The visit of Malaysian Prime Minister Anwar Ibrahim to New Delhi in August 2024 marked a turning point in the bilateral relations between the two countries, as the the existing Enhanced Strategic Partnership (ESP) has been elevated to the level of ‘Comprehensive’ Strategic Partnership (CSP).
Interestingly, the elevation coincided with the completion of India’s Act East Policy launched in 2014. The meeting between the prime ministers of India and Malaysia in August 2024 sealed the 'comprehensiveness', implying thereby the need and desire to continue to build relations on various facets—political, strategic, economy, defence, science and technology, digitalization, culture and others that best serve the interests of both countries.
Clearly, this is a multi-dimensional partnership as the areas identified for collaboration stretch into several significant sectors, thereby strengthening the bonds of friendship, cooperation and solidarity which both countries have shared long enough. Polemics aside with regard to the implications such strengthened bilateral relationships will have on the regional dynamics revolving around China and other players, the issue is how best the various aspects of the Comprehensive Partnership Agreement would pan out in terms of strengthening the bond for the mutual benefit of the larger population that both these countries represent.
Towards the Comprehensive Strategic Partnership
It would not be an exaggeration to say that geographical proximity, historical connection, coupled with the presence of a large Indian diaspora, have transformed these two natural partners into a partnership at the strategic level. With India as the fourth largest economic power in the world and Malaysia as ASEAN Chair for 2025 and an equally important power to reckon with in Southeast Asia, the elevation of bilateral relations to the level of Comprehensiveness is something worth noting.
Inherent in the bilateral ties are the historical socio-cultural commonalities that have laid the foundation for facilitating easy identification of partnership areas that best serve them. India’s Act East Policy (AEP) of 2014 pushed the country to take concrete steps to develop bilateral relations much more vigorously and Malaysia’s Madani Economic Framework launched in 2023 has enabled synchronising and complementing the interests of both these countries.
Bilateral trade in goods and services has expanded in scope and dimension, touching roughly $20.01 billion in total for 2023-2024 with India becoming one among the top 10 trading partners for Malaysia, particularly since the 2011 Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA). And within ASEAN, Malaysia occupies the third largest trading partner for India after Singapore and Indonesia.
Looking into the trend over the past two decades, and compounded by the new “Madani Economy: Empowering People” was launched by the incumbent government in Malaysia with the twin objective of economic restructuring and equitable growth as its main objective. The goods that are being traded include manufactured items like machinery, organic chemicals, and petroleum products, as well as other commodities such as oil and mineral fuels. This serves as an indicator for us to understand the complementary dynamics of economic relationships—Malaysia’s expertise in key industries like semiconductors, machinery, electronics, palm oil, rubber and tourism and India’s expertise in large skilled human resources, technology, industries, IT services, manufacturing, textiles, chemicals, and pharmaceuticals, among others. In other words, the economies of both countries are complementary and diversified, with India possessing a huge and resilient economy capable of supporting Malaysia’s Madani Economic Framework.
Cooperation in digital technologies
Foremost among the eight CSP provisions for which memorandums of understanding (MOUs) have been signed, the one on digital technologies focusing on niche areas like cyber security, 5G technology, quantum computing, cloud computing and Internet of Things is a significant addition, providing increased opportunities to both small and medium-sized start-up companies looking for investments in Malaysia and India. Undoubtedly, Digital Technology today has tremendous scope in a wide range of modern economic activities, such as computers, wireless technology and renewable energy, in which important elements like semiconductors are used and hence possess strategic utility. Collaborating on such critical areas not only enhances talents and skills among youth, generating employment opportunities in both countries, but also helps in promoting the digital economy and thereby facilitates vital financial services, besides empowering weaker sections of the population. India’s pioneering advancement in Aadhaar, UPI and e-market has global recognition that has immense scope to benefit Malaysia on similar lines as well.
Besides, significant strides have been achieved by India in Digital Technology; it now contributes roughly 11.74 per cent of its GDP growth in 2022-2023 and is expected to grow to one-fifth of its national income by 2030. Such enormity of digitalisation in India can certainly be of vital help for Malaysia as well in terms of diversification and restructuring of its economy, which the Madani Framework aims to bring about. On its part, India is seeking to build a resilient supply chain in semiconductors with several suppliers, and Malaysia’s global power house ranking in semiconductor industry fulfils India’s requirement and need to sustain its economic growth.
Besides, Malaysia's ministry of human resources launched the new 'National Human Resources Policy Framework' in May 2024 for a six-year period until 2030, providing for a national-level strategy to streamline human resource management, incorporating aspects of emerging technologies and skills training among youth. This goes in tandem with India’s ambition to develop a technological ecosystem using new and emerging technologies in a wide array of fields such as agriculture, healthcare, education, manufacturing etc., and hence can be mutually complementary.
It was along this line that Malaysia – India Digital Council was formalised in January 2025 to help serve bilateral digital trade, exchange of technology and mobilise talents from both countries. Besides, there is also the security angle to digitalisation and related technology that would be forthcoming.
Another aspect of the CSP is tapping the presence of enormous manpower skills in both countries which will have decisive impact on each other’s economic welfare. With day-to-day technological advancements capturing the global economic environment, it is but essential that the talents and skills of youth are tuned to adapt to the changing cultural and socio-economic context. It is along this line that the new CSP agreement to cooperate in recruitment, employment and repatriation of workers in both countries has been worked out comprehensively with seventeen article provisions that detail the existing manpower situation in both countries, the rights and obligations of the employer and employee, the safety, security and welfare of the workers and such other terms of employment.
Both countries stand to benefit from the large, skilled manpower they possess, and which has now become institutionalised through the comprehensive agreement. In fact, the movement of people from India to Malaysia back and forth dates back to history and the contribution of Indians, particularly those indentured laborers who were taken largely from Tamil Nadu in Southern India by the British to work in sugar cane and rubber plantations during their colonial rule has a significant history of labour issues and socio-economic challenges. These people have settled in Malaysia in due course of time and today form the huge Indian diaspora community of over 2.75 million approx and constitute about nine per cent of the total population of Malaysia, amalgamating the cultural bond between India and Malaysia even further.
To conclude, the CSP agreement has ushered in a new era of bilateral relations, as not only are their economies complementary, but the visionary leadership has provided the requisite push to bring about such a transformation. In particular, cooperation in digital technologies will see both countries reaping the benefits in the near future. It would be an exaggeration, therefore, to say that India’s Act East Policy and Malaysia’s Madani Economic Framework have provided the necessary inputs to think in terms of taking the relations to new heights for the benefit of both countries.
Dr. M. Venkataraman is Professor, Department of National Security Studies, Central University of Jammu.
He can be reached at drvenkat65@gmail.com; venkatraman.nss@cujammu.ac.in