This article first appeared in Forum, The Edge Malaysia Weekly on June 25, 2018 - July 1, 2018

Although the new Malaysian administration has yet to appoint a foreign minister, the formation of the country’s new foreign policy and its attendant regional and domestic ramifications have rapidly come into the focus of political observers. Malaysia’s supposedly subtle shift of relational emphasis from China to Japan is of particular interest.

Prime Minister Tun Dr Mahathir Mohamad made Japan the destination of his first foreign visit after assuming power, although it was a working and pre-scheduled one. In Japan, he raised the prospects of resurrecting the long defunct Look East Policy and setting up another national car project. These seeming policy pronouncements, when coupled with the new administration’s repeated vows to “review” the terms of some contracts for gigantic projects signed by the former government, were understandably seen, both domestically and regionally, as perhaps signifying a shift of economic cooperation priorities from China to Japan. But in recent days, Mahathir also received Jack Ma, the founder of Alibaba, which is perhaps one of the world’s largest electronic commerce platforms. He heaped praise on what Alibaba is doing and can do in and for Malaysia. The trade and investment policy signals emitted by the new administration have thus been mixed and at times frustrating to observers.

A brief visit of the foreign and associated policies of the previous Mahathir administration can perhaps be instructive in this regard. When Mahathir first took the country’s helm in the early 1980s, Malaysia was decidedly a developing country with the export of commodities such as tin and rubber being the mainstay of its economy. At the same time, East Asian economies such as Japan, South Korea and Taiwan were making great strides in industrial development. Japan, in particular, had become the world’s second largest economy in just a short period of time, a feat much admired by the socioeconomically observant Mahathir.

The Look East Policy was thus promulgated primarily to achieve two related goals. The first was to attract a high level of trade and investment from the major East Asian economies of the time, especially Japan. In addition to the ubiquitous factories set up by these economies in Malaysia, the national car project, Proton, was launched with Japanese help, supposedly to create job opportunities for the locals and to enable the transfer of technology, which would enhance local industrial know-how. The viability of the project eventually became the subject of endless debate.

The second goal was a more amorphous one, namely to emulate the “shame-conscious” value system and the hardworking work ethic of these successful East Asian societies, so that Malaysia too could achieve their spectacular achievements. Many Malaysian students were thus sponsored to study in Japan, supposedly to absorb the fine characteristics of the Japanese, although this saw mixed success.

While Malaysia was gradually industrialising, China embarked on its reform and opening-up process. At the time, the country, and especially Mahathir, saw China — with which Malaysia had only recently established diplomatic ties — primarily from a “South-South” perspective. In other words, as both countries were developing, they had to “help” each other out in Third World solidarity and camaraderie. It was in that spirit that successful Malaysian businesses were encouraged to make a foray into China for their future investments. Malaysia thus traded with and invested in China increasingly, making the country its overall largest trading partner. Malaysia too was often China’s largest trading partner in Southeast Asia. The disputes over the South China Sea were not prominent then, and the late Chinese leader Deng Xiaoping’s axiom of “setting aside disputes for the moment in favour of joint development” was taken to heart by many other regional leaders, including Mahathir, who was conferred with the esteemed title, “Old friend of the Chinese people”.

We must also contemplate from the Chinese perspective for a more comprehensive understanding. Since the first Mahathir administration, China has grown by leaps and bounds in national development, surpassing Japan as the world’s second largest economy. And the main lesson the Chinese distilled from their mind-boggling developmental experience is that “wealth will be created after roads are built”, referring to the importance of having in place massive infrastructure, even in the most remote areas, after which the business community will flock in and the place will flourish, thus enabling the reaping of manifold returns. And the Chinese are eager to share what they consider to be the sound “Chinese model” with their neighbours, not the least under the aegis of the Belt and Road Initiative.

Viewed from these historic and perspective lenses, the foreign policy course that the new administration seems to be embarking on is not as surprising or confusing as it appears. Mahathir welcomes continued and further flourishing trade and investment opportunities with both China and Japan. He not only bears no malice against China but has, at times, also come to its defence when international criticism was levelled against it. But Mahathir’s understanding of “investment” is of the aforementioned local job-creating, technology-transferring and thus growth-inducing variety. That is why Alibaba, with its massive technological and marketing capabilities, appears to fit the new criteria and is thus welcome. And that is also why the Look East Policy is being revisited, with a new and supposedly industry-spurring national car project seemingly being once again put on the table.

At the same time, the new administration is apparently not in favour of massive infrastructure undertakings financed primarily by debts or guarantees when national debt is so frighteningly high. Moreover, the new administration suspects that a large portion of the “inflated” obligations incurred by the previous government was not actually used for its intended purpose but instead siphoned off by the latter for political or even personal benefit. Hence, the need for the review of some “problematic” contracts.

And when it comes to the South China Sea, Malaysia the trading nation continues to see it as a major international waterway bearing the bulk of the world’s shipping lanes, which must be kept open and free so that trade will continue to thrive despite various sovereignty claims that have sprung up intermittently in recent years. Malaysia, as Mahathir aptly put it, does not like to see many warships in the South China Sea because that would inevitably attract even more warships to the region, and when that happens, trade suffers and economies cannot prosper.

Dr Oh Ei Sun advises policy institutes in Malaysia and abroad. He was political secretary to the prime minister from 2009 to 2011.

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