By INS Contributors

KUALA LUMPUR, Malaysia: Next year will mark the 70th anniversary since the establishment of diplomatic ties between Malaysia and Australia, a partnership that has proven to be mutually beneficial and is likely to maintain its robust nature even in the face of new geopolitical developments.

The world was very different in 1955, in fact Malaysia as it exists today had yet to be established and its very existence was challenged by forces within and without. Malaysia of 2024 is a far cry from those dark times with a burgeoning economy that spans the export of strategic commodities including rare earths and hydrocarbons while also being a powerhouse in the electrical & electronic and semiconductor sectors among others.

Deep Roots

This is a relationship that has been tested in fire, 1955 was right in the middle of the Malayan Emergency with Australian forces joining other Commonwealth forces in putting down a communist rebellion that had been raging since 1948. In the next decade, Australia played a pivotal role in safeguarding Malaysia's sovereignty against Indonesia's attempts to undermine the newly independent country between 1963-1966.

While both of these conflicts are little known today, even in Malaysia, they laid the foundation for the Southeast Asian country's development and prosperity into the modern day, keeping at bay forces out to destroy it. It would not be  a stretch to say that Australia has had Malaysia's back since the beginning.

It is also important to note that the Royal Australian Airforce (RAAF) has its only permanent overseas deployment at the Royal Malaysian Airforce base in Butterworth, showcasing the special relationship between the two nations.

Australia has also seen rapid changes having evolved from a primarily agricultural and resource-based economy in the 1950s to a diversified, modern economy integrated into global markets by 2024, successfully diversifying its economy from mining and livestock to services, education and finance sectors while also being an agricultural powerhouse.

The continent sized country has successfully weathered global economic crises, maintained steady economic growth and has embarked on a successful digitalisation drive with strong performance in telecommunications, IT services, and fintech while developing a remarkably strong soft power capability.

Economic Interdependence and Integration

Australia is Malaysia's 10th largest trading partner with total two-way trade being valued at MYR 106.4 billion (AUD 33.5 billion) in 2022. While this may seem minor compared to Malaysia's trade relationship with China, the U.S. or European Union, there are certain strategic peculiarities that belie this relationship.

Lynas, an Australian producer of rare earths, operates the world's largest single rare earths processing plant in Malaysia  and the only such facility globally that is not controlled by China making it extremely crucial in light of current geopolitical tensions between that country and the West. Not only does the plant provide much needed revenue to Malaysia and allows it to play an outsized role in the sector it also provides thousands of skilled jobs and supports a number of downstream industries.

Both countries are also party to two significant trade agreements: the world’s largest Free Trade Agreement (FTA), the Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). China is a member of RCEP while seeking membership in CPTPP, allowing some interesting potential should tensions between the U.S. and China escalate. It is non-inconceivable that Australia will be able to maintain trade flows through Malaysia in the event that it is pressured against maintaining direct economic ties with China among other possibilities.

Malaysia is home to some of Australia's major investments in Southeast Asia, including Cochlear, NS BlueScope, Lendlease and, more recently, NextDC and AirTrunk while leading Malaysian businesses such as Gamuda, Gentari, OSK, Sime Darby, Petronas, as well as pension funds EPF and KWAP, are all significant investors in Australia.

Trade and economic interactions between both countries are only set to grow, not only in volume but in value and having found specific niches, these sectors will prove to be not only robust but of strategic value for the global supply chain.

Security And The Future

The world in 1955 was an entirely different era with Western-dominated global governance and global economy. For better or worse such stability allowed various newly-independent countries to find their footing and develop accordingly. However 2024 and beyond will be a world with a very different economic climate and security structure.

Revisionists powers led by China are seeking up upend the existing order and impose their own new world order. What this means is that countries which until now could feel secure are now going to feel the heat as China looks towards dominating what it views as its backdoor, namely the countries making up the Association of Southeast Asian Nations (ASEAN) and the waters in the region most dramatically the South China Sea and to a lesser extent the Malacca Straits.

Indeed China's maritime ambitions are creeping steadily southwards with Indonesia also seeing encroachment into its territorial waters around the Natuna islands, adding on to the large scale illegal sand mining that has seen whole islands disappear and illegal, unreported and unregulated fishing which threatens the regions food security. It is not inconceivable that these activities will in the near future spread to Australian waters.

AUKUS, a trilateral security partnership for the Indo-Pacific region between Australia, the UK, and the U.S., has been the response, complementing earlier arrangements such as the Five Power Defence Arrangements which include Australia, Malaysia, New Zealand, Singapore, and the UK. Malaysia, with its strategic location on the South China Sea and Malacca straits and Australia which is set to receive advanced nuclear powered submarines will likely play a key role in the coming years.

Peace can only be achieved through strength and peace beings prosperity. These are hard won lessons that must not be forgotten. While both Malaysia and Australia engage in trade with China, they would both be wise to put their national interests in front to head off the threat of economic coercion and pressure that could see their strategic positions erode. Acting in solidarity and providing mutual support while strengthening existing ties will benefit both and will present the gold standard for cooperation between not only Malaysia and Australia but Australia and Southeast Asia as a whole.