A Strategic Reset Driven by Strategic Interests

Weeks after revitalising ties with Vietnam, India braced for another state visit from a South East Asian Country. For the first time, since assuming charge as the Prime Minister in 2022, Malaysian Prime Minister Dato’ Seri Anwar Ibrahim arrived in New Delhi on August 19 for a three-day visit.

Indo-Malaysian ties took a massive hit in 2019 following the controversial remarks of the former Prime Minister Mahathir Mohamad on Kashmir. Despite India’s request to desist from commenting on the Kashmir issue terming it an “internal matter”, in solidarity with Pakistan, speaking at UNGA in September 2019, Mahathir said Jammu &Kashmir has been “invaded and occupied” and that India’s action in the state as “wrong”. His unwarranted criticism post-abrogation of Article 370 dented the bilateral ties.

The Islamist PM who burnt bridges with Saudi Arabia by holding a Muslim Summit in 2019 categorically announced that his international condemnation of India wouldn’t have any trade repercussions. The precarious bilateral ties already teetering over Malaysia’s reluctance to extradite radical Islamic preacher Zakir Naik hit a new low. Mahathir’s unbridled criticism of Citizenship Amendment Act (CAA), the proverbial last straw on the camel’s back caused the Commerce Ministry to amend the notification in palm oil imports from Malaysia from ‘free’ to ‘restricted’. India was the largest importer of Malaysian palm oil in 2019.

After the Indian government's unofficial ban, palm oil imports to India fell by 85% in the first four months of 2020. This period coincided with Covid-19 when the demand for Palm oil declined but production surged.  Amid the Palm oil glut, Malaysia besides offering discounts, agreed to buy 100,000 tonnes of Rice from India. But India resumed Palm oil imports only after Mahathir was replaced by Muhyiddin Yassin.

Roiled by testy bilateral ties, PM Ibrahim’s visit to India upon the invitation of PM Modi the first since 2018 along with a huge delegation reflects a paradigm shift. PM Modi and Anwar Ibrahim who attended the 2019 Raisina Dialogue as the President of the People’s Justice Party have a warm relationship with the Indian PM. After becoming Prime Minister, Ibrahim in 2022, deepened engagement with India and since then, countries witnessed 15 bilateral visits at the level of Minister and Deputy Minister level¹.

Recalling his fond friendship the Malaysian PM said, “Prime Minister Narendra Modi is my brother. Even when I was not the PM, he was kind… we have agreed to further enhance the comprehensive strategic partnership… we will reinvigorate working relationship in all fields”².

Holding wide-ranging talks, commemorating close to 10 years of the Enhanced Strategic Partnership announced during PM Modi’s visit to Malaysia in 2015, consolidating the ties leaders of both countries agreed to elevate ties to a Comprehensive Strategic Partnership. Both sides agreed to intensify cooperation in trade and commerce, defence and security, cultural exchanges, digital technologies, renewable energy, health care, higher education, agriculture space, nuclear energy, semiconductors, vaccines and sustainable development.

 India announced the allotment of 100 seats to Malaysian students in the areas of Cybersecurity, AI and Machine Learning under India’s Economic and Technical Cooperation (ITEC) programme. Both countries share historical ties dating back at least a millennium. The people to people ties continue to serve as a robust bridge of friendship. To foster these ties, countries have announced a free visa regime. Countries discussed the establishment of the Thiruvalluvar Chair of India Studies at the University Malaya (UM)³.

Malaysia is home to over 2 million Indian Diaspora, the third largest after the US and UAE. The people of Indian origin include skilled and unskilled workers and IT professionals. Malaysian Indians make up 7% of the Malaysian population and constitute the second largest minority after the Chinese.

Indians form the largest source of labour for Malaysia and as many as 1,40,000 workers are currently working in the country. To cater to the welfare and security of these workers, countries have agreed on a model contract or a comprehensive framework between employees and employers. The contract will lay down obligations for the welfare measures of the employees and their repatriation. e-migrate will be now linked to Malaysia.

Countries have signed eight MoUs including those on repatriation, recruitment and employment; public administration and governance reforms; digital technologies; cultural cooperation; tourism; ayurveda and traditional medicine; mutual cooperation in fintech services; promotion of sports and youth affairs⁴.

To strengthen trade cooperation between both countries, ahead of comprehensive talks between the leaders, Meeting of India-Malaysia CEO’s Forum was held at New Delhi. The co-chairs of both countries jointly submitted a report enlisting the areas of cooperation and collaboration. Malaysian investment in India reached over $5 billion last year with as many as 70 companies operating in India. Malaysia is India’s 13^th-largest trade partner and third-largest among the ASEAN countries.

Around 100 Indian companies operate in India. India is among the 10 top trading partners of India. The bilateral trade touched the $20 billion mark largely in favour of Malaysia. India is in discussions with ASEAN regarding the ASEAN-India Trade in Goods Agreement (AITIGA). With Malaysia assuming the chair of ASEAN next year, India anticipates to finalise the agreement by 2025. Buoyed by growing bilateral investments in multiple sectors, through the India-Malaysia Startup Alliance, countries are expediting discussions between Startup India and the Cradle Fund of Malaysia.

Tipped to become the third largest economy, Malaysia is raring to invest in burgeoning Indian markets. To insulate from global uncertainties, India and Malaysia commenced trade transactions in local currencies in April 2023. Though it is in the early stages, exporters are particularly urged to take this route.

Defence and security are slowly emerging as another major pillar of cooperation. Along with significant exchanges in terms of defence training and joint exercises countries have agreed to intensify cooperation through capacity building, defence R&D collaboration. Given the similarity in the platforms and compatibility of equipment, both Sides are mulling cooperation in maintenance and extending the life of such equipment. Reports of the Royal Malaysian Air Force (RMAF) expressing keen interest in acquiring India’s BrahMos Air Launched Cruise Missile to bolster its Sukhoi-30 MKM fighter fleet⁵ can putatively position India as a source of defence equipment.

Condemning extremism and radicalism, countries agreed to bring perpetrators of terrorism to justice expeditiously as per domestic laws and international conventions. Simultaneously, countries have agreed to promote cooperation in the sharing of information and best practices in counter-terrorism. With respect to the long pending Indian request for Zakir Naik’s extradition, PM Ibrahim said, “We are open to any ideas and if evidence is submitted, we will not condone terrorism, but one has to produce a compelling case to support”. He added, “We have been tough, we have been working together with India on many of these issues against terrorism. But I don’t think this one case should deter us from further collaboration and enhancing our bilateral cooperation”⁶.

India-born Naik fled to Malaysia in 2016 after he and his organisation, the Islamic Research Foundation (IRF) were banned for stoking hatred, hostility and enmity between Muslim and non-Muslim communities in India. He obtained permanent residency during Mahathir’s rule.

Countries reaffirmed their commitment to “Freedom of Navigation and Overflight and unimpeded lawful commerce based on principles of international law” and urged parties to peacefully resolve the disputes. Given Malaysia’s loyalty towards China, this indirect dig is viewed with a lot of scepticism. Malaysia which has conflicting claims with China over geographical features in the South China Sea refrains from open condemnation of Beijing unlike the Philippines, Indonesia and Vietnam.

China is the topmost trading partner of Malaysia with a bilateral trade of 98.8 billion accounting for 17% of its global trade. Malaysia is part of China’s BRI and never criticises China even though it sails through its water but prefers discussing the issue through diplomatic channels. During Chinese Premier Lin Qiang’s visit to Malaysia last month, Ibrahim opposed ‘external interference’ in SCS disputes and renewed five-year trade and economic cooperation.

Though loyal to China, threatened by its expansionist ambitions, endeavouring for a balance of power, ASEAN countries are now recalibrating ties with India which has comparable strategic depth, developing markets, growth potential and investment opportunities. Above all, India’s steady advocacy of ASEAN centrality to the Indo-Pacific, developmental partnership as opposed to the coercive, debt trap diplomacy of the Dragon is warranting Chinese neighbours to hedge their bets.

Amid the global power struggle, India has become pivotal in international affairs. With its commitment to becoming the voice of the Global South, countries are seeking a benign partnership with India. In a bid to reduce dependence on the US dollar Malaysia, keen on joining BRICS is cementing ties with India, one of the founding members of the multilateral organisation.

Having opted out of the Regional Comprehensive Economic Partnership (RCEP), India is very keen on deepening bilateral economic cooperation with the Asian Tiger economies for better growth and untapped investment opportunities. Malaysia is highly reliant on agricultural imports to handle the rising food crisis. Prolonged drought in Malaysia has exacerbated the crisis. India is among the largest exporters of Rice, Sugar and Onions to Malaysia.

EU recently announced plans to phase out Palm oil imports from Malaysia over environmental concerns stating that cultivation of Palm oil leads to deforestation. EU, France and Lithuania have recently challenged Malaysia at WTO on this. WTO ruled in favour of Malaysia. Amid brewing ‘anti-palm oil’ sentiment, Malaysia, the largest producer of palm oil is soliciting India’s support to counter this campaign⁷.

Steered by strategic interests, PM Ibrahim is attempting to reverse the neglect of the previous administration and resurrect the historically and culturally anchored ties with India. But Malaysia’s slide towards conservative Islam ever since Mahathir’s declaration of the country being an Islamic State in September 2001 has ignited concerns of discrimination. The 929 declaration coupled with the new economic policy that expanded ‘Bumiputra special rights’ have consistently marginalised the non-Muslims in Malaysia especially the Hindus⁸. Denied equal citizenship rights, Hindus are now the “new underclass” in Malaysia. Increasing hate attacks on Hindus and brazen demolition of temples are validating fears of rapid Islamisation in Malaysia.  People-to-people relationship is at the nub of any trustworthy partnership.

The rising Islamist tentacle consumed the cordiality of the India-Malaysian relationship under a bigoted leadership. Burying the past hatchets, while the leaders have started the new chapter and a comprehensive strategic partnership, lurking suspicions, inaction and indifference can prove to be a spoiler.

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