• Bait Al-Amanah

Malaysia’s Hedging Strategy In South China Sea: A Delicate Balancing Act

Updated: May 17

* This article is originally published on The INS news dated 22 April 2022

By INS Contributors KUALA LUMPUR, Malaysia--Stradling a wide area of the South China Sea, Malaysia has cautiously staked its claim over disputed waters while carefully managing its relations with major powers such as China. The strategic waterway is a key maritime route for international trade: an estimated US 5.3 trillion in trade moved through the area in 2021 including 60 percent of global maritime trade, 22 percent of total global trade and 40 percent of the global petroleum products. At least 10 countries are directly and heavily dependent on the route with some 65 percent of China’s trade and 42 percent of Japan’s trade passing through the area, cementing its importance in the global supply chain and as a major artery of the global economy. In addition to being a strategic shipping route, the area has vast stores of oil and natural gas reserves and mineral deposits including titaniferous magnetite, zircon, monazite, tin, gold, and chromite. Competing claims All the above factors make the South China Sea a valuable prize for any power capable of commanding the whole area and China has in recent times not shied away from claiming the sea for itself either through its infamous nine-dash line or more recently its Four Sha” (four sands archipelagos) the four island groups in the SCS region over which China claims it has “historical rights”. While none of these claims are recognised internationally, this has not stopped China from aggressively militarising artificial islands with missile systems and aircraft and beefing up its coast guard with at least 20 new warships to bolster its power in the area in safeguarding key sea regions, islands and reefs.

So who is all this firepower directed against? Taiwan, Indonesia, Brunei, Malaysia, the Philippines, and Vietnam all have competing claims in the same area, some of which are recognised with Malaysia and Vietnam in particular which have submitted claims over their continental shelf beyond 200 nautical miles from the baselines. Malaysia’s hedging strategy Being caught between competing claims against its neighbours and that of China, Malaysia’s largest trading and economic partner, Malaysia has to effectively manage its manoeuvres in the area, explains Bait Al Amanah founding director, Abdul Razak Ahmad. “Malaysia as a small state has always been practising hedging strategy as part of its pursuant for independent, principled and pragmatic foreign policy on the verge of big power rivalry. Hedging involved a multi-layered strategy of minimising risk while maximising benefits in security and economic dimensions when engaging big power and threading its fierce rivalry. “It is imperative for Malaysia to be tactical in engaging with China and will require competent leadership from the Malaysian side in conducting negotiations,” he said. Abdul Razak also noted that while some claimants in the region could and did take more dramatic action against Chinese claims and intrusion, it is paramount for Malaysia to maintain its strong economic relations with China on trade and infrastructure while preserving its comprehensive strategic partnerships. “Nevertheless, Malaysia continues to prioritise its national interest and its domestic politics at home as a crux in spearheading its foreign policy and bilateral relations with China and other major powers,” he said. Balanced assertiveness Malaysia has faced repeated intrusions into its maritime airspace and the waters of its Exclusive Economic Zone (EEZ) including “near daily harassment” of its oil and gas prospecting vessels according to the Asia Maritime Transparency Initiative. But the most dramatic incident in recent times was the intrusion of 16 Chinese military aircraft in June last year, an event which saw Malaysia scramble fighter jets in response and to lodge a diplomatic protest. The incident also drew a harsh public reaction and stoked anti-Chinese sentiments. Despite what may be perceived as a lack of conviction in staking its South China Sea claims over Malaysia being heavily dependent on trade relations with China and the possibility of the Chinese government flexing its economic muscle against the country, Abdul Razak asserted that Malaysia has not been “soft” against China but there is room for greater assertiveness. “Malaysia is aware that China’s assertiveness and its claim based on the nine-dash line over the Sea will not wane off. Malaysia needs to be more aggressive in defending its national interest and not be intimidated by China’s position as a big power. “Malaysia will continue to protect our Economic Exclusive Zone (EEZ) and tighten up our territorial waters by bolstering our capacity and capability by strengthening military assets,” he said. Abdul Razak also said that Malaysia has been effective in pushing its line even in the face of China’s economic leverage and the presence of several large Chinese infrastructure developments including Belt and Road Initiative (BRI) projects in Malaysia, protecting its sovereignty while maintaining its economic ties. He noted that Malaysia had successfully renegotiated the details of the East Coast Rail Link (ECRL) and pipeline projects which were cancelled then revived after the fall of the Barisan Nasional (BN) government in 2018. “China has leveraged asymmetrical relations through economic domination through the BRI. It has always been the strength of China’s statecraft to influence small countries economically. “The readjustment on BRI indicates Malaysia’s moves to prioritise our national interest despite partnering with China on major infrastructure projects. Regardless, there will be repercussions on the readjustment of the BRI projects, but it is a risk that Malaysia needs to confront to protect our interest despite China’s influence on the BRI projects,” he said. Strong partnerships Abdul Razak stressed that Malaysia, as an interconnected global trading nation, must leverage on its international partnership in facing challenges in the South China Sea, keeping close and active relations with other countries in the region and beyond who have an interest in keeping the water way open for international navigation. “Let this be a good call that Malaysia needs to uphold its stance on fostering friendly ties with both ends of the spectrum among major superpowers and begin more actively exploring its alternative partners in foreign affairs that are more reliable,” he said. Malaysia has, in addition to carrying out its own maritime exercises, participated in numerous multinational exercises friendly militaries, honing its skills and demonstrating its resolve in defending its territorial claims and EEZ. Abdul Razak also said Malaysia must make use of international tools and conventions such as the United Nations Convention on the Law of the Sea (UNCLOS), of which Malaysia has been a strong advocate. “Upholding the law of the sea on the South China Sea that acts as one of the main channels to deter China’s assertiveness, will help Malaysia’s effort to strengthen its claim on the sea and defend territorial integrity,” he said.

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