Six months after Malaysia’s parliamentary elections, its domestic affairs are still untidy. The government is combating corruption, but not bringing in constitutional reform. A successor’s name is not emerging clearly either. But Prime Minister Mahathir Mohammad’s foreign relations priorities – principally, Japan and China – are in order.
Six months after the Pakatan Harapan (PK) coalition’s win in Malaysia’s parliamentary elections in May 2018, greater political certainty has not come to the South East Asian nation.
The PK, which replaced the United Malays National Organisation (UMNO), the party that had governed Malaysia ever since it won independence in 1957, had stressed on a ‘New Malaysia’, prior to being elected. It has been working on its promised agenda – fighting corruption, misgovernance and concentration of power – but seems to have little intention of introducing constitutional reforms to change the polity. Malaysia has had a change of ruler – from Najib Razak to Mahathir Mohammad – not of system. Thus, those who envisaged a realignment in the present mix of the three R’s – Royalty, Race and Religion, which stands at the heart of the Malaysian political system – are disappointed.
The transition is still incomplete. Mahathir Mohammad is 93 years old now; he declared, upon his electoral victory, that he would serve as PM for one or two years only. The next change, probably due in 2020, is beginning to cast its shadow. Anwar Ibrahim, who joined hands with Mahathir Mohammad to unseat Razak, has moved from jail (after receiving a royal pardon) to the parliament (after winning a seat in October). He expects to be the next PM.
However, well-informed sources contacted over three recent visits to Kuala Lumpur, say the level of trust between Mahathir Mohammad and Ibrahim is on the decline. The Mahathir Mohammad camp seems to prefer as successor Mohamed Azmin Ali, minister of economic affairs. But Ibrahim, perhaps the more powerful and popular of them, is cannily pledging public support for Mahathir’s leadership. The PM, he said, should have “the space and latitude to continue unaffected by the constraints of time or pressure.” Ibrahim is also open to giving the mentor’s role to Mahathir after his final retirement.
Could there be a dark horse, a third candidate, with better chances to be the next prime minister? Not yet. Wan Azizah Wan Ismail, the present deputy prime minister and Ibrahim’s wife, is unlikely to be elevated to the top spot, say political insiders. And so, a ‘wait-and-watch’ game is underway.
Re-engineering external ties
With the domestic situation defying prediction, Mahathir has pursued his deep interest in foreign affairs predictably enough, recalibrating Malaysia’s important relationships in the neighbourhood.
The Malaysian government now follows its own ‘Look East’ policy, paying greater attention to relations with Japan. As PM, Mahathir has visited Japan three times – in June, August and November 2018. Besides strengthening the political and strategic partnership and deepening personal ties with Japanese Prime Minister Shinzo Abe, the main objective has been to secure a sharp increase in Japanese assistance and investment.
The Japanese government will help Malaysia issue Yen-denominated Samurai bonds worth 200 billion Yen ($2.4 billion), guaranteed by the Japan Bank for International Cooperation (JBIC). Mahathir will use these Samurai bonds to retire some of the costly loans taken by his predecessors. Japan-Malaysia cooperation will focus particularly on sectors such as transportation, education and human resource development. China seemed a bigger challenge for Mahathir as former PM Najib had moved Malaysia very close to Beijing. China-linked projects became a serious election issue and a source of corruption. To address this head on, Mahathir leveraged his old record of friendship and cooperation with the Chinese government during his visit to China in August. He managed to secure China’s concurrence for the cancellation of the East Coast Rail Link (ECRL) project, a part of China’s Belt and Road Initiative, as well as two pipeline projects.
He did not abandon his customary bluntness either at a joint press conference with Premier Li Keqiang, when he said he favoured free, but fair, trade, adding: “You don’t want a situation where there is a new version of colonialism happening because poor countries are unable to compete with rich countries in terms of just open, free trade.” Apparently, the Chinese had no choice but to go along, promising to ensure that the next phase in China-Malaysia relations remained positive while the local media applauded the outcomes of his visit: Mahathir took “an important step in putting our relations with our most important neighbour and economic partner on firm footing”.
Singapore, a neighbour with memories of tensions in their relations during Mahathir’s previous tenure (1981- 2003), braced itself for more of the same. Bilateral ties have come under stress once again as the two countries prepare themselves for lengthy negotiations on two important issues: the Kuala Lumpur-Singapore High-Speed Rail (HSR) project and the 99-year Water Agreement of 1962 which expires in 2061. Experts predict that bilateral relations are “expected to cool” in the coming years, but their mutual dependence on trade and connectivity will not disappear How the changing relationship affects the internal balance within the Association of South East Asian Nations (ASEAN) merits a close watch.
Malaysia’s relations with the ASEAN or with India, currently at a low ebb, do not seem an immediate priority. While Mahathir has accepted “with appreciation” Pakistan Prime Minister Imran Khan’s invitation to visit, he has a ‘love-hate’ attitude towards India. Razak, the previous prime minister, strengthened Malaysia’s economic ties with India even though China was his clear preference. Prime Minister Modi’s courtesy call on Mahathir on 31 May 2018, soon after the latter’s return to power, was thus a prudent and productive move.
If there were hopes of an early visit to India, Mahathir has not fulfilled them. The ‘New Malaysia’ leadership may decide to connect with Indian leaders only after India’s upcoming parliamentary elections. If so, it is a missed opportunity for Malaysia.

Indian Prime Minister Narendra Modi made his third visit to Japan on 28-29 October 2018 to attend 13th Annual Summit with Japanese Prime Minister Shinzo Abe. Both countries reiterated their commitment to the Special Strategic and Global Partnership and issued a vision statement that reviewed past achievements since the last meeting, and laid out a new plan for the future. An important developments was the agreement to upgrade their 2+2 dialogue involving the defence and foreign ministers of the two countries. Earlier, these dialogues were held at the junior ministerial levels. Japan also agreed to release the next installment of the Official Development Assistance (ODA) for the high-speed train project linking Mumbai and Ahmadabad. However, the most reported achievement was the raising of the existing bilateral currency swap agreement to US$ 75 billion from the previous US$ 50 billion to provide greater stability to the Indian Rupee.
India-Japan relations have been consistently good, except for the temporary period of Japanese disappointment with India's 1998 nuclear tests. The historical and cultural connect between both countries provide the foundation for these good relations, along with Japan’s generous economic help to India under its ODA programme for decades. Modi and Abe's strong personal chemistry. which adds further mutual trust between the two countries, is also well known. Overall, bilateral relations have been placed in a of win-win framework.
The goodwill demonstrated in bilateral exchanges is considered an important element of forging a common stand on the regional order by both India and Japan. However, many argue that it is in fact the other way round, on the basis of both countries needing each other to deal with regional and global issues, which has allowed an expansion of the bilateral relationship. Whatever be the case, the general perception is that similar to the bilateral, Japan and India are also similar in their approaches and orientation towards regional issues.
Why is this assertion significant? India and Japan both share common concerns in the rise of an ‘assertive’ China that wants to ‘revise’ Asia's economic and security order. They also share a friendship with the US, which has been committed to maintaining the status quo by countering China. The US has been trying to do so bilaterally as well as through the partnerships with allies and friends in the region. The US push, support and encouragement for the Indo-Pacific, which was initially largely articulated by Japan and Australia, is symbolic of the US' willingness to create a network of countries to deal with China’s ‘assertiveness’. The US would definitely like two of its close friends in Asia - Japan and India - to work along with an eager Australia to take lead in the Indo-Pacific strategy.
Clearly, the push-and-pull factors of regional politics bring India and Japan close to each other. However, there are nuanced divergences in the Indian and Japanese stands vis-à-vis the Indo-Pacific strategy. Japan apparently wants China excluded from the Indo-Pacific strategy and indirectly identifies China as a threat to a ‘free and open Indo-Pacific’. Thus, for Japan, the Indo-Pacific strategy is the first choice to deal with China. India has slightly different position. India still hopes that China can be persuaded to the 'right' track and to play by the rules of the game. It is for this reason that Modi sought a ‘reset’ of India-China relations after his informal summit with the Chinese President Xi Jinping in Wuhan in April 2018. Modi further discussed this new approach towards China in his speech at the Shangri La Dialogue in June 2018, where, while talking about the Indo-Pacific, he used the word ‘inclusiveness’ multiple times. He did not name China directly at any point, but it was clear that he was alluding to China and its inclusion in the Indo-Pacific. More recently, on 16 November, he said that a "great wall of trust and cooperation" must be build between India and China. To be sure, India does not appear to be against the Indo-Pacific strategy as a means to counter-balance China, but is reluctant to make this its first choice. India has still not moved to a fundamentally realist understanding of the region and believes that concessions must be made for constructive neutrality.
For the same reason, there have been murmurings in Japan, Australia and the US about India’s slow, insufficient and less vocal participation in the Indo-Pacific strategy, for which India has its own valid explanations. India-Japan relations must have the space to allow for India’s constructive reluctance, while also making progress on in-depth and wide-ranging cooperation on the bilateral front.

China and the United States agreed to halt additional tariffs in a deal that keeps their trade war from escalating as the two sides try again to bridge their differences with fresh talks aimed at reaching an agreement within 90 days.
The White House said on Saturday that President Donald Trump told Chinese President Xi Jinping during highstakes talks in Argentina that he would not boost tariffs on $200 billion of Chinese goods to 25 percent on Jan. 1 as previously announced. Beijing for its part agreed to buy an unspecified but "very substantial" amount of agricultural, energy, industrial and other products, the White House said in a statement. The two sides would also launch new trade talks to address issues including technology transfer, intellectual property, non-tariff barriers, cyber theft and agriculture, it said. If no deal is reached within 90 days, both parties agreed that the 10 percent tariffs will be raised to 25 percent, the White House said.
On Sunday, China's state-run media lauded the "important consensus" reached by the two leaders but did not mention the 90-day deadline. Trump imposed 10 percent tariffs on $200 billion worth of Chinese goods in September. China responded with its own tariffs.
Trump has also threatened to put tariffs on another $267 billion worth of Chinese imports, as the relationship appeared set to worsen in the weeks ahead of the Argentina meeting.
"I think this is not a breakthrough - it's more of avoiding a breakdown. This is not a worst case outcome but the hard work is ahead of them," said Paul Haenle, Director at the Carnegie–Tsinghua Center in Beijing.
"The Chinese have to come into (the talks) with a sense of urgency," he added.
'INCREDIBLE DEAL'
As part of the deal, China agreed to start purchasing agricultural products from U.S. farmers immediately, the White House said. Speaking to reporters on Air Force One, Trump hailed his agreement with Xi. "It's an incredible deal," Trump said. "What I'd be doing is holding back on tariffs. China will be opening up. China will be getting rid of tariffs." He said under the deal China would buy a "tremendous amount of agricultural and other product" from the United States. "It'll have an incredibly positive impact on farming." State Councillor Wang Yi, the Chinese government's top diplomat, told reporters in Buenos Aires that the two sides believed the agreement "effectively prevented the expansion of economic frictions between the two countries".
"Facts show that joint interests between China and the United States are greater than the disputes, and the need for cooperation is greater than frictions," he said. U.S. companies and consumers are bearing part of the cost of the U.S. tariffs on China by paying higher prices for goods, and many companies have increased prices of imported goods. At the same time, U.S. farmers have been hurt by reduced Chinese imports of soybeans and other products. China "is open to approving the previously unapproved" deal for U.S. company Qualcomm Inc to acquire Netherlands-based NXP Semiconductors "should it again be presented," the White House statement said.
In July, Qualcomm - the world's biggest smartphone-chip maker - walked away from a $44 billion deal to buy NXP after failing to secure Chinese regulatory approval, becoming a high-profile victim of the China-U.S. trade dispute. Qualcomm and NXP did not immediately respond to requests for comment late on Saturday.
TEMPORARY REPRIEVE
Beyond trade, Xi also agreed to designate the drug fentanyl as a controlled substance, the White House said. For more than a year, Trump has raised concerns about the synthetic opioid being sent from China to the United States, which is facing an epidemic of opioid-related deaths. Scott Kennedy, a China expert at the Center for Strategic and International Studies in Washington, said the United States appeared to come out slightly ahead in the overall agreement.
"Beijing at best gets a temporary reprieve from additional tariffs, but was unable to get the U.S. to agree to return to 'business as usual'," he said.
"Instead, only the pace of deterioration has changed, not the direction of the relationship," Kennedy added.
The 90-day talks deadline falls just days before China's annual meeting of parliament in the first week of March, a politically sensitive time for Beijing.
Sun Zhe, co-director of the China Initiative at Columbia University, said China might have made greater concessions this time but may be looking for more out of the United States in the coming months.
"I think China compromised more. They bet that the United States would appreciate that China doesn't want to break the relationship even though China was pushed very hard," he said.
"Some Chinese speculate about what compromise the United State can make in the future because China promised a lot and Trump just promised to not raise U.S. tariffs," he added.