My work co-authored with Assoc. Prof. Dr Asmady Idris
Malaysia’s diplomatic relations with Saudi Arabia and Iran generally have been cordial while its economic ties with both countries have been expanding. However, the Saudi-Iran strategic rivalry has intensified both within and beyond the Middle East, raising several questions that this essay proposes to address: What are Malaysia’s interests in Saudi Arabia and Iran? Is there any evidence that Saudi Arabia and Iran, as a function of their competition with each other, are seeking to expand their influence in Southeast Asia, and in Malaysia in particular, through the promulgation of Shia and Wahhabi ideology? If so, to what extent and by what means could Malaysia respond to this development so as to avoid jeopardizing the fruitful aspects of their relations with both countries?
Saudi Arabia and Iran: Malaysia’s Partners but Strategic Rivals
Malaysia’s relations with both Saudi Arabia and Iran are based primarily on economic interests, with energy cooperation constituting the most important element. Malaysia, which is an energy producer and exporter in its own right, nonetheless imports significant quantities of crude oil. Saudi Arabia is Malaysia’s leading foreign source of crude oil, accounting for 30 percent of its oil imports, valued at US$774 million, in 2016.[1] Iran, too, has been also a source of petroleum and petroleum products for Malaysia.[2]
Malaysia’s state-owned oil company (Petronas) has spearheaded efforts to thicken ties with Saudi Arabia and Iran in the energy sector through participation in upstream and downstream petroleum projects. Petronas’ involvement in Iran’s oil exploration dates back nearly twenty years to its role as a contractor in the South Pars mega gas project.[3] Petronas was recently selected to partner with the National Iranian Oil Company (NIOC) in exploring the South Azadegan and Cheshmeh Khosh oil fields.[4] Petronas has also joined forces with the Saudi Arabian Oil Company (Saudi Aramco) in the development of the Refinery and Petrochemical Integrated Development (RAPID) project in the southern Malaysian state of Johor.[5]
Malaysia’s economic ties with Saudi Arabia and Iran extend beyond the energy sector. Bilateral trade with both countries has been expanding. In 2016, Malaysia’s total trade with Saudi Arabia increased by 27.8 percent over the previous year.[6] Malaysia’s exports to the Kingdom include palm oil, palm oil products, electrical and electronics products, machinery and wood products.[7] Likewise, trade with Iran has been robust. Iran accounts for about one-fifth of Malaysia’s trade with Middle Eastern countries.[8] The removal of nuclear-related economic sanctions against Iran has brightened the prospects for more expansive trade relations. Figures 1-3 below depict the value and general composition of Malaysia’s bilateral trade with these two countries. Note that in 2016, energy products, which have typically dominated Malaysia’s imports from Saudi Arabia, continued to do so; moreover, the dollar value of Malaysia’s energy product imports from Saudi Arabia more than doubled over the previous year. Note also that, from 2015 to 2016, total trade with Saudi Arabia and Iran grew by 26 percent and 29 percent, respectively.
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