Pearls and Irritations

Malaysia’s 2025 ASEAN Chairmanship is an opportunity to provide clear regional leadership amid shifting geopolitics, but the country’s strategic goals remain uncertain despite a growing perception of closer alignment with China. Malaysia should focus on enhancing ASEAN centrality, balancing local sentiment against global interests, and sustaining ties with all major regional powers including the US, EU, and Japan to demonstrate regional leadership, strengthen ASEAN, and further the interests of Southeast Asia.

As ASEAN chair in 2025, Malaysia has a critical opportunity for leadership at a time when geopolitics threaten regional stability and prosperity. Deploying ASEAN centrality to restore the region’s influence and secure the momentum of its development is its primary task. But there are questions about the country’s strategic priorities as Prime Minister Anwar Ibrahim’s diplomacy has seemed to tilt towards China and, more recently, Russia.

The risk is that Malaysian leadership is being derailed by a ‘the West’ against ‘the rest’ narrative when regional geopolitics is in reality a story of complex and competing dangers and opportunities on all sides through which ASEAN has to navigate its own pathway.

During Chinese Premier Li Qiang’s visit to Malaysia in June 2024, commemorating the 50th anniversary of China–Malaysia diplomatic ties, Malaysia reiterated its support for China’s Belt and Road Initiative (BRI). A joint press statement also welcomed Beijing’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Malaysia reaffirmed its ‘firm commitment’ to the ‘One China Policy’ and opposition to Taiwanese independence.

In July, Anwar announced that Malaysia had formally applied to join the intergovernmental organisation, the BRICS, of which Russia currently is president — a nine-country bloc including China and India representative of ‘the rest’. He is also planning a visit to Vladivostok to meet Russian President Vladimir Putin to discuss economic cooperation.

On Chinese media outlet Guancha he said that Malaysia ‘can no longer accept the scenario where the West wants to control the discourse because the fact is they are not colonial powers anymore and independent countries should be free to express themselves.’

Anwar’s perceived tilt towards China reflects widespread domestic sentiment, which he is never shy about expressing.

A July survey conducted by the Pew Research Center found that 64 per cent of Malaysians held a favourable opinion of China, while 57 per cent viewed Russia favourably, up 10 percentage points from 2022. Sixty one per cent even expressed confidence in Russian President Vladimir Putin’s foreign policy.

The Israel–Hamas war has also deepened Malaysian resentment of US foreign policy. Anwar has taken strong positions against Israel on the international stage including by maintaining ties with Hamas. If ‘all politics is local’, then Anwar is likely responding to the increasing political competition from his coalition government’s rival, the National Alliance, comprised of two conservative Malay-Muslim parties.

Some of Anwar’s statements appear as grandstanding rhetoric. Malaysia continues to foster deep economic ties with other major powers including the United States, the European Union and Japan — its third-, fourth- and fifth-largest trading partners in 2023. US investment into Malaysia reached US$13.2 billion in 2022, up 4.6 per cent from 2021. The United States and Malaysia also enjoy a strong defence partnership.

Malaysia participates in the US-led Indo-Pacific Economic Framework for Prosperity (IPEF), the CPTPP whose commission is currently chaired by Canada, and crucial semiconductor supply chains linked with the West and Taiwan. As a small and historically open trading nation, Malaysia favours economic ties with all major powers.

Malaysia’s ‘grand strategy’ thus appears quite opaque. An articulation of strategic priorities may be urgent but still absent. It is important to be clearer about the region’s role in the current geopolitical environment.

While both security and drivers of growth like foreign investment are important, Malaysia needs to renew its commitment to the global rules and uphold principles of free and fair trade based on regional institutional governance — key to ensuring the domestic economy remains robust and resilient.

Malaysia could, for example, demonstrate such commitments by signing up to the Multi-Party Appeal Arbitration Arrangement (MPIA) — a framework allowing members to resolve World Trade Organisation (WTO) disputes since the WTO’s Appellate Body ceased functioning because of a US veto on the appointment of Appellate judges — and encourage others in ASEAN to do the same. Ensuring the Digital Economic Framework Agreement (DEFA) is signed and implemented ahead of 2025 is also a priority.

Malaysia can also work to translate its commitments under the CPTPP and the Regional Comprehensive Economic Partnership (RCEP) into meaningful national and regional benefits.

Malaysia should lead efforts to manage disputes in the South China Sea, especially given the increasing division between the Philippines, Vietnam and Malaysia. As the architect of Myanmar’s entry into ASEAN, Malaysia must also do more to engage that state. Countries like Malaysia can share important lessons from its own experience of federalism and decentralisation as Myanmar explores new models of governance.

As domestic discussions about carbon pricing ramp up, Malaysia is well-positioned to lead on regional climate change policies and initiate dialogue on a regional carbon credit trading scheme. It can also lead on the business and human rights agenda, building on its work in developing a national action plan based on the United Nations Guiding Principles on Business and Human Rights in a space where only Thailand in Southeast Asia has so far had some success.

The question is whether Malaysia’s leadership can engage a more constructive approach on strengthening ASEAN, eschewing a diplomacy that appears hooked on merely belittling the West.

The region has potential as an attractive geopolitical and economic partner that other blocs cannot ignore. As the host of the first-ever East Asia Summit in 2005, Malaysia has a unique legacy and new responsibility to reinvigorate the East Asian arrangements as a platform for mitigating security risks while promoting a rules-based order.

While grappling with local sentiment is a political necessity, it’s time for Malaysia to strike a better balance between international partners and their competing economic and security interests. Grasping ASEAN’s collective strengths and demonstrating them through a concrete policy agenda offers Malaysia the chance of regional leadership when it is most sorely needed.

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