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The Waxing and Waning of Malaysia-Japan Relations

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Authors: Geetha Govindasamy and Mohammad Danial Azman*

Malaysia, as a small country in Southeast Asia, has always maintained a pragmatic foreign policy that caters for complex domestic as well as external interests. Thus far, it has avoided being trapped in China-Japan competition for influence in the Southeast Asian region. Nonetheless, Malaysia’s foreign policy continues to display shifts and continuity in policymaking. While Kuala Lumpur has consciously taken the position of balancing its relations with both Beijing and Tokyo, certain administrations have given more attention to a particular state at one time or another. Against this backdrop, Malaysia’s relations with Japan has consistently continued uninterrupted for six decades albeit with some fluctuations along the way. Despite having been colonized by Japan between 1941 and 1945, Kuala Lumpur established relations with Tokyo in 1957, right after obtaining its independence from the British in the same year.

For the first three decades, bilateral relations were uneventful, mostly concentrating on economic interactions. It can be assumed that both states, one newly independent and the other severely damaged by World War Two focused more on economic building and recovery respectively. For Malaysia, efforts to develop the economy in the 1970s  saw Japanese companies working together with government linked agencies like the National Corporation Limited (Pernas),  Majlis Amanah Rakyat (MARA) and Federal Land Development Authority (FELDA). The formation of the Malaysia-Japan Economic Association (MAJECA) in Malaysia and Japan-Malaysia Economic Association (JAMECA) in Japan in 1977 further enhanced bilateral relations. Despite these developments, Japan was still considered to be at the peripheral in Malaysian foreign policy.

Malaysia’s perception changed dramatically when Japan developed rapidly, particularly in the 1980s making it the second largest economy in the world. Malaysian policymakers were taken up by the ability of Japanese companies to penetrate world markets. Prime Minister Mahathir Mohamad (1981-2003) attributed the success to Japanese ethics, work culture and value system. Mahathir began to warm up to Japan not only to acquire technological know-how or draw investments but to inculcate a sense of Asian identity that was relatable to the Malaysian mindset. Not surprisingly, in 1982, Mahathir announced the Look East Policy (LEP) during the fifth annual joint conference of MAJECA-JAMECA meeting. This policy which was a major turning point played an important role in shaping Malaysia-Japan relations in the subsequent years. Groups of select Malaysian students were placed in universities in Japan with the expectation that those graduates would immerse themselves in Japanese value system and management style so as to be able to contribute effectively to the productivity and innovation of their home country.

At the same time, Mahathir was especially interested in the Japanese style of cooperation between public-private partnerships in targeting overseas investments. Therefore, Malaysia established the concept of Malaysia Incorporated, similar to that of Japan Incorporated which highlighted a system where the government and businesses were cooperative and not confrontational in nature. After the establishment of the LEP, investors’ confidence in Malaysia increased and this in turn saw a rapid expansion of Japanese investments from companies like Toray, Hitachi, Sony and Panasonic in the manufacturing sector. Since LEP became one of the main policy drivers in attracting Japanese investments, this eventually made Japan a dominant player in the Malaysian industrialization process.

Though Malaysia-Japan relations has shown continued resilience, nonetheless the gradual rise of China impacted Malaysian foreign policy orientation, especially under the administration of Prime Minister Najib Razak (2009 -2018). While Malaysian leaders in the 1970s and 80s perceived China as a threat, Mahathir Mohamad took a different view in the 1980s by recognizing the Chinese market as a valuable access for local goods. The gradual rise of China saw subsequent Malaysian leaders taking the same stance. Three decades later, with China’s Belt and Road Initiative gaining a foothold in Malaysia, Chinese investments in major infrastructure projects such as deep-sea ports and railway lines became quite prevalent under the administration of Najib Razak. This led to a perception of Najib being pro-China, more so after he agreed to procure Chinese-made military equipment amidst rising tensions in the South China Sea. Such a perception also contributed to the notion thatMalaysia- Japan relations have become secondary to that of Beijing-Kuala Lumpur ties.

However, the unexpected regime change after the 2018 general elections in Malaysia, coupled with nonagenarian Mahathir Mohamad becoming the prime minister (2018-2020) for a second time saw the immediate revival of Malaysia-Japan relations. The Pakatan Harapan government commandeered by Mahathir elevated bilateral relations as the prime minister’s belief system was defined by a fondness for Japanese values and management style. As expected, Japan was the first country Mahathir visited after being sworn in as the prime minister. In order to stimulate the economy with Japanese capital and technology, the LEP was revived and renamed LEP 2.0. Not surprisingly, the policy became a hallmark of Mahathir’s second term.

Policymakers acknowledged that Malaysia needed to learn the extent to which Japan had encouraged collaboration between government, research and academia in its manufacturing industry in order to create viable long term solutions and innovations. If Najib Razak coveted Chinese investments, Mahathir turned to Japanese companies involved in high-tech and high-end service industries.With the Malaysian government’s assistance, after decades of focusing investments in the electrical and electronics sectors, Japanese companies increasingly began investing in medical device manufacturing, digital technology and halal food industries. This diversification was in line with the Mahathir’s national industry policy which took into account the ongoing Industrial Revolution (IR) 4.0. Predictably, Japan became one of the top sources of foreign direct investments into Malaysia during the Pakatan Harapan government.

Overall, the waxing and waning of Malaysia-Japan relations has much to do with the leadership of the country. In early 2020, Malaysia experienced another dramatic change of government less than two years after the country’s landmark May 2018 election that ousted the 60 year old Barisan Nasional government. Even though Japan is still viewed as a strategic trading and investment partner, it is apparent that domestic concerns have become the immediate priority to the new government under Prime Minister Muhyiddin Yassin.

The arrival of COVID 19 pandemic at a time when Muhyiddin is at his most vulnerable due to political infighting means that domestic issues will override foreign policy considerations. Against this backdrop, it is more likely that newer Japanese investors will adopt a ‘wait and see attitude’ before investing. Such a scenario is detrimental to Malaysia which needs more Japanese investments to assist in restructuring local companies to apply digital and innovative technologies that will enable them to migrate to IR 4.0. systematically.

As before, Muhyiddin, should recognized the LEP as a tool that can serve to shore up investor confidence that will translate into larger Japanese investments into the country. Since Malaysia’s debt is predicted to rise while the government struggles with the Covid-19 pandemic, the government could request for Japanese capital in the form of yen-denominated bonds with no strings attached (commonly known as Samurai Bonds) for much needed development expenditure. In the event Muhyiddin revitalizes LEP 2.0 and chooses to acquire Samurai Bonds which is a government-to-government (G2G) arrangement, Kuala Lumpur-Tokyo relations will indubitably continue to strengthen and Japan will remain a valued partner in the ongoing efforts to transform Malaysia into a “fully developed country” through the IR 4.0. benchmark.

*Both Dr Geetha Govindasamy and Dr. Mohammad Danial Azman are Senior Lecturers at the Faculty of Arts and Social Sciences, University of Malaya, Kuala Lumpur, Malaysia.This research was sponsored by a 2019/20 Sumitomo Grant.

Senior Lecturer Department of East Asian Studies Faculty of Arts and Social Sciences University of Malaya, Kuala Lumpur, Malaysia

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Southeast Asia

Learning to build a community from a ”Solok Literacy Community”in the West Sumatra

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Established on September 21, 2020 in Solok City, West Sumatra Province, Indonesia. Solok Literacy Community initiated by the young people of Solok City has grown rapidly into a community that has its own trendsetter among young people. Bringing narratives smelling of education, The Literacy Solok Community has a movement with measurable progressiveness that can be seen from its flagship programs.

Starting from the free reading stall movement that has been moving in various corners of Solok City over the past few months. The concept of film surgery that provides proactive discussion space for all segmentation in society. “Diskusi Ngopi” activities which in fact is the concept of FGD (Focus Group Discussion), run with interesting themes and issues so that it can be considered as one of the favorite programs that are often attended by many young people in Solok. Then a class of interests and talents aimed at reactivating the soft skills and great talents of the children of Solok City.

Solok Literacy Community has a long-term goal of making Solok City as a Literacy City in 2025. With these noble targets, of course we together need small steps in the form of programs that run consistently over time. Because after all, a long journey will always begin with small steps in the process of achieving it.

Many appreciations and positive impressions from the surrounding community continue to be received by the Solok Literacy Community. This is certainly a big responsibility for the Solok Literacy Community to continue to commit to grounding literacy in Solok City. Solok Literacy Community activities can be checked directly through instagram social media accounts @solok_literasi. Carrying the tagline #penetrategloomy or penetrating the gloom and #lawanpembodohan, members of the Solok Literacy Community or better known as Soliters, will always make innovative breakthroughs in completing the goal of making Solok City 2025 as a Literacy City.

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Southeast Asia

Indonesia Submit Extended Continental Shelf Proposal Amidst Pandemic: Why now is important?

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Authors: Aristyo Rizka Darmawan and Arie Afriansyah*

Indonesia’s active cases of coronavirus have been getting more worrying with more than 100.000 active cases. With nearly a year of pandemic, Indonesia’s not only facing a serious health crisis but also an economic catastrophe. People lose their jobs and GDP expected to shrink by 1.5 percent. Jakarta government therefore should work hard to anticipate the worst condition in 2021.

With this serious economic threat, Indonesia surely has to explore maximize its maritime geographic potential to pass this economic crisis and gain more national revenue to recover from the impact of the pandemic. And there where the Extended Continental Shelf submission should play an important role.

Recently this week, Indonesia submit a second proposal for the extended continental shelf in the southwest of the island of Sumatra to the United Nations Commission on the Limit of the Continental Shelf (CLCS). Continental shelf is that part of the seabed over which a coastal State exercises sovereign rights concerning the exploration and exploitation of natural resources including oil and gas deposits as well as other minerals and biological resources.

Therefore, this article argues that now is the right time for Indonesia to maximize its Continental Shelf claim under the law of the sea convention for at least three reasons.

First, one could not underestimate the economic potential of the Continental Shelf, since the US Truman Proclamation in 1945, countries have been aware of the economic potential from the oil and gas exploration in the continental shelf.

By being able to explore and exploit natural resources in the strategic continental shelf, at least Indonesia will gain more revenue to recover the economy. Even though indeed the oil and gas business is also hit by the pandemic, however, Indonesia’s extended continental shelf area might give a future potentials area for exploitation in long term. Therefore, it will help Indonesia prepare a long-term economic strategy to recover from the pandemic. After Indonesia can prove that there is a natural prolongation of the continental shelf.

Second, as the Indo-Pacific region is getting more significant in world affairs, it is strategic for Indonesia to have a more strategic presence in the region. This will make Indonesia not only an object of the geopolitical competition to utilize resources in the region, but also a player in getting the economic potential of the region.

And third, it is also showing that President Joko Widodo’s global maritime fulcrum agenda is not yet to perish. Even though in his second term of administration global maritime fulcrum has nearly never been discussed, this momentum could be a good time to prove that Indonesia are still committed to the Global maritime fulcrum by enhancing more maritime diplomacy.

Though this is not the first time Indonesia submit an extended Continental Shelf proposal to the CLCS, this time it is more likely to be accepted by the commission. Not to mention the geographical elements of natural prolongation of the continental shelf that has to be proved by geologist.

The fact that Indonesia has no maritime border with any neighboring states in the Southwest of Sumatra. Therefore, unlike Malaysia’s extended continental shelf proposal in the South China Sea that provoke many political responses from many states, it is less likely that Indonesia extended continental shelf proposal will raise protest from any states.

However, the most important thing to realize the potential benefit of the extended continental shelf as discussed earlier, Indonesia should have a strategy and road map how what to do after Indonesia gets the extended continental shelf.

*Arie Afriansyah is a Senior Lecturer in international law and Chairman of the Center for Sustainable Ocean Policy at University of Indonesia.

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Southeast Asia

The China factor in India’s recent engagement with Vietnam

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Photo courtesy - PTI

In its fourth year since the elevation of ties to a Comprehensive Strategic Partnership, December 2020 witnessed an enhanced cooperation between New Delhi and Hanoi, ranging from humanitarian assistance and disaster relief to defence and maritime cooperation, amid common concerns about China.

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In an effort to boost defence cooperation, the navies of India and Vietnam conducted atwo-day passage exercise (Passex) in the South China Sea on December 26 and 27, 2020, reinforcing interoperability and jointness in the maritime sphere. Two days before this exercise has begun, an Indian naval ship arrived at Nha Rong Port in Ho Chi Minh City to offer humanitarian assistance for the flood-affected parts of Central Vietnam.

Before this, in the same week, during a virtual summit between Indian Prime Minister Narendra Modi and his Vietnamese counterpart Nguyen Xuan Phuc on December 21, both countries inked seven agreements on miscellaneous areas of cooperation and jointly unveiled a vision and plan of action for the future, as both countries encounter the common Chinese threat in their respective neighbourhoods.

Vietnam’s disputes with China

India’s bone of contention with China ranges from the Himalayas to the Indian Ocean. Both Vietnam and India share territorial borders with China. Well, it seems odd that despite its common socialistic political backgrounds, China and Vietnam remains largely hostile. 

Having a 3,260 km coastline, covering much of the western part of South China Sea, Vietnam’s exclusive economic zone (EEZ) overlaps with Chinese claims based on the legally invalid and vaguely defined Nine-Dash Line concept, unacceptable for all the other countries in the region, including Vietnam, Philippines, Malaysia, and Brunei.

In 2016, China lost a case brought out by the Philippines at the Permanent Court of Arbitration based in The Hague when the court ruled that Beijing’s had no legal basis to claim ‘historic rights’ as per the nine-dash line. China rejected the ruling and continued to build artificial islands in the South China Sea, which it has been doing since 2013, some of them later militarized to gain favourable strategic footholds in the sea and the entire region.

The Paracel and the Spratly Islands in the South China Sea has been historically considered part of Vietnam. The Geneva Accords of 1954, which ended the First Indochina War, gave the erstwhile South Vietnam control of territories south of the 17th Parallel, which included these island groups. But, China lays claims on all of these islands and occupies some of them, leading to an ongoing dispute with Vietnam.

China and Vietnam also fought a border war from 1979 to 1990. But today, the disputes largely remain in the maritime sphere, in the South China Sea.

China’s eyes on the Indian Ocean

The Indian Ocean has been long regarded as India’s sphere of influence. But with the Belt and Road Initiative, a trillion-dollar megaproject proposed by Chinese President Xi Jinping in 2013, and the Maritime Silk Road connecting three continents, which is part of it, China has grand ambitions in the Indian Ocean. Theories such as ‘String of Pearls’ shed light on an overambitious Beijing, whichattempts to encircle India with ports and bases operating under its control.

China has also opened a military base in Djibouti, overlooking the Indian Ocean, in 2017 and it has also gained control of the strategic port of Hambantota in the southern tip of the island of Sri Lanka, the same year.

Chinese presence in Gwadar in Pakistan, where the Maritime Silk Route meets the land route of BRI, is also a matter of concern for India. Moreover, the land route passes through the disputed Gilgit-Baltistan region, which is under Pakistani control, but is also claimed by India.  China has also been developing partnerships with Bangladesh and Myanmar to gain access to its ports in the Bay of Bengal.

Notwithstanding all this, India’s response has been robust and proactive. The Indian Navy has been building partnership with all the littoral states and small island states such as Mauritius and Seychelles to counter the Chinese threat.

India has also been engaged in humanitarian and developmental assistance in the Indian Ocean region, even much before the pandemic, to build mutual trust and cooperation among these countries. Last month, India’s National Security Adviser Ajit Doval visited Sri Lanka to revive a trilateral maritime security dialogue with India’s two most important South Asian maritime neighbours, the islands of Sri Lanka and the Maldives.

Foe’s foe is friend

The Indian Navy holding a Passex with Vietnam in the South China Sea, which is China’s backyard, is a clear message to Beijing. This means, if China ups the ante in the Indian Ocean or in the Tibetan border along the Himalayas, India will intensify its joint exercises and defence cooperation with Vietnam.

A permanent Indian presence in the South China Sea is something which Beijing’s never wish to see materialise in the new future. So, India’s engagement with Vietnam, which has a long coast in this sea, is a serious matter of concern for Beijing.

During this month’s virtual summit, Prime Minister Modi has also reiterated that Vietnam is a key partner of India in its Indo-Pacific vision, a term that Beijing vehemently opposes and considers as a containment strategy against its rise led by the United States.

Milestones in India-Vietnam ties – a quick look-back

There was a time when India supported Vietnam’s independence from France, and had opposed US-initiated war in the Southeast Asian country in the latter half of the previous century. Later, India hailed there-unification of North and South Vietnams.

Even though India maintained consulate-level relations with the then North and South Vietnams before the re-unification, it was elevated to ambassadorial level in 1972, thereby establishing full diplomatic ties that year.

During the Vietnam War, India supported the North, despite being a non-communist country, but without forging open hostilities with the South. Today, India partners with both France and the United States, Vietnam’s former colonizers, in its Indo-Pacific vision, comfortably along with Vietnam as geopolitical dynamics witnessed a sea change in the past few years and decades.

Way ahead

Today, these two civilizational states, sharing religio-cultural links dating many centuries back, is coming together again to ensure a favourable balance of power in Asia. Being a key part of India’s ‘Act East’ policy and ‘Quad Plus’ conceptualisation, Vietnam’s role is poised to increase in the years to come as China continues to project its power in Asia and beyond.

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