Commentary: Malaysia and the South China Sea dispute – a sea change under PM Anwar Ibrahim?

SINGAPORE: According to a recent spate of articles, Malaysian Prime Minister Anwar Ibrahim has recalibrated the country’s foreign policy, giving it a more pro-China and anti-Western slant.
In particular, it has been suggested that Kuala Lumpur has moved closer to China’s position on the South China Sea dispute in stating that the dispute should be resolved among claimant states without the involvement of external parties, and that this could cause problems for Association of Southeast Nations (ASEAN) unity when Malaysia takes over as chairman next year.
In reality, however, the Anwar government’s stance on the maritime dispute remains broadly consistent with that of its predecessors. And for good reason.
In the early 1990s, under prime minister Mahathir Mohamad, Kuala Lumpur adopted a three-pronged policy towards its overlapping claims with Beijing in the South China Sea.
First, Malaysia seeks to steadfastly assert and defend the country’s territorial claims and sovereign rights inside its exclusive economic zone (EEZ).
Malaysia has deployed military personnel to the five atolls it occupies in the contested Spratly Islands, while the Malaysian navy and coast guard maintain a constant vigil in the country’s EEZ, monitoring, but not challenging, China’s activities. Since 2019, Malaysia has publicly rejected China’s nine-dash line claim, calling it “ridiculous”.
Second, Kuala Lumpur tries hard to decouple the dispute from the country’s vital economic ties with China, its largest trade partner and an important, if sometimes controversial, source of investment.
This is to prevent the dispute from overshadowing bilateral relations – as is currently the case between the Philippines and China – while allowing trade and investment ties to flourish. Malaysia therefore downplays the dispute, remaining quiet about the China Coast Guard’s near-constant presence at Luconia Shoals and its regular harassment of Malaysian drilling rigs and survey ships in its EEZ.
The third prong is to support the ASEAN-China conflict management process – the ongoing negotiations for a Code of Conduct – and promote a peaceful resolution of the dispute through negotiations.
Regarding the latter, Malaysia has consistently dangled the prospect of bilateral talks in front of China, possibly leading to the joint development of hydrocarbons. However, as Kuala Lumpur has exclusive rights to all living and non-living resources within its EEZ, it has never had any serious intention of discussing joint development with Beijing, let alone the sovereignty issue.
Since taking office in November 2022, Anwar’s government has adhered to this three-pronged policy.
The Anwar administration has not compromised Malaysia’s territorial claims or sovereign rights in the South China Sea. The state-owned energy company Petronas continues to drill for oil and gas in the country’s EEZ.
On his return from China in April 2023, Anwar told parliament that while Beijing had raised “concerns” about Petronas’ activities, “Malaysia sees the area as Malaysian territory, therefore Petronas will continue its exploration activities there”.
When he added that Malaysia was “open to negotiations” with China, the opposition accused him of being “careless” in his remarks. But as noted earlier, a willingness to hold talks with China over the dispute is a long-standing position, and should be seen as more of a rhetorical device to string Beijing along than a serious commitment to dialogue.
Just in case there was any doubt regarding Malaysia’s position, within days of Anwar’s remark, the foreign ministry quickly followed up with a statement asserting that the government was “unequivocally and firmly committed” to protecting the country’s sovereignty in the South China Sea. In August 2023, China published a new map showing the nine-dash line, which Malaysia roundly rejected.
Nor is there any indication that the Malaysian navy or coast guard has reduced its presence in the country’s waters. Indeed, plans to build a new naval base at Bintulu in Sarawak, facing Petronas’ upstream projects, are proceeding on Anwar’s watch.
In accordance with the second prong, the Anwar administration continues to downplay the dispute with China. In an interview in June, Anwar accused the West of exaggerating tensions in the South China Sea: “Do we have a problem (with China)? Yes. Have we encountered any serious clashes or problems? No.”
In another example, in a recent media interview, the director-general of the National Security Council, Nushirwan bin Zainal Abidin, said that while he would prefer Chinese ships not to loiter in Malaysian waters, their presence should not “colour” bilateral relations and that “We can let sleeping dogs lie”.
A statement by Foreign Minister Mohamad Hasan at the recent ASEAN Ministerial Meeting provoked consternation in some quarters when he said that “issues” within the region should be resolved through dialogue among the countries themselves. His statement was accurate: The Code of Conduct is between ASEAN and China only, and a resolution to the dispute can be achieved only by the disputants themselves. Both China and Malaysia have long agreed on these two points.
Hasan’s comment that any attempt by an ASEAN member to bring in “external influence” to solve its problems will cause “uncertainty” may have been a dig at the Philippines for its tight relationship with the United States.
But Malaysia also has close defence ties with the US and facilitates its military presence in Southeast Asia through regular ship visits and joint exercises, mostly recently in Sabah, which fronts the South China Sea. In contrast, Malaysia’s military ties with China are much thinner.
To be sure, Malaysia has adopted a very different approach to the South China Sea dispute than either Vietnam or the Philippines, and sometimes it appears as if Kuala Lumpur is leaning towards Beijing’s position.
But the three-pronged policy allows Malaysia to maintain close ties with China while asserting its territorial claims and protecting its sovereign rights. Anwar understands this and will not deviate from it.
Ian Storey is a Senior Fellow at ISEAS – Yusof Ishak Institute. This commentary first appeared on the ISEAS-Yusof Ishak Institute’s blog, Fulcrum.