Updated August 10, 2023
Malaysia
Overview
issues in the country including Malaysia’s record in
The Federation of Malaysia is a majority Muslim
combatting human trafficking (Malaysia was listed on the
parliamentary democracy in Southeast Asia. It has an
Tier 2 Watchlist in the State Department’s 2023 Trafficking
ethnically and religiously diverse population of 32.7
in Persons report), as well as Malaysia’s treatment of
million, with a Malay majority and large ethnic Chinese and
refugees from Burma (Myanmar).
Indian minorities. Malaysia is considered a middle-income
country and is relatively prosperous among Southeast Asian
Democracy and Politics in Malaysia
nations. Malaysia is one of four Southeast Asian nations
Until May 2018, Malaysia had been ruled by a single
that have territorial disputes with China in the South China
political coalition since its independence from the United
Sea.
Kingdom in 1957. The Barisan Nasional was led by
UMNO, a Malay-nationalist party that draws its
Malaysia has undergone significant political upheaval in
membership predominantly from the country’s Malay
recent years, as a series of coalition governments have held
majority. During its lengthy period in power, UMNO
power following national elections in 2018 and 2022. In a
enacted a series of economic and social preferences for
country that had been led by a single governing coalition
bumiputera (ethnic Malays and indigenous peoples), and it
from Malaysia’s independence in 1957 until 2018, the
derived much of its appeal from issues of ethnic identity.
political instability has resulted in a series of weak
Anwar was UMNO’s deputy chairman until 1998, when he
governments marked by internal rivalries that many
broke with longtime UMNO leader Mahathir Mohamad and
observers say has hindered their effectiveness. The current
was later convicted and imprisoned on charges many
government is headed by Prime Minister Anwar Ibrahim, a
considered politically motivated.
former deputy prime minister and then opposition leader,
who came to power in November 2022 following elections
Figure 1. Malaysia
in which no party gained a clear majority of parliamentary
seats. Anwar’s political coalition, Pakatan Harapan (PH),
joined its longtime rival, the United Malays Nasional
Organization (UNMO) to form a government, although the
two groups remain deeply divided on many issues.
Despite its chaotic political processes, Malaysia has long
played 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. Malaysia was a founding
member of the Association of Southeast Asian Nations
(ASEAN), and sees 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 constrain closer ties, including Malaysian opposition

to much of U.S. policy in the Middle East, and U.S.
Patronage and corruption are a major part of Malaysian
concerns over some Malaysian economic and human-rights
politics. Some observers heralded the changes that resulted
policies.
from the 2018 and 2022 elections, both of which brought
peaceful changes of government in a country long seen as
Malaysia’s economy is export driven, and it has pursued a
an authoritarian democracy. However, in the view of many
variety of trade negotiations. Malaysia was a member of the
analysts, the weakness of the resulting ruling coalitions has
proposed Trans-Pacific Partnership (TPP), from which the
limited the government’s ability to make reforms and
United States withdrew in 2017, and is one of 11 members
constrained Malaysia from acting as a leader on many
of the renamed Comprehensive and Progressive Agreement
regional issues.
for Trans-Pacific Partnership (CPTPP), which it ratified in
September 2022. Malaysia also ratified the Regional
U.S.-Malaysia Relations
Comprehensive Economic Partnership (RCEP) in 2022.
The relationship between the United States and Malaysia is
complex. In the 1980s and 1990s, under former Prime
Congress has overseen Malaysia policy, including trade
Minister Mahathir, Malaysia was one of the leading voices
negotiations in the 2000s and 2010s, as well as U.S.-
behind building the East Asia Economic Caucus, and
Malaysia cooperation on security issues. Some Members of
“Asia-only” regional institutions that excluded the United
Congress have expressed concerns about human rights
States. Since then, Malaysia has generally welcomed a
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Malaysia
broader U.S. role in the region. Bilateral ties deepened
conflicts between Muslim separatist groups and the central
following the Obama Administration’s strategic
government in both the Philippines and Thailand. Malaysia
“rebalancing” to Asia, and the relationship was elevated to
is also a member of the Five Power Defence Arrangement
a “Comprehensive Partnership” in 2014.
with Australia, New Zealand, Singapore, and the United
Kingdom.
Malaysia’s political upheaval and changes in U.S. Indo-
Pacific policy under the Trump and Biden administrations
Malaysia has cordial relations with its neighbors, and has
have led to uncertainties about the future of the relationship.
promoted cooperation among the 10 ASEAN countries.
Many observers argue that Malaysian sensitivities about
Following the February 1, 2021, coup in Burma, Malaysian
aligning with the United States constrain the establishment
officials have been among Southeast Asia’s most outspoken
of a deeper strategic relationship. Areas of friction in U.S.-
critics of the Burmese military regime, arguing against
Malaysia ties include Malaysia’s opposition to U.S. military
including representatives of the military government in
interventions in the Middle East and U.S. support for Israel.
regional meetings, and for engaging members of Burma’s
The United States has criticized the Malaysian government
National Unity Government (NUG) in exile. Approximately
for weak human rights protections, constraints on press
150,000 members of Burma’s Rohingya minority are in
freedom, economic policies based on ethnic preferences,
Malaysia, although the nation has not signed the 1951 U.N.
and prosecution of opposition political leaders.
Refugee Convention or the 1967 Protocol Regarding the
Status of Refugees. Other regional issues Malaysia
U.S.-Malaysia security cooperation includes numerous
prioritizes include managing relations with Singapore, with
military exercises, ship visits, and military education
which Malaysia has deep economic interdependency;
exchanges. Key areas of U.S.-Malaysia security
combatting piracy in the Straits of Malacca along with
cooperation include counterterrorism activities aimed at
Indonesia and Singapore; repelling Philippine armed groups
terrorist networks operating in Southeast Asia and
that claim parts of Malaysian territory; and managing
bolstering maritime security in the South China Sea. The
immigration and migrant labor communities from Burma,
U.S. and Malaysian navies also cooperate as part of
Indonesia, and other neighbors.
multilateral efforts to combat piracy near the Malacca Strait
and off the Horn of Africa. Malaysia in 2022 sent military
China-Malaysia Relations
forces to participate in the United States’ Rim of the Pacific
Malaysia has long adopted careful hedging strategies to
(RIMPAC) exercise.
balance its relations with China and the United States. It has
assumed a relatively low profile in ASEAN’s quarrels with
Malaysia’s Economy
China over tensions in the South China Sea, pursuing a less
Malaysia is the United States’ 17th largest trading partner
confrontational diplomatic approach than have the
and the United States is Malaysia’s third largest trading
Philippines and Vietnam despite its own territorial disputes
partner after China and Singapore. Bilateral trade in goods
with China. Malaysia prioritizes the negotiation of a Code
with the United States was $72.4 billion in 2022. U.S. direct
of Conduct between ASEAN and China to govern behavior
investment in Malaysia was $13.5 billion in 2020.
in disputed waters. However, since the early 2010s,
Electrical machinery and equipment dominate bilateral
Malaysia has grown increasingly alarmed by China’s
trade flows in both directions, reflecting Malaysia’s role as
assertions and activity in disputed waters. Since 2019,
a major site for consumer electronics manufacturing.
Chinese vessels have regularly harassed Malaysian energy
Malaysia is an important part of regional consumer
exploration vessels in Malaysia’s declared Exclusive
electronics supply chains, manufacturing parts and
Economic Zone.
components that are exported and assembled elsewhere. It
is also an oil and natural gas producer; some of its reserves
Malaysia is part of some Chinese foreign investment
are located in disputed waters in the South China Sea.
projects under Beijing’s Belt and Road Initiative (BRI). The
government announced in April 2019 that it would go
The United States and Malaysia undertook free trade
ahead with a renegotiated East Coast Rail Link investment
agreement negotiations from 2005 to 2008, but did not
deal that reportedly will cost one-third less than first
conclude an agreement. Those talks were later folded into
planned. Some Chinese investments, including port
the TPP negotiations. The United States’ main trade-related
modernization projects, the East Coast Rail Link, and
concerns are Malaysia’s government procurement policies,
employment-generating manufacturing investments, align
protection of intellectual property rights, and market access
with Malaysia’s own development goals.
for key goods and services. Malaysia’s economy is divided
along regional and ethnic lines; a wide-ranging economic
Congressional Interest
program known as the New Economic Policy (NEP)
In the 118th Congress, interest in Malaysia is manifest in
attempts to address socioeconomic disparities by
proposed regionally-focused legislation such as the
privileging bumiputera in government contracts, education,
PARTNER with ASEAN Act (S. 682), which would extend
and government hiring.
full diplomatic recognition to ASEAN officials including
Malaysians and their regional partners, and S.Res. 141, a
Malaysia’s External Relations
resolution that would express support for ASEAN centrality
Malaysia pursues active diplomacy on numerous regional
in the Indo-Pacific region.
and global issues. Efforts to promote moderate Islam and
marginalize religious extremism have been a major part of
Ben Dolven, Specialist in Asian Affairs
Malaysian diplomacy, including acting as a mediator in
IF10316
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Malaysia


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https://crsreports.congress.gov | IF10316 · VERSION 14 · UPDATED

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