When the UK’s Duke and Duchess of Cambridge touched down in Kuala Lumpur in September 2012, the warm greeting they received from Malaysia’s public and politicians spoke volumes of the continuing strength of ties between the two nations. The royal couple’s visit also marked the high point of a year of British official visits to Malaysia, begun with Prime Minister David Cameron’s trip in April 2012 – the first by a British prime minister since 1993. Nine months previous to that, Malaysian Prime Minister Najib Razak had visited London, beginning a period of renewed momentum in relations. And these relations have deep roots, too.
HISTORICAL TIES: While unofficial trade goes back many centuries, the first official links between Britain and the Malay kingdoms were via the East India Company and Captain Francis Light, who founded the colony of Penang in 1786. From there, British influence quickly spread. In 1824, the Anglo-Dutch treaty gave Britain rule over Malacca and the newly established Singapore, with these territories then becoming the British-ruled Straits Settlements. The other Malay states of the peninsula also came increasingly under British influence, with the sultans gradually accepting British advisors and residents. This system laid many of the foundations for the federated character of today’s Malaysia, with the Malay states retaining much autonomy, yet also coming together under central rule, with Kuala Lumpur the administrative and political capital. In Eastern Malaysia too, British influence has long been deep rooted. Sarawak was for many years ruled by the “white rajahs,” a dynasty of Britons, while Sabah was formerly British North Borneo. Indeed, modern Malaysia was originally conceived as a post-colonial coalition of former British colonies and administered territories in the region. The states of the peninsula, originally including Singapore, thus gained independence from the UK in 1957, with Sarawak and Sabah joining to form Malaysia in 1963. Singapore then left the federation in 1965. The heritage left behind by the British is thus extensive, from three-pin electrical plugs to the prevalence of the English language and the basis in English law of much of the Malaysian judicial code. Over the years, many Malaysians have been educated in the UK too, including Prime Minister Najib, with many families containing members based in both countries.
MILITARY TIES: There have also long been strong military ties between the two. Malaysians fought alongside Britons during the Japanese invasion of 1941, while British forces also supported anti-communist Malaysians in the 1950s and assisted in blocking Indonesian designs on Eastern Malaysia in the 1960s. The two nations continue to be linked via the Five Power Defence Arrangements (FPDA), which brought the UK, Australia, New Zealand, Singapore and Malaysia together in 1971. The FPDA calls for joint consultation in the event of an attack on either Peninsular Malaysia or Singapore, and the five nations regularly conduct joint training exercises. Since independence, the state of diplomatic relations has also continued to be good, even as Malaysia has itself widened its global outlook away from its early focus on the UK post-colonial partnership.
Indeed, since the end of the Cold War in particular, Malaysia has increasingly looked to its neighbours in the ASEAN, to greater regional bodies such as the Asia-Pacific Economic Cooperation and to international bodies such as the UN and the Organisation of Islamic Cooperation to make its mark on the world (see analysis). Yet the UK relationship remains strong.
TEST OF TIME: “Economically, culturally and politically,” Prime Minister Najib wrote in an article published to coincide with September’s royal visit, “our bilateral relationship has stood the test of time. And it has done so precisely because our history and our values are so intricately intertwined.” It was that economic link in particular that the British prime minister had been most keen to expand on his visit to Malaysia in April.
TRADE: Indeed, this link is now a far cry from the dominant position Anglo-Malaysian trade enjoyed at independence. The latest figures available from the Malaysian Department of Statistics show that for the January-July 2012 period, total Malaysian exports to the UK were worth RM4.07bn ($1.31bn), down from RM4.14bn ($1.33bn) in the same period of 2011. Imports from the UK, meanwhile, totalled RM3.86bn ($1.23bn) in January-July 2012, up from RM3.39bn ($1.09bn) in the same period of 2011. This gave Malaysia a positive trade balance with the UK of RM211m ($68.06m) in January-July 2012, down from RM750m ($242.95m) in the same seven months in 2011.
These figures were less than trade with Germany, which exported RM14.13bn ($4.55bn) to Malaysia in the same period of 2012, during which time it imported RM9.65bn ($3.11bn) from Malaysia. Indeed, the Netherlands and France both conducted more trade with Malaysia in that period than the UK, making the UK only Malaysia’s fourth-largest EU trading partner. Many ASEAN countries, China, India, Japan and the US are all also larger importers and exporters than the UK.
LEARNING LINKS: Yet in certain areas, the UK still has a major role in Malaysia’s economic life. Education is one such arena. According to figures from the UK’s Department for Business Innovation and Skills (BIS), in April 2012 close to 14,000 Malaysian students were studying in the UK, while 58,000 more were studying for British qualifications in Malaysia. The latter figure is partly a result of the fact that a range of British universities have taken advantage of the Malaysian government’s push to develop its higher education sector, seeing this as a vital component in creating a knowledge-based economy.
Nottingham, Southampton, Liverpool, Reading and the University of London are only a few of the high-profile UK institutes with campuses and affiliations in Malaysia. The BIS figures for April 2012 show some 80 British educational and training institutions with Malaysian links. Much of this higher learning is in subjects that are highly technical and engineering-based. Cameron’s visit saw the signing of the UK-Malaysia Partnership in Education Agreement, alongside an announcement from the Chevening Scholarships programme, supported by BAE Systems, doubling the number of scholarships it was making available for Malaysian students to study in the UK. Dyson and the Lloyd’s Register Education Trust also announced 19 new engineering scholarships at the University of Southampton’s Malaysia campus.
INVESTMENTS: Cameron’s visit also saw deals finalised that illustrate other areas of major UK involvement in Malaysia. These include: energy, with Anglo-Dutch Shell announcing two production-sharing contracts with Malaysia’s Petronas to explore offshore Sarawak; utilities, with a £60m ($95.42m) memorandum of understanding signed between the UK’s Lifesaver Systems and Malaysia’s H2O to supply fresh drinking water to remote Malaysian villages; and transport, where the UK’s AECOM and Weston Williamson signed a £50.4m ($80.15m) deal for work on the Klang Valley Mass Rapid Transit system. Also among the deals signed during Cameron’s visit was a £10m ($15.90m) research and development investment in the UK by Malaysian life sciences company InfoValley – a deal that included installation of the first digital autopsy facility in Bradford, UK.
IN THE UK: At the same time, 2012 saw Malaysians capture global business headlines when a consortium consisting of Sime Darby, SP Setia and the Employees Provident Fund bought London’s iconic Battersea Power Station. After purchasing the site for £400m ($636.16m), the consortium announced an £8bn ($12.72bn), 15-year regeneration project that should see a mixed-use residential and commercial development take shape there.
This was not a one-off deal either, as Malaysians have been important players in the London real estate market for some time. According to figures from property consultants CBRE Group, Malaysians bought £1.3bn ($2.06bn) of London office property in the seven months to July 24, 2012 – more office property by value than the British bought themselves. Indeed, Malaysia was the top country for London purchases over the period, pushing the US into second place, at £793m ($1.26bn).
Other international headline grabbing Malaysian buys in 2012 included Permodalan Nasional’s £500m ($795.21m) purchase of One Exchange Square – formerly home to the London offices of the European Bank for Reconstruction and Development – and 90 High Holborn, previously home to law firm Olswang. Both are highly prestigious office buildings. Indeed, these examples of Malaysian involvement in the UK are widely thought by London property analysts to be part of a growing future trend, as Malaysian businesses seek a politically secure investment destination that promises a reliable long-term rate of return. That these qualities are also what attracts many UK investors, and many others, to Malaysia bodes well for the long-term growth of trade and investment between these two old partners.
Back in April 2012, the two prime ministers announced that they intended to boost total trade between them to £8bn ($12.72bn) by 2016. With current trends, the final total could turn out to be far more.
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