The recent visit of Malaysian Prime Minister Anwar Ibrahim to India marked a significant reset in India-Malaysia relations, particularly after tensions during Mahathir Mohamad’s tenure. The visit highlighted enhanced strategic cooperation and economic engagement between the two nations.
| Note: Strained India-Malaysia Relations before 2022
During Mahathir Mohamad’s tenure as Prime Minister of Malaysia, relations with India were strained due to Malaysia’s criticism of India’s policies, particularly on issues related to Kashmir and the abrogation of Article 370, as well as concerns about the safety of Muslims in India. These tensions were exacerbated by Malaysia’s alignment with Pakistan on the Kashmir issue. However, after Mahathir left office and Anwar Ibrahim became Prime Minister in 2022, relations between Malaysia and India began to improve. |
India-Malaysia Relations: A Comprehensive Strategic Partnership
- Reset in Relations
- Before this visit, fifteen ministerial exchanges had set the tone, elevating the partnership to a “comprehensive strategic partnership” from the “enhanced strategic partnership” established in 2015. This aligns with the broader India-ASEAN Comprehensive Strategic Partnership (CSP) of 2022.
- The relationship is likely to evolve into an ASEAN-Plus arrangement, incorporating additional factors and terms not present with all ASEAN countries.
- Malaysia’s upcoming role as ASEAN Chair in 2025 adds further importance to this evolving relationship.
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- Enhanced Economic Cooperation
- Strengthening Economic Ties: Economic ties are being strengthened, with Malaysia, as the economic lead for ASEAN, seeking to hasten the review of the ASEAN-India Trade in Goods Agreement (AITIGA).
- The AITIGA, which was signed in Bangkok in 2009 and went into effect in 2010, is under review to adapt to the current economic situation, including which goods should be included or excluded from free trade.
- Trade and Investment: Malaysia is India’s third-largest trading partner within ASEAN.
- Palm oil, a key export item from Malaysia, is highly demanded in India. Large exports of palm oil provide Malaysia with a trade surplus.
- During the CEOs Forum meeting, it was decided to enhance commerce and explore new value chains. These new segments, such as semiconductors, renewables, automobiles and parts, and electronics, will invigorate the traditional partnership.
- Recently, Malaysia invested $5 billion in FDI in India. New sectors, including semiconductors, renewables, and digital technologies, are gaining focus for cooperation, as highlighted by MOUs signed during the visit.
- Digital and Financial Integration:
- Financial Services and Digital Partnership: A significant MOU on financial services, (including fintech, insurance etc. ), was signed, emphasising the growing digital partnership.
- Both countries have initiated trade in their own currencies (Malaysian Ringgit and Indian Rupee), which will help reduce transaction costs.
- Discussions on a RuPay arrangement are also underway, indicating deeper financial integration.
- These arrangements make Malaysia one of the most vigorous partners in digital technology and the economy within ASEAN, after Singapore.
- Diaspora and Human Resource Cooperation:
- Welfare and Protection of Indian Workers: The signing of a new MOU on diaspora and human resource cooperation was a significant achievement of the visit.
- With 140,000 Indian workers in Malaysia, India aims to ensure their welfare and protection.
- Following the lapse of the 2009 MOU, the new agreement addresses recruitment, employment, and repatriation of workers, marking a notable achievement during the recent visit.
- The model employment agreement attached to the MOU provides a framework for terms and working conditions.
| India and Malaysia Clash Over Zakir Naik:
Zakir Naik, an Islamic preacher, left India in 2016 and faces accusations of money laundering and hate speech. He went to Malaysia, and the Indian government requested his extradition. However, Malaysia has not complied, stating that they need sufficient evidence and will consider the request, as they do not condone terrorism.India did not seem to have taken up this controversial point here. |
- Tourism as a Growth Multiplier:
- Increasing Tourism: Tourism between the two nations is on the rise, with one million Indian tourists expected to visit Malaysia by 2024.
- Improved visa facilitation and increased flights (around 220 weekly) between the countries, including from Tier II cities, support this growth. Malaysian tourism to India is also growing, albeit at a slower pace, reaching about 200,000, which is better than most ASEAN countries.
- The two countries are in discussions to further enhance tourism, such as by facilitating visas. Thus, tourism serves as an economic and people-to-people multiplier, fostering better ties through increased promotion.
- A New Chapter in Global Education
- IIT Kharagpur’s Expansion: IIT Kharagpur is set to expand its global footprint with the opening of its new campus in Malaysia. This development marks a significant milestone in the institute’s international expansion strategy, which includes plans to establish seven overseas campuses.
- The Malaysia campus is expected to enhance educational collaboration and foster deeper ties between India and Malaysia, reflecting IIT Kharagpur’s commitment to advancing global education and research.
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| Note: IITs are planning to expand to seven overseas campuses, having already established campuses in Zanzibar and Abu Dhabi. |
- South China Sea Dynamics:
- Malaysia’s Approach to South China Sea: Malaysia is one of the countries with a contentious relationship with China over the South China Sea.
- Unlike the Philippines, which takes a more aggressive stance, Malaysia prefers quiet diplomacy and has even acquiesced to Chinese maritime activity within its Exclusive Economic Zone (EEZ), showing a preference for Chinese economic engagement.
- Malaysia was reluctant to discuss China’s role in the South China Sea, with discussions during the visit focusing on free and open sea lines of communication, navigation, commercial shipping, and overflight.
- India has made it clear that, despite the actions of some ASEAN countries, it cannot accept the South China Sea becoming a Chinese lake and has expressed full support for the Philippines’ claims.
- Defence and Security Cooperation
- Strategic Defence Talks: Both countries use Soviet-era equipment, and defence cooperation discussions have focused on the compatibility of this equipment, particularly regarding maintenance.
- India’s HAL has an office in Kuala Lumpur and recently they pursued a Tejas contract, which was ultimately lost to a Korean competitor.
- India is keen to export newly developed defence equipment, with potential contracts in aviation and missile systems, such as BrahMos, being explored.
- Multilateral Engagement and Global Positioning
- Support in Global Forums: Malaysia expressed support for India’s bid for a permanent seat on a reformed UN Security Council and sought India’s backing for its BRICS membership application. Both nations are committed to a more just and multipolar world order, aiming to maintain a balance of power.
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Conclusion
The Modi-Anwar understanding is rapidly enhancing the India-Malaysia partnership, building on the India-ASEAN relationship with significant “ASEAN-plus” features. This visit signifies a new chapter in bilateral relations, marked by deeper economic ties, strategic cooperation, and multilateral engagement.
September 6, 2024
