India Fills Security And Geopolitical Gaps For Malaysia – Analysis
Malaysia’s Prime Minister Anwar Ibrahim’s visit to India is long overdue and timely, in elevating a new way forward of a strengthened Kuala Lumpur-New Delhi ties, which forms one of the most strategic and critical bilateral relationships in the region for both economic and geopolitical domains.
Anwar’s three-day visit is also a chance to reset Malaysia’s relations with India, following a hangover from a spat with New Delhi previously. There has not been a visit by a Prime Minister to India for the last six years, and this is a critical and strategic time for Malaysia to reset and enhance its vital ties with New Delhi.
It reaffirms the commitment to elevate and reset the ties based on mutual trust and understanding and the steadfast shared values of democracy and rule of law in a values-driven approach.
Areas of joint interoperability and cooperation to tackle other non-traditional maritime and transboundary threats will provide a positive chain impact on both players’ readiness and mutual trust.
Both Kuala Lumpur and Delhi remain strategically interlinked in security assurances and positive returns.
India fits the spectrum of this new sphere of defence partnerships pillared on the moral high ground of values, democracy and rule of law.
India’s prospects remain vast and exciting, as encapsulated in the recent report by Goldman Sachs that New Delhi is projected to become the second largest economy in the world by 2075, surpassing Japan, Germany and the United States.
The factors mentioned as driving this projection are India’s favourable demographics, innovation and technology, higher capital investment and rising worker productivity.Innovation and increasing worker productivity are going to be game changers in exerting greater output for each unit of labor and capital in India’s economy.
India provides immense openings for the region to be part of the new spectrum of economic leadership that is moulded on the crest of value driven and responsible models and approaches that prioritise human rights, climate responsibility, rule of law and democratic principles.
Delhi remains an ever more critical bulwark of stability, trust and norms in maintaining regional stability and in promoting a value-based engagement and peacebuilding efforts.
Trust and confidence provide the critical foundations to secure joint aspirations of a free, open and a rules based regional order.
India’s inevitable regional and global leadership provides a much welcomed new opening for the country and the region in their security calculations and options.
Delhi remains the region’s overlooked but critical partner in providing the economic and security fallback that is based on values, trust and proven expectations on its trajectory of behaviours and intent.
Malaysia remains a crucial partner for New Delhi and vice versa, and we must strategically elevate our defence and security ties with this next global economic and military power for both our long term assurances and regional stability.
The shift from a strategic partnership to a comprehensive strategic partnership in 2015 during PM Narendra Modi’s Malaysia visit showcased how much importance India attaches to Malaysia as a part of its Act East Policy.
India’s commitment to keep the Indo-Pacific region inclusive, peaceful, rule-based, and open, is in line with ASEAN’s AOIP (ASEAN Outlook on Indo-Pacific). India’s IPOI (Indo-Pacific Oceans’ Initiative) and SAGAR (Security and Growth for All in the Region) initiatives have reaffirmed India’s image as a responsible stakeholder and security provider in the region.
India’s New Geopolitical Power Provides Security and Economic Assurances for Malaysia and ASEAN
India also recently celebrated its Independence Day on 15th August. Rapid growth in the past several decades has seen the acceleration in urbanization, industrialization, and household incomes.Policy reforms undertaken by Modi have seen several long term strategic action plans in place, from Smart Cities Mission to Digital India and Make in India initiatives.
Startups, digital creators, unicorns, gig economy , these are the new vocabulary of the new Bharat, as argued by Modi and the dream of the next 1000 years hinges on the chess moves set by Modi in his reform drive and in tackling core fundamentals including poverty, housing, and income levels.
The rising internet penetration has seen the number of internet users increased to 840 million broadband users, having among the cheapest broadband prices in the world.
India’s digital economy grew 2.4 times faster than the economy between 2014 and 2019 generating around 62.4 million jobs. The size of the digital economy has grown from US$108 billion in 2014 to US$223 billion in 2019.
India is overhauling its local infrastructure domain in a massive leap of physical development. Highways are built at a rate of 28km a day, and railways at 12km a day. The number of airports has doubled in the last 9 years to 148 now.
The need to undertake policy reforms is critical in improving the ease of doing business and a greater investment inflow, which has seen reforms in land acquisition, labor laws, and regulatory frameworks being simplified.
The Make in India initiative that was launched in 2015 covered 27 sectors of the economy, and the manufacturing sector in GDP is set to increase from 13% to 21% of GDP by 2031.
Energy transition and new energy drive have been the core of regional geopolitics, driven by the scramble for energy and food security and assurances in supply chain and maritime domain security. India’s role in the global energy transition is increasingly clear.
For the next 20 years, 25% of the increase in global energy demand is going to come from India, with the target of net zero emissions by 2070. New Delhi is ranked 3rd in the renewable energy country attractive index.
Innovation remains the periphery of India’s new economic drive, and is now home to the world’s third largest Startups at 119,000 at present from a mere 600 in 2016, with about 111 unicorns valued at about US$ 350 billion, as of late last year. It presently has the third-largest unicorn base in the world.
All these present great openings for Malaysia to strategically leverage on, and to rebuild relations based on trust and confidence, underpinned by future driven demands and shared coexistence and geopolitical needs.
The One Future Alliance serves to offer solutions in leading the Global South in addressing the world’s most pressing challenges. The ‘Aarogya Maitri’ project will see India provide essential medical supplies to any developing country affected by natural disasters or humanitarian crises, further reinforcing its role as the leader of the Global South.
Modi aspires to turn India into a vishwaguru, or “teacher to the world”. In this sense, technological prowess is his answer. The digital transformation has produced life changing impact and changes to the people where digital payments can now be accepted, with direct benefit transfers and slashing corruption. Estimates are as such that this has helped to save US$34bn, or 1.1% of GDP, from 2013 to 2021.
The biggest piece of the puzzle that is missing is India’s role as both the balancer and the primary power challenger to any powers that might upset the balance and regional rules based order, including China. Beijing’s rapid ascendency in the past three decades have transformed the entire power and economic equation in the region, and until recently, there is no adequate power balancer to this new power dynamic apart from the West.
New Economic Powerhouse and Power Balancer
India became the 5th largest economy (GDP of US $3.75 trillion economy) by September 2022, rising from 10th position in 2014 to 5th largest in a span of 9 years.In latest projections, India is set to become the world’s 3rd largest economy by 2027, in the next three years, providing the critical buffer and alternative to the Chinese led dominance in supply chain, critical minerals and core economic fundamentals of the market, consumerism, trade and digital, technology and innovation led economy.India’s stock market became the 4th largest in the world last May in 2023.
It will remain as the fastest growing major economy, expanding three times the pace of the global average with a growth rate of 6-7% until the end of this decade.
Projections for 2100: National Bureau of Economic Research Cambridge has produced the projections and simulations for the next century that by 2100, India is set to become the world’s second largest with 16% of 2100 world GDP.If recent productivity continues and demographic projections prove accurate, India will become world’s largest economy accounting for one third of world output in 2100.
One of India’s greatest future potential and strength is its demographic advantage. It is now the most populous nation on Earth with a population of 1.4 billion. Most importantly, the median age is just around 28 years, and a rising population of about 900 million in the working age (15-60 years).It remains a relatively young nation with 65% below the age of 35 years.
This carries a significant weight and implications for the next century in the region, especially when compared to the declining demographic advantage of China and other regional neighbours including Japan. Europe will also see a similar decline in demographic advantage but India and the US will both reap the fruits of their young working population and a rising productive segment.
India has consistently surpassed expectations and chartings and is ranked as one of the fastest-growing economies in the world,India became the 5th largest economy (GDP of US $3.75 trillion economy) by September 2022, rising from 10th position in 2014 to 5th largest in a span of 9 years. It will provide the critical buffer and alternative to the Chinese led dominance in supply chain, critical minerals and core economic fundamentals of the market, consumerism, trade and digital, technology and innovation led economy.
India’s stock market became the 4th largest in the world last May in 2023. It will remain as the fastest growing major economy, expanding three times the pace of the global average with a growth rate of 6-7% until the end of this decade.
As the country emerges from the pandemic, however, a new pattern of growth is getting more visible. India has rolled out a national “tech stack”with rapid digitalisation and connectivity that have transformed the nation, shifting from an informal cash economy into a new century of technology and digital driven reform and advancement. This new core has turbocharged India to be the world’s third-largest startup scene after America’s and China.
Rapid growth in the past several decades has seen the acceleration in urbanization, industrialization, and household incomes.Policy reforms undertaken by Modi have seen several long term strategic action plans in place, from Smart Cities Mission to Digital India and Make in India initiatives.
Startups, digital creators, unicorns, gig economy , these are the new vocabulary of the new Bharat, as argued by Modi and the dream of the next 1000 years hinges on the chess moves set by Modi in his reform drive and in tackling core fundamentals including poverty, housing, and income levels.
The rising internet penetration has seen the number of internet users increased to 840 million broadband users, having among the cheapest broadband prices in the world.
The same trend can be observed in the new energy transition. India ranks third for solar installations and is pioneering green hydrogen. This is further bolstered as global players continue to lessen the supply chain dependence on China, and India’s attraction as a manufacturing fallback support has risen. This is being capitalised on by New Delhi through a US $26bn subsidy scheme.
India’s digital economy grew 2.4 times faster than the economy between 2014 and 2019 generating around 62.4 million jobs. The size of the digital economy has grown from $108 billion in 2014 to $223 billion in 2019.
Highways are built at a rate of 28km a day, and railways at 12km a day. The number of airports has doubled in the last 9 years to 148 now.
The need to undertake policy reforms is critical in improving the ease of doing business and a greater investment inflow, which has seen reforms in land acquisition, labor laws, and regulatory frameworks being simplified.
The Make in India initiative that was launched in 2015 covered 27 sectors of the economy, and the manufacturing sector in GDP is set to increase from 13% to 21% of GDP by 2031.
Energy transition and new energy drive have been the core of regional geopolitics, driven by the scramble for energy and food security and assurances in supply chain and maritime domain security. India’s role in the global energy transition is increasingly clear. For the next 20 years, 25% of the increase in global energy demand is going to come from India, with the target of net zero emissions by 2070. New Delhi is ranked 3rd in the renewable energy country attractive index.
Innovation remains the periphery of India’s new economic drive, and is now home to the world’s third largest Startups at 119,000 at present from a mere 600 in 2016, with about 111 unicorns valued at about US$ 350 billion, as of late last year. It presently has the third-largest unicorn base in the world.
India-Malaysia Strategic Interdependence
Malaysia needs to strengthen its deterrence, leverage and chips in the regional geopolitical play and vulnerabilities, and India remains the most critical and strategic power both in current and future forms in providing these multi-faceted returns to Malaysia.
In wanting to increase fallback options and to strengthen the country’s security deterrence, India provides the crucial and safest alternative, as Malaysia seeks to secure a more welcomed security partner.
Malaysia stands as a vital and emerging economic player in the South East Asian region, and with the new focus on future driven critical sectors including on energy transition, digital economy, high technology led economic transformation, critical minerals, semiconductors and EV and others, Malaysia presents a new economic opening for India and complements its Act East Policy.
Bilateral trade totalled US$43.3 billion last year. In 2023, Malaysia became India’s third-largest trading partner within ASEAN, with exports primarily driven by palm oil and electronics. Indian tourist arrivals in Malaysia have surged by 165% to 325,000 compared to 2019 figures.
India’s semiconductor industry is expected to reach $8.32 billion in 2024, growing annually by 8.68%. The country aims to become the world’s largest semiconductor manufacturing hub within 4-5 years, focusing on integrated circuits and system-on-chip technologies.
Malaysia is positioning itself as a key player in the global semiconductor market, aiming to attract 500 billion ringgit ($112.45 billion) in investments through its National Semiconductor Strategy. Malaysia will need India’s exchange of expertise and capacity in further advancing this sector.
India and Malaysia cooperate in a number of multilateral and regional foras such as UN, NAM, WTO, ASEAN, ARF, East Asia Summit (EAS), Commonwealth, Indian Ocean Rim for Regional Economic Cooperation, etc.
Defence and security will be the next strategic domain that Malaysia will need to leverage and tap into, as India’s rise as both an economic force and a rising player in defence and security especially in technology-led security advancement including naval capacity will be beneficial to the region’s rules-based order and peace and stability.
Malaysia forms an integral plan of its Act East Policy, as Malaysia is strategically located within India’s necklace of diamonds counter balancing strategy against China.India’s strategic dominance and base in Andaman Sea and Nicobar Island chain will further strengthen its blue water navy and power postures in the strategic waterways to strengthen integrated maritime security, upholding international maritime law and in polishing guardrails against any potential unilateral violations of rules and stability.
Indian Naval Ships and Indian Coast Guard Ships frequently make port calls at Malaysian Ports, with various military exercises including the Exercise SAMUDRA LAKSHMANA and HARiMAU SHAKTI.
Not only will they create guardrails against further risks to the existing chain of interconnectivity and economic linkages, they form a deeper second front capacity and bargaining chip against potential exploitation and openings for security and economic coercion and tools by other powers.
Establishment of the SU-30 Forum and the Strategic Affairs Working Group to elevate the cooperation between the two ministries remains a symbol of greater trust and intent.
With greater defence collaborations with India including in areas of new technological exploration and downstream industries in asset development, Malaysia’s self-reliance and safe dependence based on trust and mutual benefits with the right defence partner will produce positive returns.
In the domain of food and supply chain security, India is the largest buyer of Malaysian palm oil and a key exporter of rice to Malaysia.
India has been our top export market for palm oil for 10 years running, buying 2.84 million tonnes in 2023, or nearly 20 percent of Malaysia’s total palm oil exports. In contrast, China bought 1.47 million tonnes of palm oil shipments. This is one area that has not been fully realised by our people, and India remains a critical nation not only for defence, economy, trade and critical sectors such as semiconductor or energy transition.
Malaysia is also heavily dependent on India for its domestic food supply.
In March, Malaysia’s government put in a request to import an additional 500,000 metric tonnes of rice from the world’s largest rice exporter. The request was on top of an earlier rice export quota of 170,000 metric tonnes allocated for Malaysia for the year.
With renewed traditional threats especially in the region from the South China Sea conflict to tensions in East Asia, Malaysia will get greater security assurances from increased interoperability exchanges with the Indian military and deepening defence partnerships which will create further leverage and options for the country, especially in seeing how the next flashpoints and geostrategic focus will be in the Indian Ocean and the strategic pathways of Straits of Malacca and the Nicobar Island chain.
Malaysia must continue to deepen economic ties with India, but also in gaining enough multiplier impact to have the spillover effects in terms of bolstering people to people ties and gaining higher trust and confidence in the sphere of top level government to government engagements and the synergy among the business and the youth segments, transcending Track I and Track II alone.
Malaysia must increase economic, technological and trade presence in the next economic giant and to capitalize on India’s booming technology and digital economy and the critical areas of scientific advancement in advancing greater security assurances and bolstering joint support and trust in facing common geopolitical threats and challenges.