By H G Rahman
KUALA LUMPUR, Malaysia--The continued tensions between China and the U.S. Is forcing members of the Association of Southeast Asian Nations (ASEAN) into opposing camps, harming regional diplomatic and trade ties at a time these countries are struggling to recover from the COVID-19 pandemic.
The U.S. with its Indo-Pacific strategy and China with its Belt and Road Initiative (BRI) seek to achieve the same things in different ways but the result for ASEAN is sadly a dampened economic outlook, uncertainty in critical issues such as territorial dispute in the South China Sea and a stunted COVID-19 recovery among other problems.
Nowhere in ASEAn is this more pronounced than in Malaysia, a key battleground for U.S.-China geo-political manoeuvres. While the country counts China as its largest trading partner, it maintains relatively warm ties with the U.S..
While this may seem to be an ideal situation for Malaysia, the fact is economic dependence on China means he country is forced to remain silent as the latter frequently violates Malaysia's strategic interests in the South China Sea area with these ranging from maritime and aerospace intrusions, to the illegal prospecting of natural resources by Chinese ships and large scale illegal fishing, depriving the country of vital fish stocks.
The U.S. for its part pressures Malaysia in different ways, frequently banning the country’s palm oil and rubber products over claims of “forced labour” besides applying pressure on the country’s domestic politics in a variety of well-documented ways.
The U.S. has even gone further with the AUKUS trilateral security pact between Australia and the United Kingdom, at the expense of economic losses for France besides potentially placing nuclear powered military systems in what had been until now a nuclear-weapon free area as per ASEAN’s Zone of Peace, Freedom and Neutrality, and pressuring ASEAN countries for their support of the pact.
In such a backdrop, what could the European Union (EU) do to leverage the situation and carve out its own strategic niche?
Malaysia, being located in ASEAN’s geographic centre, represents a unique opportunity for the EU. The country is already interested in building a high-speed railway but this plan has been plagued by costs and politics. The EU could seriously consider involvement in this project, expanding it to connect Bangkok-Kuala Lumpur-Singapore, not only demonstrating its goodwill to Malaysia and other ASEAN partners but also providing jobs and building a new-market for its high-tech railway products.
At least since the 1400’s, Malacca and now Malaysia has been a strategic point for ports along the East-West maritime route, being a part of the ancient maritime Silk Road. The EU could consider energising its port and shipping industries, setting up maintenance facilities and related industries in the country for its own merchant fleet, and strengthening its own supply chain from East Asia to the EU, with Malaysia providing easy access from the South China Sea Region, The Pacific and Indian Oceans.
The COVID-19 pandemic has dominated discussions on healthcare since 2020 but it will not last forever as many countries are already preparing to treat the virus as an endemic problem, one which the world will have to live with.
That said, certain sectors in Malaysia have benefitted hugely from the pandemic especially those dealing with gloves and certain other medical supplies, with the EU standing to benefit by expanding its interests in Malaysia and other ASEAN countries.
Let us not forget the predatory moves of the Trump administration which seeked to lock out others including the EU from vital medical supplies in the early, chaotic days of the pandemic. Health threats will not go away and the EU would be well-advised to secure its healthcare supply chains to better position itself for future health crises.
Malaysia is also a suitable centralised gateway for the EU to produce and distribute pharmaceuticals and other medical products, given its central location in ASEAN, simplifying and strengthening supply chains.
Bilateral trade between Malaysia and the EU equaled €35.2 billion in 2020. EU imports from Malaysia stand at €24.7 billion in 2020 while EU exports have reached €10.5 billion in 2021.
Malaysia is and always has been a trading nation, and has demonstrated its openness and willingness to forge free trade agreements (FTA) of various kinds, being party to the Regional Comprehensive Economic Partnership (RCEP).
The country had been in the process of negotiating an FTA with the EU in 2010 but this had been put on hold over various problems including the country’s political situation since 2018. However general elections are expected in the 2022/2023 time frame and it would be prudent for the EU to begin reaching out to the country to renew negotiations which would benefit both sides.
The EU may very well turn out to be a palatable and indeed sincere partner for Malaysia, leading the way by example and demonstrating the benefits it offers while being respectful of Malaysia’s interests.
For those in the ASEAN region, who seek to avoid being drawn into the U.S. or Chinese camp, the EU is indeed positioned advantageously to boost development and trade in the region, and for Malaysia specifically. Having a third way will ease the minds of many political power structures in the region while also boosting the EU’s own profile as a solid and viable alternative.
The only question is will the EU grasp the opportunity?