Indonesia-Malaysia Relations: How does it fare overall?

Updated On: Jan 17, 2006

The two countries of Indonesiaand Malaysiahave seen disturbances in their relationship over the past few years including the burning of flags by agitated citizens over Ambalat and when the ICJ awarded rights over Sipadan and Ligitan islands to Malaysia.

From illegal logging/ smuggling to human trafficking/illegal immigration to the transboundary haze originated from Sumatraand Borneo, KL and Jakartahave been at odds. Each year, the Indonesian haze returns to sting Malaysian eyes and break the cycle of diplomatic niceties.

Another thorn in the relations between the two countries is the ongoing spat over Malaysia`s unilateral decision to give a concession for oil exploitation and management of the Ambalat block to Royal Dutch Shell in February 2005. The dispute had previously sparked a tense stand-off between the navies of the two countries in the SulawesiSeaIndonesiahas since disputed Malaysia’s claim over Ambalat by providing historical evidence dating back to the Bulungan Sultanate to substantiate its ownership. Following Malaysia’s confrontational move, Jakartahas responded by allowing the construction of a lighthouse in the Unarang atoll.

The Indonesians rejected Malaysian proposal of joint development of the Ambalat oilfield. Foreign Minister Hassan Wirajuda communicated Indonesia’s stand to Malaysian Foreign Minister Syed Hamid, making it clear that it is a “matter of principle”, a codename for Indonesian sovereignty, to protect Indonesia’s interest in this matter, and accused Malaysia of “poaching”.  "We said no. We have an interest in solving the dispute once and for all first. A joint development is out of the question. This is our position," he added.  To reiterate Indonesia’s position, Hassan made the remarks on the sidelines of an informal meeting between Indonesian President Susilo Bambang Yudhoyono and Malaysian Prime Minister Abdullah Badawi in Bukittinggi, West Sumateraon 12 and 13 January 2006. To add salt into the wounds, the oilfields are located near Sipadan and Ligitan islands. Indonesiais still hurting from the decision of the International Court of Justice at the Hague, the main judicial office of the UN, to award Sipadan and Ligitan islands to Malaysiaon Dec 17, 2002. The ruling is binding without avenues for appeals and the Court voted sixteen to one that Malaysiawon the sovereignty claims,

It is suggested that the foundations to closer bilateral relations might be interactions and dialogues at the grassroots level. This would break the cycle of on-off, warm-cold relations that have characterized Indonesian-Malaysian diplomatic relations since the Asian financial crisis  in 1997. It might also break the over-reliance on senior politicians to mend the fences. Too many times have ties depended on the personal bond between leaders like Prime Minister Datuk Seri Abdullah Ahmad Badawi and President Susilo Bambang Yudhoyono (SBY). Grassroots interactions are important because, even at the height of crises, ties were maintained at the popular level including business people and the bureaucracies of both countries. To underline this importance, Malaysian Prime Minister Abdullah Datuk Seri Abdullah will visit an Indonesian resort and meet Malaysian students and media today before returning home in the evening. These students could potentially form the forefront of Malaysia’s grassroots outreach to Indonesia

Abdullah Badawi and SBY, meeting in Bukit Tinggi in West Sumatra, hope to foster closer ties at different levels by bringing large delegations including junior subordinates in charge of the daily administrative affairs to familiarize themselves with one another. The Malaysian Prime Minister brought along a 100-strong delegation, including nine ministers, five state chief ministers and many senior government officials like Foreign Affairs Minister Syed Hamid Albar and International Trade and Industry Minister Rafidah Aziz and corporate representatives. Trade and commerce were apparently on the minds of the two parties as well.

Economic cooperation included increasing bilateral investments, oil palm plantations, a new tax agreement, an offshore gas pipeline construction deal, developing markets for palm oil and avoidance of double taxation. However, corporate interactions need a bigger boost. While officialdom can be patched up, Malaysian businessmen are still complaining about Indonesian red tape, hostile unions, unrealistic labour laws and poor infrastructure in holding back their investments.


* RI Rejects Malaysian Proposal for Joint Operation in Ambalat (Antara, Jan 14)

* EDITORIAL: The high road to better ties (NST, Jan 15)

Jakarta, KL may jointly explore for oil (ST, Jan 13)