Indo-Malaysia tie: A counterbalance to growing volatility in East Asia? - Hindustan Times

Indo-Malaysia tie: A counterbalance to growing volatility in East Asia?

ByHindustan Times
Oct 14, 2023 08:42 PM IST

This article is authored by Ravindran Devagunam, senior correspondent, Foreign Policy and Politics, Malaysia Gazette, Kuala Lumpur.

Contagion to conflict(s) over the past few years have caused severe disruptions in global supply chains for goods, rising cost of commodities and cost-of-living crisis around the world. While we awaited an abatement of the Russo-Ukraine conflict, we are now confronted with yet another war in West Asia. Will this now spiral into a further supply chain disruption and worsen the cost-of-living crisis in the region? For the common man living in other parts of the world, these conflicts may appear as far-away events discussed on various news channels and social media sites. However, such events may prove to be a warning of possible future flashpoints much closer to home that could cause deeper consequential disruptions.


The South China Sea (SCS), a body of water over three million square kilometres in area, is ringed by several Southeast Asian nations, China and Taiwan. While it is a vital shipping route carrying trillions of dollars in cargo that acts as a gateway to the Indian Ocean, it is also rich in oil, gas deposits and thriving marine life that is a prime food source for a growing East-Asian population. It is a territory that is highly disputed and aggressively claimed by China as its own with numerous clashes occurring between Chinese and Southeast Asian vessels. The volatility of this region has been further exacerbated with the United States (US) and its allies conducting freedom of navigation exercises in these waters.

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For instance, in late August 2023, China issued a new map of its dominion that laid claims to most of the SCS as well as contested parts of India and Russia, prompting India to respond saying China’s claims have no basis. This was followed by Malaysia, rejecting China’s unilateral claims as uncalled-for and that it could possibly be misconstrued as provocative.

China also lays territorial claims on Taiwan, and in recent years has increased its military exercises around the island as a means to assert its sovereignty. As a deterrent, President Joe Biden had recently endorsed US military support for Taiwan which saw a rebuke by the Chinese leadership. This only confirms the possible role of a ‘third player’, further raising the stakes of a broader conflict in the region.

Asia-Pacific economic sphere is dominated by China through the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trading bloc comprised of 15 Asia-Pacific countries established in 2022 as an economic alternative to the US-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). China is, by far, the Association of South East Asian Nations (ASEAN) largest trading partner with over $ 447.3 billion in two-way trade with the 10-nation bloc.

In the event of a possible conflict in the SCS region, ASEAN’s economic over-reliance on China could certainly become an impediment. Supply chains of base commodities and flow of trading dollars could be curtailed causing a further jolt to the already painful cost of living crisis in the region. Malaysia, in particular, is exposed to a trade deficit of over $22.8 billion from China. A large portion of Malaysia’s base commodities like food products and other essential goods are primarily sourced and imported from China.

With this backdrop, Malaysia clearly needs a balanced foreign and trade policy that leverages other strategic neighbours. India, with its geographic proximity to Malaysia is definitely a prime partner to leverage with an existing trade balance at $4.77 billion in Malaysia’s favour.

India’s growing economic and geopolitical stature could provide Malaysia with a strategic advantage as it is currently the fifth largest economy at around $3.5 trillion and set to rise becoming the world’s third largest at $5.5 trillion by 2028. It is also the fourth largest agriculture producing country at $397 billion. And, it plays a pivotal role over trade across the Indian Ocean, which stands at over $6.17 trillion.

Malaysia has had a long-standing relationship with India, not just on the trade and economic front but also on the people-to people relationship sphere. There are deep cultural ties between the two countries that spans several centuries. Malaysia is also home to a very significant Indian diaspora that goes back several generations.

There is an added uniqueness to this geopolitical relationship between Malaysia and India with the geographic position and proximity of the Straits of Melaka that acts as a gateway between the Indo-Pacific and the SCS regions. As one of the busiest trade channels, the Straits of Melaka needs to be secured from encumbrances should possible flashpoints occur in the SCS. Closer collaboration between these two neighbours to ensure that this strategic channel does not become a potential choke point in the event of a crisis in the region is indeed a necessity.

Furthermore, Malaysia’s northern state of Kedah has a close proximity to the Andaman Nicobar Islands. The state is located on the cusp of the Andaman Sea. The intense economic development that is currently being driven by the Indian administration on these Islands and the economic expansion that is being set in place by the Kedah state leadership provides for greater opportunities to explore for cross-border collaboration.

The Kedah economic blueprint includes expansion of palm oil cultivation technologies and the establishment of Rare Earth Elements (REE) processing plants. In addition, the state is looking to grow an aerospace hub, possible marine facilities around the Andaman Sea and expects to expand its capabilities in silicon wafer development technologies. Kedah is well positioned to explore the possibilities of a cross-border economic growth corridor with the Andaman Nicobar Islands. Collaborating with India would not only offer mutual economic prospects but also an opportunity to enact a security of supply principal coupled with a drive towards effective on-shoring of technology when Kedah begins processing its natural resources.

In addition, Malaysia’s agricultural belt that stretches across its northern States from Kedah to Kelantan provides for numerous opportunities for Indian agro and food technology players to explore joint agricultural development opportunities. Beyond satisfying Malaysia’s domestics requirements, these prospects could also provide possibilities for re-exports to the rest of ASEAN and East Asia as well. Needless to say, an effort of this nature would help expand economic opportunities in the region while also addressing the immediate cost of living crisis experienced by all Malaysians alike.

Clearly, enhanced Indo-Malaysian ties offers numerous strategic opportunities. These ties, based on mutually assured economic growth, could also present broader multilateral offerings acting as a gateway to ASEAN and East Asia. Greater dialogue, diplomacy and collaboration between these strategic neighbours are definitely the need of the hour to provide a geopolitical counterbalance at a time when the region is experiencing uncertainty from multiple State actors.

This article is authored by Ravindran Devagunam, senior correspondent, Foreign Policy and Politics, Malaysia Gazette, Kuala Lumpur.

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