Malaysia PM signs defence deal in tilt toward China

BEIJING (AFP) – Malaysia and China signed a defence deal and pledged closer cooperation in the South China Sea Tuesday (Nov 1) , signalling a potential strategic shift by Premier Najib Razak as his ties with the United States fray over a corruption scandal.

Najib’s week-long trip marks another potential setback for Washington’s “pivot” toward Asia, two weeks after President Rodrigo Duterte of longtime US ally the Philippines visited China with olive branch in hand.

Meeting at Beijing’s Great Hall of the People, Najib and his Chinese counterpart Li Keqiang witnessed the signing of nine agreements spanning defence, business and other spheres.

“I believe this visit will bring our bilateral ties to a new high... a historic high,” Najib said prior to meeting with Li.

Asked for details of the defence arrangement, Chinese vice foreign minister Liu Zhenmin said that the two countries were “focusing on naval cooperation,” adding that the deal “marks a big event in our bilateral ties.” 

China and Malaysia have an outstanding territorial dispute in the South China Sea, which is claimed almost in its entirety by Beijing.

Parts of the vast maritime region are also claimed by the Philippines and Vietnam, among others, who have found themselves caught in an increasingly tense dispute between the US and China over Beijing’s construction of military-capable artificial islands in the region.

“China and Malaysia are littoral states of the South China Sea so we need to enhance our cooperation to ensure peace and stability in the South China Sea and enhance our mutual trust,” Liu said.

Last month in Beijing, Duterte stunned observers by announcing his country’s “separation” from longstanding partner the United States.

Though he subsequently backed off, saying their alliance remained intact, the episode underlined China’s increasing diplomatic and economic gravitational pull at the expense of the United States.

Najib’s visit provides fresh evidence, said South-east Asia politics analyst Bridget Welsh.

“This is the new regional norm. Now China is implementing the power and the US is in retreat,” she said, adding Washington’s Asia “pivot” was “dead in the water”.

Taking office in 2009, Najib reached out to Washington, and relations warmed following decades of periodic distrust.

But he has increasingly leaned toward China as it became Malaysia’s biggest trading partner, and especially after the eruption last year of a massive corruption scandal implicating Najib and a state investment fund he founded.

Billions are alleged to have been syphoned from the fund, 1MDB, in a stunning international campaign of embezzlement and money-laundering that has sparked investigations in several countries.

Najib’s ties with Washington became strained when the US Justice Department moved in July to seize more than US$1 billion (S$1.4 billion) in assets it says were purchased by Najib relatives and associates using stolen 1MDB money.

Justice Department filings said a “Malaysian Official 1” took part in the looting. Malaysia has since admitted that official was Najib.

Najib and 1MDB deny wrongdoing and have railed at foreign forces they say concocted the scandal.

1MDB launched a fire sale of assets to stay solvent, and China’s biggest nuclear energy producer China General Nuclear Power Corporation came to the rescue last year, purchasing its power assets for US$2.3 billion.

Depressed oil prices have slashed government revenue in energy-exporting Malaysia, which also faces rising public-sector debt.

“This trip reflects not only Malaysia’s geostrategic re-alignment to China as the ‘regional banker’ but also the reality that Najib is desperate for alternative financial sources,” Welsh said.

China has increasingly won major infrastructure and other projects in Malaysia.

Among the agreements was one to build a new rail line on Malaysia’s east coast.

Later this week Najib will meet President Xi Jinping, as well as Jack Ma, founder of e-commerce giant Alibaba.

The straits Times Singapore

PUBLISHED

NOV 1, 2016, 7:37 PM SGT

Chinese, Malaysian navies to cooperate in South China Sea

BEIJING (AP) — China and Malaysia said their navies will cooperate more in the politically sensitive South China Sea in an agreement signed Tuesday during a visit by Malaysia's leader, who is seeking stronger ties with Beijing as he tries to offset a financial scandal at home.

Prime Minister Najib Razak hopes to use his visit to Beijing this week to woo new investment and boost his image as he is shunned by Western leaders over the scandal, which has prompted a U.S. government investigation, analysts say.

He was given a red carpet welcome Tuesday by his Chinese counterpart, Li Keqiang. After meeting at the Great Hall of the People, they oversaw the signing of agreements, including a memorandum of understanding on defense cooperation.

"We have not touched upon the details of our cooperation. Mostly we are focusing on naval cooperation," Vice Foreign Minister Liu Zhenmin told reporters afterward. As China and Malaysia are both South China Sea coastal nations, "we need to enhance our naval cooperation to ensure peace and stability in the South China Sea and enhance our mutual trust," he said.

Beijing asserts that virtually all of the South China Sea is Chinese territory, but an international tribunal ruling in July invalidated those sweeping claims. China has ignored that ruling. Six other Asian governments also claim part of the South China Sea, and some observers see it as a potential flashpoint that could spark conflict one day.

Najib is the second leader of a nation with rival territorial claims in the South China Sea to visit Beijing in two weeks. The first, Philippine President Rodrigo Duterte, played down his country's dispute with China.

The international tribunal case was initiated by Duterte's predecessor, and Duterte has sought to cast himself as far more conciliatory, an approach that appears to have paid off. While Chinese coast guard ships continue to guard a tiny, uninhabited shoal that China effectively seized in 2012, Filipino fishermen have been allowed to fish there for the first time in four years.

Malaysia claims a swath of the South China Sea north of Borneo, along with islands and reefs, but has been relatively understated amid the feuding among fellow claimants China, Vietnam and the Philippines.

Last month, Najib said Malaysia will not compromise on its South China Sea claims, but wants them to be hashed out through dialogue and peaceful negotiations.

Liu said Najib agreed with the Chinese premier "to further advance the proper settlement of the South China Sea issue on a bilateral channel and through dialogue." Beijing always prefers negotiating disputes on a one-to-one basis with the countries concerned, so it can bring more pressure to bear.

Liu said the two sides also agreed to enhance cooperation in infrastructure, agriculture, trade, investment and law enforcement, and will work together to build an east coast railway link in Malaysia and an oil and gas pipeline in Sabah. All this cooperation "will bring our relations to a new high," Liu said.

Najib is to meet President Xi Jinping on Thursday.

Najib has been implicated in a U.S. government investigation into massive fraud at a Malaysian investment fund he founded known by the initials 1MDB. The U.S. Department of Justice said in a lawsuit seeking to seize assets in the U.S. that at least $3.5 billion was stolen from the fund and diverted through a web of shell companies and bank accounts in Singapore, Switzerland, Luxembourg and the United States.

Malaysia's attorney general has defended Najib, even as his popularity at home has plummeted in recent months.

James Chin, director of the Asia Institute at Australia's University of Tasmania, said Najib wants to attract more Chinese money to make up for a drop in foreign direct investment from Western countries spooked by the scandal. He said Najib also wants to show that "there are still powerful countries around the world that are still willing to give him the five-star or red carpet treatment."

"He's showing the Malaysian domestic audience that a new upcoming power like China is still willing to host him, because it is quite obvious that he can't get the same treatment in Western capitals anymore," Chin said.

While Najib has more riding on the visit, the Chinese government is also eager to increase its clout with Malaysia as it looks to develop its "One Belt, One Road" initiative. Under Xi's signature foreign economic expansion strategy, China aims to strengthen land and sea links and bilateral cooperation with the rest of Asia, Africa and Europe. One part of that is a planned high-speed railway from Singapore to the southwest of China which will pass through Malaysia.

"China for its part wants to be closer to Malaysia in economic and political terms because it's trying to draw Malaysia into its sphere of influence," Chin said.

Relatives of Chinese passengers on Malaysia Airlines Flight 370, which went missing in 2014 en route to Beijing, are clamoring to meet with Najib during his visit. About 10 relatives went to the Foreign Ministry and later to the Malaysian Embassy on Tuesday.

The Associated Press - By By LOUISE WATT - Associated Press

November 1, 2016 1:10pm

LMS Purchased From China To Be Built By Joint Venture: BNS +China Shipbuilding & Offshore International Co Ltd.

KUALA LUMPUR: The construction of the four Littoral Mission Ships (LMS), purchased by Malaysia from China, will be done by a joint venture between Boustead Naval Shipyard Sdn Bhd and China Shipbuilding & Offshore International Co Ltd.

Defence Minister Datuk Seri Hishammuddin Tun Hussein said the construction of the ships, procured in conjunction with Prime Minister Datuk Seri Najib Abdul Razak's official visit to the Republic of China, would be monitored by his ministry and the State Administration for Science, Technology and Industry for National Defence (Sastind) of the Republic of China.

"Yesterday, PM Najib Razak has announced the purchase of four LMS in conjunction with his official visit to China. This landmark decision marks the first time in history Malaysia will be procuring a defence asset from China.

"The first LMS will be ready within 24 months upon contract signing and the allocation for the purchase is Off-Budget, which means the funding will come from the Royal Malaysian Navy (RMN) through savings acquired from the 15-5 Transformation Programme," he said in a statement posted on his Facebook page today.

He said this was part of the several initiatives to achieve 'efficiency savings' where the RMN would be decommissioning old vessels that cost a lot to operate and maintain and channelling these funds to buy newer ships which have the latest equipment to obtain operational and maintenance savings.

Through this transformation, the RMN Armada would be revamped to only five classes of ships from 15, he said.

"I believe that this is a creative, transformative and cost-effective initiative to improve our asset base to ensure defence remains a top priority.

"In fact, the acquisition of the LMS also meets the RMN's requirements based on the concept of 'fit for purpose', designed to conduct multi missions in a challenging littoral environment. The LMS also meets international maritime standards," he explained.

Hishammuddin, who is among the Malaysian delegates for the six-day visit, which began Monday, said two of the LMS would be built in China, while the other two would be made in Malaysia.

- Bernama

Published on Thursday, 03 November 2016 09:55

No Information Leak By Insiders In ESSCom

KUALA LUMPUR: Minister in the Prime Minister's Department Datuk Seri Shahidan Kassim denied any leak of information by 'insiders' in the Eastern Sabah Security Command (ESSCom) on security operations in Sabah waters.

However, he did not rule out the possibility of the information being shared by illegal immigrants having family ties with terrorists who attacked the east coast of Sabah.

"There is no leakage of information through insiders from ESSCom, " he said when winding up the debate on the Supply Bill 2017 at the Dewan Rakyat here Wednesday.

The issue was raised by Datuk Dr Ewon Ebin (BN-Ranau) when debating the bill.

Shahidan, who is also Arau Member of Parliament, described as unreasonable a proposal by Wong TienFatt@Wong Nyuk Foh (DAP-Sandakan) for the government to disband ESSCom as it had failed to protect the waters off Sabah.

"ESSCom's responsibility is to ensure that the waters in Sabah is safe. Its establishment is to prevent intrusions in the eastern coast of Sabah following the incident in Kampung Tanduo, Lahad Datu," he added.

- Bernama

Malaysia’s Navy Deal with China: Meeting A Complex Security Challenge

By Koh Swee Lean Collin

Synopsis Beyond geopolitics, the latest revelation of Malaysia’s purchase of Littoral Mission Ships from China needs to be viewed in perspective.
Commentary PRIME MINISTER Najib Razak’s current visit to Beijing has been underscored by what the Malaysian leader described as a “landmark decision” - a two-year defence contract to buy and build four Littoral Mission Ships (LMS) from China. This deal might have come across as surprising to many who have long known that Malaysia has customarily operated Western naval equipment. As Najib told the Malaysian media in Beijing: “I call this a landmark decision because before this, we had not bought such vessels from China.”

Such a revelation sparked much speculation about Kuala Lumpur’s further geopolitical shift towards Beijing and consequent ramifications for regional security, especially the United States’ Asia rebalancing strategy. But geopolitics aside, this deal, if it is formally inked and implemented, should not have come across as any surprise. In fact, last year the Royal Malaysian Navy (RMN) reportedly also mulled Chinese replacements for the aging Italian-made missiles on board its Laksamana-class corvettes.

Persistent Shortfalls

Notwithstanding Malaysia’s sprawling maritime zone that spans from its Indian Ocean-facing peninsular western seaboard, all the way across the South China Sea to the Celebes and Sulu seas off Borneo, the country has long been afflicted by budget and equipment shortfalls.

In the face of such immutable geographical circumstances, what has become more pertinent in recent years has been the increasingly complex maritime security challenges Malaysia is confronted with. Eastern Sabah remains a key focal point – a problem that stemmed from the 2013 infiltration by Sulu militants into Lahad Datu, and most lately, the spate of “kidnap-for-ransom” incidents in the Sulu Sea, involving attacks on Malaysian vessels.

In this regard, the Eastern Sabah Security Command (ESSCOM) has consumed a
huge chunk of funding – over RM1.1 billion (about US$263 million) at least had been allocated under the previous state budgets. These do not simply go to purchase of physical surveillance and patrol assets, but also land infrastructure construction, including the ESSCOM Fusion Centre. More recently, with the rising threat from the self-proclaimed Islamic State, Kuala Lumpur also raised its maritime security alert posture along the coasts of peninsular Malaysia.

Not a Strange Purchase

Overall, the Malaysian Armed Forces is no stranger to purchasing equipment from sources outside its traditional Western circles, including Poland and Russia since the 1990s. An interesting example is the Sukhoi Su-30MKM Flanker, essentially a hybrid multi-role fighter jet combining a Russian airframe and retaining some of its baseline native systems with a mixture of South African and Western components. Viewing today’s cut-throat competition in the global arms market, it has become an imperative for suppliers to meet customers’ demand for “mix and match”, customising platforms according to their needs. This way, the customer is not necessarily beholden to one source.

Of course, this can lead to various problems; for example, it becomes more
complicated to integrate systems from different sources together on a common
platform. There may also be consequences for after-sales life cycle support,
especially concerning logistics.

Neighbouring Thailand is a proximate example to look at this reported LMS purchase from China. Back in the early 1990s, as part of its major naval buildup Thailand acquired several warships from China, including four Chao Phraya/Kraburi-class frigates which were essentially Jianghu-III/IV outfitted with all key Chinese systems.

The Royal Thai Navy (RTN) was reportedly dissatisfied with these ships, citing poorquality systems and frequent breakdowns.

Subsequent buys changed the equation. A pair of Naresuan-class frigates was
purchased in the mid-1990s, again based on a modified Jianghu hull but outfitted
with mainly Western systems and only some Chinese components. These ships
worked fine, and remained the RTN’s principal surface combatant at least until the new South Korean-built DW3000H frigate enters service.

Bangkok appears satisfied – after 2007 it commissioned a pair of Pattani-class
offshore patrol vessels, based on Chinese hull but outfitted with Western systems.
The lead ship, HTMS Pattani was deployed to the Gulf of Aden in 2010 to join in
counter-piracy operations.

Challenging Fleet Rationalisation?

The Malaysian LMS fleet is thus foreseeably not going be a “thorough-bred” Chinese ship with all Chinese systems, but likely a hybrid platform based on a Chinese hull combined with various Western and Chinese components.
In the current climate of austerity – the defence budget allocated for 2017 is US$3.6 billion, a 13% drop from about $4.1 billion the previous year. In the face of pressing operational and technical requirements to address capacity shortfalls to cope with a myriad of complex, evolving maritime security challenges across a vast domain, this “mix and match” approach may constitute a means to diversify supply sources.

However, for the RMN which has been using Western systems, it may take time to familiarise with and assimilate the new platform and its systems in service. Logistics also potentially constitute a long-term challenge to the 15-to-5 Armada
Transformation Programme proposed by the navy’s leadership early this year.
The plan envisages reducing the current 15 classes of vessels, averaging 30 years
of age and sourced from seven different countries, to five broad categories: 1)
Second-Generation Patrol Vessel-Littoral Combat Ship; 2) New-Generation Patrol Vessel (Kedah-class); 3) LMS; 4) Multi-Role Support Ship and 5) Submarine (modified Scorpene; Tun Abdul Razak-class).

Balancing Priorities

For now, what take precedence are addressing the need for block replacement of
ageing systems and maintaining at least a critical mass of assets and thus
operational readiness in peacetime. Kuala Lumpur will continue to be fixated on
eastern Sabah and generally the rising terror threat posed by IS.
This means possibly lesser funds available in future for “big-ticket” purchases but instead, simpler, less expensive yet more useful patrol vessels (especially for the Malaysian Maritime Enforcement Agency).
The Malaysian example is not the first, and likely not the last, where it comes to the tough act of balancing competing economic, political and operational priorities in the process of building maritime forces capacity – especially in the era where new, lower-tier players have emerged amongst the global arms suppliers.

Purchasing arms from China may not necessarily reflect just Malaysia’s geopolitical choice, but more pertinent concerns over day-to-day upkeep of an effective yet costconscious force capable of tackling immediate security challenges at sea.


Koh Swee Lean Collin is a Research Fellow with the Maritime Security Programme at the Institute of Defence and Strategic Studies, a constituent unit of the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.
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