Malaysia’s centrality in Southeast Asia, its location at the midpoint of maritime and overland East-West trade routes and its middle income position make it pivotal for China’s BRI.
Kuala Lumpur: China is being referred to as the new East India Company. This is an understatement if the pace and scale of what it may be up to is compared to the intrigue filled approaches of the East India Company of yore. An interesting case in point that warrants reference or comparison is China’s dealings with Malaysia.
Malaysia is now in a state of political limbo. The unexpected happened in February 2020 and an illegitimate government took control of the reins of power in a coup of sorts. That government is finding itself in a continuing and serious bind to find legitimacy, given the complex mix of interests involved. Najib Razak, a former Prime Minister mired in the Malaysian courts on charges of kleptocracy and most recently convicted, is a key player in this imbroglio.
This limbo situation has become a fertile ground for the bounty hunting imperialist designs of China, much like the East India Company of the 1700s and 1800s. The Belt and Road Initiative (BRI), a geostrategic brainchild of China to establish itself as a superpower, suddenly finds itself presented with a godsend of an opportunity in an otherwise receding shoreline, so to speak. It is about to recover a piece of the puzzle it had lost in the pre limbo Malaysian political environment. Here is probably where the comparison to the East India company (EIC) is most appropriate.
There are clear indications of a dovetailing about to occur between this geostrategic intent of China and the geopolitical and geoeconomic position of the lynchpin state of Malaysia and the local complex mix of interests. Malaysia’s centrality in Southeast Asia, its location at the midpoint of maritime and overland East-West trade routes and its middle income position make it pivotal for China’s BRI.
It is not possible to draw up a complete list of Chinese investments in Malaysia as available statistics do not seem to include projects with clear Chinese fingerprints. But significantly and publicly acknowledged Chinese investments are at least MYR 240 billion (about US$57 billion), at last count, for the period of 2013-2019. There are numerous indications that the previous government led by Najib concluded very unfavourable terms in these deals with Beijing during the period he was the Prime Minister from 2009-2018. There is speculation of diversion of funds worth at least US$34 billion from the deals, to close a gap in the finances of the national development company, 1MDB. All this smacks of a key set of EIC tactics to gain empire without guns.
The mega projects and deals funded by hot Chinese cash took shape just as the cracks in 1MDB began to reveal that they were not superficial but ran wide and deep. Observers say Najib tilted Malaysia towards China’s orbit as a result of Beijing’s “chequebook diplomacy” strategy in Southeast Asia as well as the increasing hostility he faced from the West over the 1MDB scandal. His key intermediary and a major accomplice in his kleptocracy scams was a Malaysian Chinese, Jho Low, now believed to be in hiding in Macau.
And then abruptly, for about 20 months, from May 2018 to February 2020, there was an interruption in the control of the reins of government which moved to a nationalist leader, Dr Mahathir Mohamad who takes a more nationalistic and hence adversarial role in these deals, and, hence, demanded better from China. “Such stupidity has never been seen in the history of Malaysia,” Mahathir reportedly said in a press conference in Beijing in August 2018, much to the embarrassment of China, as he lambasted the previous administration’s predilection for accepting unfavourable terms.
In the words of China’s Foreign Minister and State Councillor, Wang Yi, after a visit to Malaysia, in September 2018 and after difficult talks with Mahathir, “China-Malaysia relations are standing at a new historical starting.” The pendulum had swung away from China.
The allegations of the kleptocracy that occurred through 1MDB will continue to haunt Najib and the leading Malay political party, UMNO, for some time to come. And the only way to get this albatross out for both is through the legislature—and not necessarily the courts, as the most recent conviction of Najib, in the first of the five cases of kleptocracy clearly indicate. He was found guilty on all seven charges in this first case. The legislature necessarily has to come in the grip of Najib and UMNO, once more. A significant collateral effect of this would be the recovery of the lost economic opportunities from the mega Chinese deals for a large faction of dominant Malay interests. The stakes and opportunities are high.
Speculation is rife that the limbo situation has to be resolved soon—a snap election is on the cards within the next 12 months. Given the alignment of the dominant Malay interests, it is very likely that UMNO will recover their grip on power in these snap elections and continue with the earlier policies with respect to Chinese involvement. The pendulum would have swung back. Najib would then have come out of the terrible bind, the dominant UMNO interests would have recovered their grip on the national resource and the Chinese will be able to keep Malaysia well within their stable.
With the dismissal of Mahathir’s government, reversals of decisions taken by that short-lived government began. The Attorney General, Tommy Thomas resigned from his post, barely two years into his contract period, returning prosecution authority on 28 February 2020 to a new AG appointee. Thomas set the wheels in motion for trials related to the 1MDB scandal, and the AG’s Chambers (AGC) put Najib Razak, Rosmah Mansor—Najib’s wife—Ahmad Zahid Hamidi, the former Deputy Prime Minister, and Tengku Adnan Tengku Mansor, a minister in the former administration, among others, in the dock to be tried for corruption and criminal breach of trust.
The beginning of the reversals facing the political notables started with the settlement with Riza Aziz, the stepson of Najib who was charged with five counts of money laundering amounting to US$248 million paid from 1MDB under which he was granted a discharge not amounting to an acquittal (DNNA) on 14 May 2020.
On 9 June 2020, 46 criminal charges against Tan Sri Musa Aman, the former Chief Minister of one of the states of Malaysia and a key member of UMNO, were withdrawn due to the unattainability of documentary evidence and witnesses vital to the case, according to the new Attorney-General (AG) Tan Sri Idrus Harun. We can expect to see more reversals against the charged UMNO stalwarts progressively. The pattern is set.
The reversals have also started to trickle down into the political realm as patronage capability has increased, with the grip on Federal power, however temporary. The opposition government in Sabah in East Malaysia has just been toppled as of 30 July, and snap state polls look very likely. To keep the story short, reversals have clearly begun.
Not everything is hunky dory though, as the Najib verdict shows. Clearly, the robust grip on Federal power must be attained before status quo ante 2018 can be re-established and Najib and his bunch of cronies avoid jail. Clearly, a lot more work to be done…enter China.
China will now see a more desperate Najib and a UMNO with a greater need to dish out patronage—a clear set of situations that offers creative opportunities to keep Malaysia within China’s foreign policy ambit. That this is a very likely scenario can be seen in the recent reversal in the attitude of the limbo government to the intimidation of Malaysian exploration vessel Capella by Chinese state-owned survey vessel Haiyang Dizi 8—the same ship that surveyed the Vietnamese coast last year. In response to the National Audit Department’s report revealing that Chinese ships had encroached into Malaysian waters 89 times between 2016 and 2019, Foreign Minister Hishammuddin Hussein (Najib’s cousin) claimed on 15 July 2020 that in the 100 days since he took over the Ministry in May, June and July, the Chinese vessels have not dared to breach the country’s Exclusive Economic Zone (EEZ) anymore.
This position was adopted despite the fact that it is a clear violation of the UNCLOS (United Nation Convention on the Law Of the Seas) stipulated EEZ (Exclusive Economic Zone) parameters. The incident took place well within Malaysian territory stipulated in the UNCLOS. Talks have been going on since 2002 to develop a comprehensive and durable settlement of the disputes while guided by the Declaration on the Conduct of Parties in the South China Sea. And China is saying that the border dispute will be resolved in three years—this from a country that prides in its capability to mobilize at turbo speed, but is taking a full 20 years to resolve this border dispute. This speaks of its duplicitous intentions—drag its very heavy feet to salami splice all of the South China Seas and promote its imperialist tendencies stealthily.
China has 20 outposts in the Paracel Islands and 7 in the Spratlys. It also controls Scarborough Shoal, which it seized in 2012, via constant coast guard presence, though it has not built any facilities on the feature. Since 2013, China has engaged in unprecedented dredging and artificial island-building in the Spratlys, creating 3,200 acres of new land, along with a substantial expansion of its presence in the Paracels.
Vietnam and Philippines have visibly woken up and spoken up, so now China cannot have Malaysia with them. A vulnerable Malaysian government, a pliant UMNO leadership and intense political jostling provide a clear opportunity for weaning Malaysia away from a strong possible regional grouping against a China with imperial designs. Having done deals with such a pliant government before, it will be a no brainer to think that China will miss the current opportunity. This is China’s strategy with much more in its stable of tactics to build an empire.
So an election that returns UMNO to the seat of power is imminent and it becomes an imperative for the dominant Malay faction for Najib and for China to win it. This is the dovetail that is happening.
Ganesan is a social activist and freelance writer of a non profit human rights organization, Freedom. Heresearches matters of social justice, and writes to clarify the big picture and create compelling narratives.