Malaysia’s public statements and positions on the South China Sea dispute has seen the country come under longstanding scrutiny, speculation and at times, “parachute analysis”. With a few exceptions, Malaysia has kept much of its apprehension on China’s actions and policies in the South China Sea confined to closed door meetings.

While this is appreciated by Beijing and allows both countries some strategic space to manage the dispute, Malaysia’s hedging approach has led to perceptions of Malaysia as a country that is “quiet” on the dispute, and one that acquiesces to the changing status quo imposed by the former. Leading policymakers have also often highlighted their concern on the role of external powers that accentuate tensions in the South China Sea, reinforcing this impression.

This article explores the developing challenges faced by Malaysia in the South China Sea and the tough but practical choices faced by its policymakers in the foreseeable future.

Developing Challenges Faced by Malaysia in the South China Sea

Despite Malaysia’s preference for low-key diplomacy in managing its disputes in the South China Sea, the past decade has seen a significant escalation in the challenges it faces, which both influences and hamstrings its South China Sea policy.

The first and most severe challenge is the operational capacity and reach of China, down to the furthest southern reaches of its claims in the South China Sea, intruding into Malaysia’s Economic Exclusive Zone. Vessels from the Chinese Navy, Coast Guard and its maritime militia are now a regular feature at James Shoal, located just 80 kilometres from the coast of the state of Sarawak, and at the Luconia Shoals, a further 20 kilometres from James Shoal. The latter is often referred to by some Chinese publications and statements as the “southernmost” territory of China.

This near-constant presence has changed realities significantly for Malaysian policymakers and security personnel who are stationed in these areas. Reports of Malaysian fisherman of the coast of Sarawak being harassed by Chinese vessels are not unheard off while further incidents of aggressive manoeuvring and even ramming by the maritime militia often go unreported. The current policy is for Malaysia to shadow but not interfere with such deployments and patrols when they are detected. A constant worry amongst Malaysian policymakers is responding to grey zone tactics in the South China Sea, especially China’s use of maritime militia. Recent developments at Whitsun Reef might be an indication of what lies in the future for other claimants, including Malaysia.

Second, China’s reclaimed features in the South China Sea, which have been extensively built up and militarised, are likely to further confound matters. The operating distance between Hainan and the coasts of Sabah and Sarawak are figuratively halved, allowing for Chinese vessels to dock, resupply, and thus rotate for much longer in the contested waters. This adds tremendous stress on the small and already-stretched capacity of Malaysian vessels sent to monitor these intrusions. The possibility of regularised air-patrols from the reclaimed features is a game-changer that cannot be ruled out.

Third, the longstanding lack of adequate assets that Malaysia can deploy in the South China Sea, and the resources needed to acquire and maintain them, have progressively deteriorated, despite widespread acknowledgement of the problem. Malaysia now faces a crippling delay of naval assets and further reduction of an already-reduced purchase of maritime patrol aircraft. Malaysia is in fact, increasingly dependent on direct and indirect aid provided by friendly countries – the United States for drones and radar, Japan for long-distance coast guard vessels.

High tempo patrol operations in the northern Malacca Strait and Sulu Sea against irregular migrants and criminals have seen the relocation of navy and coast guard assets, causing a shortfall of assets elsewhere, including in the South China Sea, and a high strain on the capacity and operational budget of these maritime agencies.

Fourth, China’s reactions in April 2020 to the efforts of Malaysian state-owned hydrocarbon company Petronas to explore for prospective resources in blocks contested by both China and Vietnam has added another complication to Malaysia’s South China Sea considerations. The harassment of the Petronas-contracted West Capella drillship by multiple Chinese vessels marks the first time that China has reportedly interfered with Malaysian offshore hydrocarbon activities. This is significant as the exploration and extraction of oil and gas are among the primary strategic and economic interests of Malaysia in the South China Sea. However, it is also worth noting that the fluctuating price of hydrocarbons and its corresponding significance to Malaysia’s coffers could also influence Malaysian policy options in the South China Sea.

Fifth, there is heightening fear amongst Malaysian policymakers that the South China Sea dispute is increasingly being subsumed within the wider wedge of strategic rivalry between China and the United States. Malaysia’s apprehension against internationalising the dispute is anchored on the long held assumption that one major power often attracts another. This then leaves smaller claimant states like Malaysia at a significant disadvantage when it comes to the narrative and developments of the disputes.

Thus, it is unsurprising that freedom-of-navigation-operations, mainly carried out by the US and more recently other external parties, worry Malaysian policymakers. Additionally, such operations often draw both public and private criticisms that such actions only give Beijing further reasons to militarise the reclaimed features and enhance their presence in the disputed waters. It is the claimant and littoral states, not external powers, which suffer from the fallout. Such views are predominant amongst policymakers albeit not unanimous.

Sixth, Malaysia’s non-contagious nature, with the South China Sea separating East and West Malaysia, adds a unique burden to policymakers. The most direct sea-air corridor have to go through international and Indonesian waters and airspace. This sea-air gap represents a critical challenge to the defence and territorial integrity of Malaysia. Beijing’s assertive rhetoric and actions have increasingly pushed Jakarta to drastically securitise the air and sea domains around the Natuna Islands, which in-turn impacts Malaysian use of the airspace. This is despite an existing air-corridor agreement between the two governments.

Matters are further complicated by the increasing influence of East Malaysian politics in a fractured national political landscape. No West Malaysia-based party can form a federal government without support from the East. And currently, there is wide frustration by East Malaysians toward the former on a variety of issues. A secure and peaceful air and sea route between East and West Malaysia therefore is a core strategic, security, economic and political concern for policymakers. The dominance of the South China Sea by any single major power – especially one that has claims over Malaysia’s maritime zones in the area – represents an existential threat to Malaysia.

Seventh, the strong, comprehensive, bilateral relationship between Putrajaya and Beijing, has only improved and deepened since the onset of the Covid-19 global pandemic. China remains Malaysia’s largest trading partner and has been so for 12 consecutive years. Despite the wider economic slowdown, trade with China expanded by 4.2%  to MYR 329.77 billion in 2020, accounting for 18.6% of total trade that year. In a year where face-to-face largely came to a halt, there was a slew of high profile, reciprocal meetings between key officials from Putrajaya and Beijing. China is an important consideration in Malaysia’s pandemic management approach, its vaccination drive, and a post-pandemic economic recovery. At a time when the Malaysian economy has seen its largest contraction since the 1997 Asian Financial Crisis, the chances of Malaysia risking any economic costs imposed by Beijing, as China has done with other countries that have displeased it, is next to nil.

Will Malaysia reassess its current approach and consider more public responses, including increased practical cooperation with other stakeholders in the South China Sea, should it come under further pressure by China? Pic courtesy of Royal Malaysian Navy

Lack of Options– Difficult, Practical Decisions Ahead

The challenges listed above indicates that the changing status quo in the South China Sea has seen Malaysia’s strategic wiggle room narrow, and its options correspondingly shrink. Coupled with perceived fear of high costs that can be imposed by China, the calculation by Malaysian policymakers seems to be centred on responses that will not give an excuse to escalate. This is especially in the South China Sea where it enjoys an escalation dominance that neither Malaysia nor any other Southeast Asian claimant state can match.

Most policymakers in Malaysia believe this is a practical, if cautious approach. This cautious-practicality does not negate Malaysia’s continued forthrightness in its own quiet way on its claims and concerns in the South China Sea, even against China. Malaysia’s partial submission in December 2019 on an extended continental shelf triggered what became known as The Battle of the Diplomatic Notes, with up to 25 diplomatic notes exchanged by 10 states. A Malaysian note verbale that followed China’s response to Malaysia’s initial submission, rejected in no uncertain terms, both China’s claims of historic rights and its ubiquitous nine-dash line. Despite harassment by Chinese vessels, the West Capella drillship only proceeded to leave the contested waters after it finished the exploration it was contracted for.

There are dissenting views on whether Malaysia’s caution has led to policymakers excessively limiting themselves on the options it could consider. While quiet diplomacy succeeded in preserving most of Malaysia’s core interests in the South China Sea thus far, the rapidly changing circumstances indicate that this might not be sustainable. In the long term, the question is whether Malaysia will reassess this approach and consider more public responses, including increased practical cooperation with other stakeholders in the South China Sea, should it come under further pressure by China.

One of the other outcomes of Malaysia’s quiet diplomacy with China and aversion to ‘internationalising’ the dispute is that the country has been construed a supporter China in the South China Sea, an outright inaccurate view. Malaysia should be cognisant that there are multiple narratives being crafted on the dispute and the stance of its stakeholders. If it doesn’t make its position clear, it allows others to muddy the waters, to its cost.

This article first appeared in Stratsea on 27 September 2021.

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