Updated May 22, 2019June 9, 2020
Malaysia
Overview
The Federation of Malaysia is a majority Muslim
parliamentary democracy in Southeast Asia. It has an
ethnically and religiously diverse population of 31.832.6
million, with a Malay majority and large ethnic Chinese and
Indian minorities. Malaysia is considered a middle-income
country, relatively prosperous among Southeast Asian
nations.
Malaysian politics underwent substantial change in 2018,
when an opposition coalition known as Pakatan Harapan
(Alliance of Hope), led by former Prime Minister Mahathir
Mohamad, defeated the ruling Barisan Nasional coalition in
nationwide elections. It was the first change of government
in Malaysia’s history. Mahathir, who had been Prime
Minister from 1981-2003 under the ruling coalition before
later forming an opposition party, ran a campaign
promising to fight the corruption of the previous
government. Many heralded the peaceful transfer of power
as a sign of democratic development in a country long seen
as an authoritarian democracy.
Malaysia plays an active role in regional diplomacy, and it
has been a partner in various U.S. initiatives in Asia,
including trade and security initiatives as well as efforts to
combat terrorism and religious extremism. It is one of four
Southeast Asian nations that have territorial disputes with
China in the South China Sea, and its export-led economy
has encouraged it to undertake trade negotiations with the
United States and others. Malaysia was a member of the
Trans-Pacific Partnership (TPP), from which the United
States withdrew in 2017, and it is one of 11 members of the
renamed Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP).
Malaysia was an original member of the Association of
Southeast Asian Nations (ASEAN), and it sees itself as both
a Malaysia has undergone significant political upheaval in
2020, as shifts in its ruling coalition deposed Prime
Minister Mahathir Mohamad and brought his former partymate Muhyiddin Yassin into power on March 1, just as the
country’s Coronavirus Disease 2019 (COVID-19) outbreak
was expanding. Mahathir’s ouster through non-electoral
processes raised questions about Malaysia’s democratic
system, as the country had undergone its first democratic
change of government less than two years earlier. The
ruling coalition now includes two parties that had been
defeated in those historic 2018 elections. The new
government’s initial response to the spread of COVID-19
garnered criticism, as Malaysia saw a rapid rise of COVID19 cases before closing its borders on March 18, 2020. The
spread has since stabilized.
Despite its chaotic political processes, Malaysia plays an
active role in regional diplomacy, and it has been a partner
in various U.S. initiatives in Asia, including trade and
security initiatives as well as efforts to combat terrorism
and religious extremism. It is one of four Southeast Asian
nations that have territorial disputes with China in the South
China Sea, and its export-led economy has encouraged it to
undertake trade negotiations with the United States and
others. Malaysia was a member of the Trans-Pacific
Partnership (TPP), from which the United States withdrew
in 2017, and it is one of 11 members of the renamed
Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP), although it has not yet ratified
the agreement.
Malaysia was an original member of the Association of
Southeast Asian Nations (ASEAN), seeing itself as both a
regional leader and a moderate voice within the Islamic
world. Despite generally cooperative bilateral relations with
the United States, some issues remain obstacles toblock closer
ties, including
Malaysian opposition to much of U.S. policy in
the Middle
East, and U.S. concerns over some Malaysian
economic economic
and human-rights policies.
Democracy and Politics in Malaysia
Until May 2018, Malaysia had been ruled by a single
political coalition since its independence from the United
Kingdom in 1957. The Barisan Nasional was led by the
United Malays NasionalNational Organization (UMNO), a Malaynationalist party that draws its membership predominantly
from the country’s Malay majority. During its lengthy
period in power, UMNO enacted a series
of economic and
social preferences for bumiputera (ethnic
Malays and
indigenous peoples), and it derived much of its
appeal from
issues of ethnic identity. Mahathir was an
UMNO member
until 2016, when he left to form a new
party, Bersatu.
The subsequent 2018 election led to a peaceful and
democratic change
of government in a region where many
analysts have
perceived a decline in democratic institutions
in recent
years. Despite uneven electoral representation favoring
Malay-dominated districts and strong government influence
over media outlets, Mahathir’s coalition won 122 seats in
Malaysia’s 222-seat parliament. Polling suggested that
Malaysian voters were deeply concerned with corruption
under the government of Prime Minister Najib Razak, who
has since been indicted for money laundering related to his
chairmanship of 1MDB, a sovereign wealth fund.
Source: CIA World Factbook.
More than one year into Mahathir’s government, numerous
questions remain about Malaysia’s political trajectory. The
sometimes fractious coalition consists of four highly
diverse parties and includes both former members of
UMNO and longtime opposition politicians. One of the
partners is Parti Keadilan, led by Anwar Ibrahim, a former
UMNO leader and Deputy Prime Minister who broke with
then Prime Minister Mahathir in the 1990s and was twice
convicted and jailed for sodomy and corruption. Many
observers considered those charges to be motivated by
Mahathir’s desire to sideline a popular critic of his
government. Mahathir has said Anwar will succeed him in
the current government (Anwar’s wife, Wan Azizah Wan
Ismail, is now Mahathir’s deputy prime minister), but he
has indicated no timetable for such a transition. Some
Malaysian political analysts express concerns that the pace
of political and economic reform under the new government
has been slow, and the government has rekindled some
long-standing disputes with neighboring Singapore.
https://crsreports.congress.gov
Malaysia years. Many heralded the peaceful transfer of
power as a sign of democratic development in a country
long seen as an authoritarian democracy. However, some
analysts argued that the pace of political and economic
reform under Mahathir’s government was slow. In early
2020, rivalries within two of its three component parties led
to a vote of no confidence in Mahathir and the rise of
Muhyiddin, a veteran politician who suffered a bout of
cancer in 2018, on March 1.
The new coalition’s future remains unclear, as it is
uncertain whether Muhyuddin has a safe parliamentary
majority. On May 18, Malaysia’s parliament held a one-day
session, declining to vote on an opposition challenge to
Muhyuddin’s government, and recessing due to COVID-19
concerns. The move drew criticism from the opposition, as
have moves by Malaysia’s Attorney General to drop
corruption charges against two prominent UNMO leaders.
Source: CIA World Factbook.
U.S.-Malaysia Relations
The relationship between the United States and Malaysia is
a complex one. Bilateral ties deepened following the
Obama Administration’s strategic “rebalancing” to Asia,
and the relationship was elevated to a “Comprehensive
Partnership” in 2014. More recent political developments in
both countries have led to uncertainties about the future. In
https://crsreports.congress.gov
Malaysia
the 1980s and 1990s, under Mahathir, Malaysia was one of
the leading voices behind building the East Asia Economic
Caucus, and “Asia-only” regional institutions that excluded
the United States. Since then, Malaysia has generally
welcomed a broader U.S. role in the region, but Mahathir
has recently made several statements critical of U.S. naval
operations in the South China Sea.
Many argue that broad sensitivities in Malaysia constrain
the establishment of a deeper strategic relationship. Areas
of friction in U.S.-Malaysia ties have included U.S.
concerns about human rights, as well as Malaysia’s
opposition to U.S. military interventions in the Middle East
and U.S. support for Israel. The United States has criticized
the Malaysian government for weak human rights
protections, constraints on press freedom, economic
policies based on ethnic preferences, and prosecution of
opposition political leaders like Anwar Ibrahim.
U.S.-Malaysia security cooperation includes numerous
military exercises, ship visits, and military education
exchanges. One major focus of U.S.-Malaysia security
cooperation is counterterrorism activities aimed at terrorist
networks operating in Southeast Asia. Reportedly, the U.S
Navy has operated P-8A Poseidon maritime patrol aircraft
from bases in Malaysia, as the two countries explore ways
to bolster maritime security cooperation in the South China
Sea. The U.S. and Malaysian navies cooperate as part of a
multilateral effort to combat to combat
piracy near the Malacca Strait
and off the Horn of Africa.
Relations were complicated in July 2016, when the U.S.
Department of Justice announced its intention to seize more
than $1 billion in allegedly misappropriated assets from
Malaysian sovereign wealth fund 1MDB. Former Prime
Minister Najib was chair of the 1MDB Advisory Board, and
investigators say nearly $700 million of the fund’s capital
was routed into banks linked to the former Prime Minister.
Najib was ousted from power in the 2018 elections and
faces four charges of abuses of power and 21 charges of
money laundering. He remains a Member of Parliament and
is once again part of the governing coalition following
Mahathir’s ouster.
Malaysia’s Economy
Malaysia is the United States’ 18th largest trading partner,
with $52 billion in two-way trade in 2018. The United
States ran a $26.5 billion trade deficit with Malaysia that
year, the U.S.’s eighth-largest bilateral deficit. Electrical
machinery and equipment dominate bilateral trade flows in
both directions, reflecting Malaysia’s role as a major site
for consumer electronics manufacturing. Malaysia is an
important part of regional consumer electronics supply
chains, manufacturing parts and components that are
exported and assembled elsewhere. It is also a major
producer of oil and natural gas—some of its reserves are
located in disputed waters in the South China Sea.
The United States and Malaysia undertook free trade
agreement negotiations from 2005- to 2008, but did not
conclude an agreement. Those talks were later folded into
the TPP negotiations, which resulted in an agreement from
which the United States withdrew in 2017. The United
States’ main trade-related concerns are Malaysia’s
government procurement policies, protection of intellectual
property rights, and market access for key goods and
services.
Malaysia’s economy is divided along regional and ethnic
ethnic lines; a wide-ranging economic program known as
the New
Economic Policy (NEP) attempts to address socioeconomic
socioeconomic disparities by privileging ethnic Malays and other
other indigenous groups (collectively known as bumiputra) in
in government contracts, education, and government hiring.
Malaysia’s External Relations
Malaysia pursues active diplomacy on numerous regional
and global issues. Efforts to promote moderate Islam and
marginalize religious extremism have been a major part of
Malaysian diplomacy, including acting as a mediator in
conflicts between Muslim separatist groups and the central
government in both the Philippines and Thailand. Malaysia
has good
Malaysia has cordial relations with its neighbors, and has promoted
promoted cooperation among the 10 ASEAN countries. Issues
Issues Malaysia prioritizes include managing relations with
Singapore, with which Malaysia has deep economic
interdependency; combatting piracy in the Straits of
Malacca along with Indonesia and Singapore; repelling
Philippine armed groups that claim parts of Malaysian
territory; and managing immigration and migrant labor
communities from Burma, Indonesia, and other neighbors.
Malaysia has
China-Malaysia Relations
Malaysia has long adopted careful hedging strategies to
balance its relations with China and the United States. It has
assumed a relatively low profile in ASEAN’s
disputes with quarrels with
China over tensions in the South China Sea,
pursuing a less
confrontational diplomatic approach than
have the
Philippines and Vietnam despite its own territorial disputes
with China. Malaysia prioritizes the
negotiation of a Code
of Conduct between ASEAN and
China to govern behavior in disputed waters.
China-Malaysia Relations
Malaysia has long adopted careful hedging strategies to
balance its relations with China and the United States.
Under Mahathir, Malaysia has been publicly skeptical of
the term
in disputed waters. However, in recent years, Malaysia has
grown increasingly alarmed by China’s assertions and
activity in disputed waters. For a six-month period in 2019
and 2020, Chinese vessels harassed Malaysian energy
exploration vessels in Malaysia’s declared Exclusive
Economic Zone.
Under Mahathir, Malaysia was publicly skeptical of the
terms of Chinese foreign investment under Beijing’s Belt
and Road Initiative (BRI). During the 2018 election
campaign, Mahathir criticized his predecessor’s moves to
court Chinese investment, and promised to review the terms
of Chinese investments in Malaysia. He was quoted ahead
of the election saying: “Some countries see only the project
and not the payment part of it. That’s how they lost chunks
of their country. We don’t want that.”
That saidMalaysia announced in
April 2019 that it would go ahead with a renegotiated East
Coast Rail Link investment deal that reportedly will cost
one-third less than first planned. Muhyuddin’s government,
consumed with political questions and the COVID-19
response, has not signaled its positions toward the BRI.
However, some Chinese investments, including port
modernization projects, anthe East Coast Rail Link, and
employment-generating manufacturing investments, still
align with Mahathir’s own goals, which have included
making Malaysia into a developed nation by 2020.
Malaysia announced in April 2019 that it would go ahead
with a renegotiated East Coast Rail Link that reportedly
will cost one-third less than first plannedalign
with Malaysia’s own development goals.
Ben Dolven, Specialist in Asian Affairs
Bruce Vaughn, Specialist in Asian Affairs
https://crsreports.congress.gov
IF10316
Malaysia
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF10316 · VERSION 34 · UPDATED