June 21, 2024

Indonesia-Malaysia Relation: Past and Today

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By: Kashif Anwar: Research Analyst, GSDN

Indonesia and Malaysia: source Internet


Historical relationship between Indonesia and Malaysia is intertwined and can be traced to 7th century AD, as throughout the history, their borders have overlapped one another, as witnessed during ancient kingdoms and empires like the Srivijaya Empire, Majapahit Empire, Malacca Sultanate, Johor Sultanate, and Bruneian Sultanate. As a result, it promoted interaction between the Indonesian and Malaysian people, who trace their origins to the other side, which helped them establish diplomatic ties in 1957. A decade later, establishment of the ASEAN in 1967 by Indonesia, Malaysia, Singapore, Thailand, and the Philippines highlighted depth of Indonesia-Malaysia relationship. Like other countries of the world who often enjoy a healthy relationship with a particular nation despite their differences and issues, such aspects are visible in the case of Indonesia and Malaysia.

The Indonesia-Malaysia relationship

As there has been a special relationship between Indonesia and Malaysia throughout the history of the Malay Archipelago which continue to enhance connection and cooperation between both nations. Despite such connection, there always suspicion of the other’s military power, possible plans for domination, and hidden agendas which to some extent present in the case of Indonesia and Malaysia. After establishing diplomatic relationship in 1957, the period between 1957 and 1967 and later between 1985-2017 which viewed as troubled phase in the Indonesia-Malaysia relationship. However, such aspect often results due to government policies and their priorities like when national issues and problems become a priority then concentrating on the issues that involved other country.

With both nations tied by a common religion, language, proximity and cultural heritage, often engage from one diplomatic spat to another over the years. Despite such aspect, Indonesia and Malaysia also enjoys a warm and cordial relation and in 2005 the bilateral relationship was enhanced, allowing both state head to have annual consultation. Further, both nations have also demonstrated their relationship through an active engagement and worked to provide a sound framework for the relations to prosper, economic cooperation which has greatly benefitted both sides. In 2022, the bilateral trade stood at US$ 27 billion which has under-score their economic interdependence and shown willingness to bolster trade through Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) to foster economic growth and integration along their border.

Prospects and Issues in the relationship

Considering the intricate world of international diplomacy, nations are working to strengthen their relationship with other like-minded nations and address the gap in their bilateral relation. Such aspect is clearly visible in the case of Indonesia-Malaysia partnership which stands as a noteworthy example of the effectiveness of collaborative efforts in the realm of global politics. As it allows both nations to strengthen their economic partnership which serves as a foundation upon which both countries have built a harmonious and mutually beneficial connection which allow them to enhance cooperation across various sectors. However, despite such a connection, both countries have difference and issues like the territorial and maritime dispute which emerged due to their colonial past, Indonesian migrant worker condition in Malaysia issue and the trans-border illegal logging are few of them, namely.

Despite the difference in issues, it allows Indonesia and Malaysia to expand cooperation in other fields too like in defence cooperation, strengthening cultural relations and are working to improve in-take of students and tourists. Such steps and interaction and exchange at high level like to counter the Covid-19 pandemic or fighting the threat of extremism and Islamophobia and between people have shaped the framework of the Indonesia-Malaysia relationship and assisted over the years. Further, since 2020, both nations have worked to address the territorial and border issue in the case of Ambalat region and Sulawesi Sea. As during Indonesian President Joko Widodo’s visit to Malaysia in early 2023, two significant agreements were reached regarding the delineation of their territorial waters in specific sections of the Straits of Malacca and the Sulawesi Sea. As a result, both nations have committed to addressing additional land boundary disputes with the goal of resolution by June 2024. 

In the case of trade and economy, they view the potential for expansion in broadening trade horizons and look for ways to look beyond palm oil sector and venture into collaborative infrastructure ventures. As they continue to fortify their trade networks, invest in each other’s economies, and engage in transformative infrastructure projects, Indonesia and Malaysia are not only poised for a remarkable economic growth but also positioned as drivers of regional stability and progress in Southeast Asia. Considering changing geopolitics in the South China Sea and around the Malacca Strait due to expansion of Chinese naval, commercial and maritime activities in the region, Indonesia and Malaysia signed Memorandum of Understanding in 2022 which will strengthen military cooperation and undertake joint military exercises like Malindo Kekar Exercise, periodic bilateral dialogues and consultations on strategic issues related to defence and military as a common interest and also promote strategic information sharing.

With Indonesia and Malaysia being impacted by China’s claim in the South China Sea dispute as later unlawful claim and expansion in the southern most region of the 9-dash line has overlapped maritime territories of Indonesia and Malaysia. On the other hand, considering the economic and trade weight with China has kept Indonesia and Malaysia’s response to the Chinese actions minimal. Furthermore, both nations continue to display the politi­cal intent to oppose Chinese control and long-term strategic intent in the South China Sea region, which so far has resulted in overlapping efforts to improve their own maritime capabilities and increase security cooperation with the US and its allies. As both nations have strategic partnership with the US, they’re viewed as a fulcrum in the Southeast Asian region to counter China and ensure a stability in the Indo-Pacific region.


For many decades, both nations have cooperated in policing the Malacca Strait, and changing geopolitics in the Southeast Asia and South China Sea to provide them an opportunity to enhance their strategic partnership. However, despite such cooperation and understanding between both nations who have only improved their bilateral relationship over the decades from economic to trade to cultural interaction and has solidified their bilateral relationship and partnership.

On the other hand, Chinese activities in the South China Sea region has become a concern for many countries in the Southeast Asia and has often undermine the impact and credibility of ASEAN. Malaysia’s reluctance to accept grand narrative, perception, and role to play to counter China remain a hurdle in the Southeast Asian region is of immense importance. As the 2017 Trilateral Cooperative Arrangement between Indonesia, Malaysia and the Philippines, regular patrolling, coordination and intelligence sharing mechanism, provides a sense of hope and has allowed others to address the limitation which comes with Malaysia to counter Chinese activities in the South China Sea.


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