Bersih in Melbourne

Australia has more long-standing institutional and people-to-people ties with Malaysia than with any other Asian neighbour. But paradoxically, we have had more bilateral difficulties with Malaysia than any other Asian neighbour. Nonetheless the two countries have a range of enduring interests that have prevented major ruptures. And relations have improved dramatically since former Prime Minister Dr Mahathir Mohamad retired in 2003.

Overview of relations

In the 1950s, Malaya, which expanded to become Malaysia in 1963, was our closest regional ally. Contacts go back even further to the pre-independence period, when Australian troops fought extensively in Malaysia during the Second World War. One aspect that has gained much attention recently is the 1945 Sandakan Death Marches in Sabah, which resulted in deaths of 1,787 Australian prisoners of war; only six Australians survived. Less well known is the fact that Australian troops led the recapture of Sabah and Sarawak, which remains well remembered particularly in Sarawak. This set the basis for extensive military cooperation, which will be discussed shortly.

Successive Australian Liberal governments worked closely with Malaya’s post-dependence government headed by Prime Minister Tunku Abdul Rahman, united by ties in the British Commonwealth and a common anti-communism. Australia’s High Commissioner at the time, Mr Tom Critchley, had close personal ties with the Tunku.

Troubles began in 1969, following the May 13 racial riots, in which some 200 Malaysian lives were lost. Alarmed by these events Australia declared that its obligations under the FPDA would not extend to Sabah and Sarawak. The riots also brought to power new leaders who did not share the Tunku’s pro-Western foreign policy, and were committed to a more independent international role. One such leader was a politician who had just lost his seat in elections, was irritated by critical Australian media reports on May 13, and had an offer of a prestigious Department of Foreign Affairs and Trade Special Visitor’s Program withdrawn – that person was Dr Mahathir Mohamad.

Following these events Malaysian students participated in unruly demonstrations against Prime Minister Tun Razak during an official visit to Australia in 1975 (Mahathir was then the Education minister). The late 1970s also saw a series of bilateral trade disputes about access for Malaysian light manufactured goods and airline agreements (Mahathir was then Trade and Industry minister, and Deputy Prime Minister).

Difficulties in the 1980s arose over incidents such as:

  • Prime Minister Bob Hawke’s 1986 description of the hanging of two Australians for drug offences as ‘barbaric’, which Mahathir mistakenly took to be a description of Malaysians;
  • Several critical media reports on Mahathir and issues such as forest logging, particularly the 1988 SBS documentary, Slow Boat to Surabaya;
  • An open letter in May 1988 from 105 parliamentarians criticising Mahathir for mass arrests under the Internal Security Act in late 1987.

Relations then went from bad to worse in the 1990s:

  • For 12 months after October 1990, Malaysia downgraded diplomatic relations with Australia over the ABC TV program Embassy, seen as holding Malaysia up to ridicule. This was only resolved when PM Hawke agreed to dissociate the government from media reports;
  • In November 1993 PM Keating described Mahathir as ‘recalcitrant’ for not attending an APEC leaders meeting. It took three weeks for Keating to offer an expression of regret for any unintended offence. Around the same time – and more importantly – an article in the Financial Review referred to Mahathir as a mamak – a derogatory term for a Malay of Indian origin;
  • Mahathir’s sacking of Anwar in 1998 and subsequent showcase trial further exacerbated relations. In February 2000 sixty parliamentarians signed a letter protesting against the trial. In August 2000, when Anwar was found guilty on initial charges, Prime Minister John Howard suggested the conviction was political, and questioned the independence of Malaysia’s judiciary.

Mahathir replied strongly to each of these perceived slights, counter-charging that Australians were arrogant, and frequently criticising Australia’s record in dealing with aborigines. While many aspects of bilateral relations continued with little change during Mahathir’s long 22 year rule, he did have a serious impact by excluding Australia from a range of regional organisations such as the Asia-Europe Dialogue and annual ASEAN plus summits (to which China, Japan and South Korea had been invited), and blocking links between the ASEAN Free Trade Agreement and the Australia-New Zealand Closer Economic Relationship.

However, since Mahathir was replaced by Abdullah Badawi in 2003, and Najib Tun Razak in 2009, bilateral relations have forged ahead. Bilateral visits at the highest level have been frequent, Australia has joined ASEAN plus summits with establishment of the East Asian Summit (2005), a trading link between Australia-New Zealand was established in 2010 (the ASEAN–Australia–New Zealand Free Trade Agreement), and a bilateral trade agreement was achieved in 2012 (the Malaysia–Australia Free Trade Agreement (MAFTA).

The relationship has faced several challenges. Liberal and National party parliamentarians strongly criticised Malaysia’s human rights record at the time of the proposed ‘Malaysia solution’ involving housing some of its refugees in Malaysia. In February 2013 Malaysia detained then expelled Senator Nick Xenophon, when he arrived as the first of a multi-party parliamentary delegation to observe preparations for general elections. And there has been ongoing parliamentary concern about democracy in Malaysia, reflected particularly in hearings by the Joint Foreign Affairs, Defence and Trade Committee.

However leaders on both sides have deflected potential trouble areas. Malaysia ignored Liberal National coalition criticisms of human rights. The Australian government expressed disappointment at Senator Xenaphon’s deportation, but has taken extra steps to accommodate Malaysian sensitivities, and been fulsome in praise of Malaysian democracy. Prime Ministers Rudd and Gillard, and Foreign Minister Carr all declined to meet opposition leader Anwar Ibrahim on visits to Kuala Lumpur. Rudd, in July 2008 said that “Democracy is not just alive and well in Malaysia but flourishing”. Foreign Minister Bob Carr rejected any role for Australia in recent elections, noting that Australia could only be involved if Malaysia requested it. That was of course correct in terms of an official role, but contrasted with his support for democracy in Burma, and international pressure to persuade Burma to accept an official observer team for by-elections in April 2012 – pressures that were indeed successful and saw a five-person Australian team taking part. Carr described the May 2013 elections as ‘credible’, ignoring widespread concerns of irregularities, noted by United States officials among others.

Enduring ties

During all these developments, some issues have remained relatively fixed, and for the most part have had a stabilising influence. These include, in approximate order of importance, ties in areas such as education, security, economic relations, and people-to people contacts.


Australia has been the most important international destination for Malaysian students, and over the years has been the most important foreign source of students for Australia. In 2012 there were some 22,000 students enrolled in Australia, and around 21,000 Malaysian and international students studying for Australian qualifications in Malaysia. (Australian education institutions have had a presence there since the 1990s.) An estimated 300,000 Malaysians have taken courses in Australia.

Special mention should also be made about academic studies. A very large percentage of the most highly regarded works on Malaysia in fields such as history, politics, economics, sociology and law have been written by Australians, or in Australian universities. Several universities have contributed, but the Australian National University has been at the forefront.


Military links begun in World War Two continued with Australian support for Malaysia during the communist uprising (the Emergency, 1948-1960), and Indonesia’s Konfrontasi (1963-1966). In 1971 Australia was a foundation member of the Five Power Defence Arrangements (FPDA) – a cornerstone of Malaysian defence policy – which included an air base in Butterworth under Australian command, until Malaysia took this over in 1988. Australia still has a small RAAF presence at Butterworth, and makes regular aircraft deployments there.

Other defence cooperation occurs through the Malaysia-Australia Joint Defence Program, commenced in 1992, which organises the training of Malaysian military in Australia, attachment of military personnel from each country in the other, and annual combined field exercises. Various agreements also cover police cooperation, particularly in areas such as narcotics and transnational crime.

Cooperation on international issues also has an important security focus. Much of this occurs in the ASEAN forum – including Australia’s position as an ASEAN dialogue partner (started in 1974), its membership of the ASEAN Regional Forum (since established in 1994), accession to ASEAN’s Treaty of Amity and Cooperation in 2005, joining the East Asian Summit (2005), and the ASEAN Defence Ministers Plus (2010). There are as well security aspects to other organisations such as APEC and the Commonwealth, and annual bilateral meetings between foreign ministers.

Economic Cooperation

Malaysia is the third largest economy in ASEAN, behind Indonesia and Thailand. It is now a middle-income country, with GDP per person of $15,568, and a major exporter of light manufactured goods, particularly electronics. Malaysia is Australia’s 3rd most important trade partner within ASEAN, and our 10th in the world. Total merchandise trade in 2012 was $14.7 billion (Australian exports $5.1 and imports $9.6), and trade in services $3 billion ($1.6 exports and $1.3 imports). Malaysian investment in Australia in 2012 was $14.9 billion, considerably more than Australian investment in Malaysia at around $7.9 billion.

Economic cooperation is supported by institutions such as the Malaysia Australia Business Council and the Australia Malaysia Business Council, and the ministerial led Australia-Malaysia Joint Trade Committee. It is also assisted by numerous bilateral and international agreements, including the aforementioned ASEAN–Australia–New Zealand Free Trade Agreement, and the Malaysia–Australia Free Trade Agreement (MAFTA).


The history of educational, security and economic ties listed above has meant Australia has had more people-to-people ties with Malaysia than with any other Southeast Asian country. In addition, according to the 2011 Census, 116,196 Malaysia-born people are resident in Australia. (Most, however, are ethnic Chinese, who sometimes migrated because of concern about government policies in Malaysia.) In 2011, Malaysia was one of the top 10 overseas tourist destinations for Australians, receiving around 258,000 visitors. In the same year Malaysia was the seventh largest source of visitors to Australia, accounting for 241,000. The Australia-Malaysia Institute was established by the Australian government in 2005 to promote people-to-people and institutional links between the two countries. It runs a grants program with a particular focus on visits by young leaders, journalists and interfaith groups.


Malaysia will never replace our 200 million strong immediate neighbours in Indonesia as the main Australian focus in Southeast Asia. There are, nonetheless, important security, economic and other links between the two countries, which are only likely to become more important as we move further into the Asian century.

Our strategic and security interests are not identical. Malaysia also puts priority on its relations with organisations such as the OIC and NAM. But as middle-ranking countries each share a common interest in a peaceful region where international law is observed, where there is a network of effective international institutions that help ensure conflicts are resolved by peaceful means, and the United States remains an important actor.

How far potential cooperation is realised will depend at least in part on domestic politics. The emergence of another Dr Mahathir seems unlikely, but post-election instability in the ruling United Malays National Organisation, could make Australia a convenient scapegoat. And unless the newly elected Malaysian government moves to restore greater democratic practice, it record will remain a concern to many in the Australian parliament. Australian politics may also have an impact. A future Liberal National government, seemingly inevitable in the near future, will need to repair difficulties caused by some of its strong human rights criticisms made in its rejection of the ‘Malaysia solution’. But there is bilateral support for closer relations with Malaysia, and that seems the most likely course in the immediate future.

John Funston, Visiting Fellow, School of Culture, History and Language, ANU.[*]

[*] This article is based on a lecture to the University of the Third Age, Canberra, 18 June 2013. It draws particularly on two of my articles – “Australia-Malaysia Relations: A Maturing Partnership”. In Australia-Malaysia Relations: New Roads Ahead, Zaniah Marshallsay (ed.), pp.90-99, Clayton: Monash Asia Institute, 1996; and “The legacy of Dr Mahathir”, The Australian Financial Review, 30 July 2004. Recent statistics are from the Malaysia Country Brief on the website of the Department of Foreign Affairs and Trade.