added, “will very vigorously defend Malaysia’s rights.”

Since 2021, Malaysia has also been increasing defense spending and strengthening military cooperation with the United States. Malaysia has received drones, communication equipment and surveillance programs, including long-range radar systems, installed on Borneo, to “monitor the sovereignty of airspace over the coastlines,” officials say. Later this year, Malaysia is set to get a decommissioned US Coast Guard cutter and hold the annual Keris Strike military exercises with the US on Borneo, according to a State Department official, as reported by the Washington Post.

Chong Yew Keat, a foreign affairs analyst at University Malaya, told Benarnews.com that Malaysia needs to be careful it doesn’t become overly dependent on China in trade and economy. That could create long-term risks to Malaysia’s economic and security fundamentals, Chong said. After a state visit to Beijing last April, PM Anwar said he had received commitments of nearly $39 billion in new investment from China.

Chong also expressed concerns about Malaysia’s approach in the South China Sea dispute, especially its oil and gas reserves in its exclusive economic zone.

“Malaysia will need to unwaveringly stand up to the steadfast protection of the rules-based order based on international law and norms and ensure free and open navigation and a free and open Indo-Pacific,” Chong told BenarNews.

“As a maritime trading nation where [Malaysia’s] economic survival depends overwhelmingly on maritime trade, Malaysia and the region cannot afford to…repackage the notion of a free, open and rules-based regional order according to different non-Western interpretations, to justify the call for the exclusion of Western powers’ presence or ‘interference’ in this region.”

The Malaysians and Indonesians were bought off by China. Duterte got almost nothing from China despite his lapdog devotion to Xi Jinping.



Boo Chanco’s email address is [email protected]. Follow him on X @boochanco

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