National Security 101: India & Malaysia – Capitalising Each Others Unique Advantages

India and Malaysia have rich and diverse cultures, histories, and economies. They both have achieved remarkable progress and faced various challenges in their development. By acknowledging their strengths and learning from each other, they can foster a mutually beneficial partnership that enhances their growth and prosperity. Image source: Julian Yu on Unsplash

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Forget the petty argument that there is a lack of toilets in India as all countries have some form of infrastructure issues that they need to address including, Malaysia. Instead, we need to look at the bigger picture of how both countries can collaborate & capitalise on the advantages that both countries have.

Economic Potential

India is one of the fastest-growing economies in the world, with a GDP growth rate of 8.4% in the second quarter of 2023, according to the International Monetary Fund (IMF) – World Economic Outlook report dated October 12, 2023. The country has also surpassed $4 trillion in stock market value, making it the seventh-largest market in the world. The country is also expected to become the world’s third-largest economy by 2030, behind only China and the US, according to S&P Global Ratings.

Some of the key drivers that have contributed to India’s impressive economic performance are as follows:-

• Consumer boom – the country has a large and young population of about 1.4 billion people, with a median age of 29 years. Consumer spending is expected to grow from $1.9 trillion in 2020 to $3.6 trillion in 2025, according to a report by Bain & Company and World Economic Forum.
• Green transition – the country is also committed to achieving its climate goals and reducing its carbon footprint. The country has set a target of installing 450 gigawatts of renewable energy capacity by 2030, which would make it one of the largest green energy producers in the world.
• Foreign Investment – Thanks to its liberalized policies, improved ease of doing business, and favourable demographics, according to the United Nations Conference on Trade and Development (UNCTAD), the country received $64 billion in FDI in 2020, making it the fifth-largest recipient in the world. Some of the sectors that have received high FDI inflows are telecommunications, computer software and hardware, services, chemicals, and automobiles.
• Increased Exports – According to the Ministry of Commerce and Industry, the country’s merchandise exports grew by 54% year-on-year to $185 billion in April-November 2023, while its services exports grew by 18% year-on-year to $139 billion in April-October 2023. Some of the products that have seen high export growth are engineering goods, gems and jewellery, petroleum products, chemicals, and pharmaceuticals.
• World-Class Infrastructure – the country is also ramping up its infrastructure spending to boost its economic growth and connectivity. The government has announced a National Infrastructure Pipeline (NIP) plan worth $1.4 trillion for the period 2019-2025, which covers sectors such as roads, railways, airports, ports, power, urban development, irrigation, and social infrastructure. The NIP aims to create world-class infrastructure assets, generate employment opportunities, enhance productivity, and improve living standards.
• High Productivity – the country has also improved its productivity levels over time, both in terms of labour productivity and total factor productivity (TFP). According to a study by the World Economic Forum and Confederation of Indian Industry (CII), India’s labour productivity grew by 5.8% annually from 2000 to 2018, while its TFP grew by 2.2% annually over the same period.

GDP per capita expressed in US dollars from the 1950s to 2019. In terms of value, Malaysia registers a higher GDP value for several reasons such as the difference in exchange rates where MYR is stronger than the INR, the difference in population size with Malaysia’s GDP is divided by a smaller number of people and the difference in economic structure with Malaysia is a more industrialized and has a diversified economy. Chart Source: Our World In Data

Malaysia is one of the fastest-growing economies in Southeast Asia, with an average annual growth rate of 6.12% from 1961 to 2022 (source: The Global Economy). Despite the challenges posed by the COVID-19 pandemic, the country has shown remarkable resilience and recovery, achieving a growth of 8.9% in the second quarter of 2022 and 14.2% in the third quarter of 2022, as reported by Bank Negara Malaysia (BNM).

The strong performance of the Malaysian economy in 2022 was driven by several factors, such as:-

• Improvements in the labour market and income conditions – the unemployment rate declined from 4.8% in June 2022 to 4.1% in September 2022, and the wage growth accelerated from 3.5% in Q1 2022 to 5.1% in Q2 2022.
• Ongoing policy support from both fiscal and monetary authorities – the government implemented various stimulus packages totalling 24.5% of GDP, and BNM maintained an accommodative stance by keeping the overnight policy rate at 1.75%.
• Robust domestic demand – from private consumption and investment, which grew by 18.1% and 25.9%, respectively, in Q3 2022, reflecting the pent-up demand and improved consumer and business confidence after the easing of lockdown measures.
• Recovery in external demand – exports of goods and services increased by 20.7% in Q3 2022, supported by strong demand for electrical and electronic products, palm oil, rubber products, and petroleum products from major trading partners such as China, Singapore, the US, and Japan.

India – Malaysia Current Trade Size

Both are two important trading partners in Asia, with a long history of economic and cultural ties. The trade value between the two countries reflects their mutual interests and cooperation in various sectors, such as agriculture, manufacturing, services, and digital technology.

According to the latest data from the Observatory of Economic Complexity (OEC), the bilateral trade between the two countries reached $19.4 billion in 2021–2022. This comprises approximately $12 billion in exports to Malaysia and $7 billion in imports from Malaysia.

The main products that India exported to Malaysia were Refined Petroleum ($2.3B), Diamonds ($1.8B), and Packaged Medicaments ($1.1B). The main products that Malaysia exported to India were Palm Oil ($3.75B), Crude Petroleum ($752M), and Computers ($447M).

The trade value has increased significantly over the years, from $4.9 billion in 2005 to $20 billion in 2020. This shows the growing demand and supply of goods and services between the two countries, as well as the potential for further expansion and diversification of trade.

Palm oil accounts for nearly two-thirds of India’s total edible oil imports with the country buying more than 9 million tonnes of palm oil annually, mainly from Indonesia and Malaysia. In the first nine months of 2019, India was the biggest buyer of Malaysian palm oil, taking 3.9 million tonnes, according to data compiled by the Malaysian Palm Oil Board (Image & Notes Source: The Star & PalmOilAnalytics)

One of the key initiatives that could boost the trade value is the India-Malaysia Trade Settlement in Indian Rupee, which was launched in April 2023. This allows Indian exporters and importers to settle their trade transactions with Malaysian counterparts in INR, instead of using USD or other foreign currencies. This reduces the transaction costs and exchange rate risks for both parties and enhances the competitiveness of Indian products in the Malaysian market.

Another important factor that could enhance the trade value is the digital transformation of both economies, especially in the wake of the COVID-19 pandemic. Both countries have been investing in developing their digital infrastructure, such as broadband connectivity, e-commerce platforms, cloud computing, artificial intelligence, and cybersecurity. These technologies enable more efficient and innovative ways of doing business across borders and create new opportunities for collaboration and integration.

In conclusion, the trade value between the two countries is a reflection of their strong and dynamic economic partnership, which has grown steadily over the years. The two countries have a lot to offer each other in terms of products, services, and expertise, and have a shared vision of achieving sustainable development and prosperity.

Technological Innovation

Compared to Malaysia, India has emerged as a major global hub for technology and innovation. With a strong emphasis on research and development, the country has produced world-class engineers, scientists, and entrepreneurs. The Indian IT industry is renowned worldwide, and its expertise in software development and digital services is highly sought after.

The country also has a vibrant startup ecosystem, with more than 70 unicorns (startups valued at over $1 billion) as of December 2023, according to Venture Intelligence. Some of the notable examples are Byju’s (education), Zomato (food delivery), Ola (mobility), Paytm (fintech), and Udaan (B2B e-commerce).

India is also home to some of the world’s leading IT companies, such as Tata Consultancy Services, Infosys, Wipro, and HCL Technologies, which provide software solutions and services to global clients. It is said that over 150 Indian companies have invested US$3 billion in Malaysia and contributed to the creation of over 20,000 high-tech jobs in the country.

Food security is a global challenge that affects millions of people who face hunger, malnutrition and poverty. One of the possible solutions to this problem is to adopt smart farming practices that use advanced technologies such as drones, artificial intelligence (AI) and the Internet of Things (IoT). Image source: The Malaysia Reserve/Bernama

Malaysia on the other hand, can collaborate and offer its knowledge & innovation in the following areas:-

• Smart farming: Malaysia has developed a smart farming system that uses sensors, drones, artificial intelligence and big data to monitor and optimize crop production, reduce wastage and increase yield. The system can also provide farmers with real-time information and guidance on weather, soil, pests, diseases and market prices. This innovation can help India address its food security challenges and improve the livelihoods of its large rural population.
• Biomedical devices: Malaysia has produced several biomedical devices that can improve the quality and accessibility of health care services in India. One of them is a portable electrocardiogram (ECG) device that can detect heart abnormalities and transmit the data to a cloud-based platform for analysis and diagnosis. Another one is a smart stethoscope that can amplify and record heart and lung sounds and send them to a smartphone app for further examination. These devices can help India overcome its shortage of medical personnel and equipment, especially in remote areas.
• Green energy: Malaysia has pioneered several green energy solutions that can help India reduce its carbon footprint and dependence on fossil fuels. One of them is a micro-hydro power system that can generate electricity from small streams or rivers using a low-cost turbine. Another one is a solar-powered water purifier that can produce clean drinking water from any source using ultraviolet rays. These solutions can help India meet its growing energy demand and provide clean water to its millions of people who lack access to it.

Defence & Space Industries

India and Malaysia have a long history of cooperation in the defence sector, dating back to the 1950s when India provided military training and assistance to Malaysia during the Malayan Emergency. Since then, the two countries have maintained regular high-level exchanges, joint exercises, training programmes, and defence industry collaborations.

In recent years, India has emerged as a major player in the defence and space domains, developing and deploying a range of advanced technologies and platforms that can enhance its security and strategic interests.

The Indian HAL-made light combat helicopter, Prachand has all the established design cues of a fully armed, dedicated combat helicopter. It is expected that the Indian Army will operate around 100 units namely in the mountainous areas facing Pakistan & China. Image source: Wikipedia

Some of these innovations have the potential to be exported to Malaysia, which is also seeking to modernize its defence capabilities and explore new opportunities in the space sector such as:-

• Aircraft: India has developed several indigenous aircraft for various roles, such as the Tejas light combat aircraft, the Dhruv advanced light helicopter, the Rudra armed helicopter, and the Saras light transport aircraft. These aircraft are designed to meet the operational requirements of the Indian Air Force and Army, but can also be customized and offered to friendly countries like Malaysia.
• Ships: India has a robust shipbuilding industry that can produce warships, submarines, patrol vessels, and amphibious platforms for its navy and export. India has already supplied offshore patrol vessels and fast interceptor boats to Malaysia and is looking forward to offering more naval platforms and systems to enhance Malaysia’s maritime security.
• Emerging technologies: India is investing heavily in emerging technologies like artificial intelligence, quantum technology, cyber security, nanotechnology, biotechnology, and robotics. These technologies have applications in various domains of defence and security, such as intelligence, surveillance, reconnaissance, command and control, communication, electronic warfare, cyber warfare, etc.
• Space: India has a well-established space programme that covers various aspects of space exploration, such as satellite launch, remote sensing, communication, navigation, meteorology, astronomy, etc. India has also demonstrated its capabilities in space defence by conducting an anti-satellite test in 2019. India can offer its space products and services to Malaysia, such as launching Malaysian satellites on Indian rockets, providing satellite imagery and data for various applications, developing satellite-based navigation systems, etc.

Cultural & Historical Connection

India’s cultural diversity is unparalleled, with a rich tapestry of languages, religions, traditions, and art forms. This diversity fosters a vibrant and inclusive society, attracting tourists from around the globe. The country’s tourism industry benefits from its historical landmarks, natural beauty, and cultural festivals.

This is why one of the most prominent influences on Malaysian culture is India, which has a long and rich relationship with the Malay archipelago. Indian influence on Malaysia can be traced back to ancient times when Indian traders, missionaries, and adventurers came to Southeast Asia and spread their language, religion, art, and administration.

Many of the early kingdoms in the region adopted Sanskrit as their official language and Hinduism as their main religion. They also built temples, monuments, and sculptures that reflected Indian styles and motifs. Some of these ancient sites still exist today, such as the Bujang Valley in Kedah, the Batu Caves in Selangor, and the Angkor Wat in Cambodia.

Thaipusam is a Hindu festival that honours Lord Murugan. It is more popular in Malaysia than in India, where it originated. The main attraction of Thaipusam in Malaysia is the Batu Caves, a limestone hill with a huge statue of Lord Murugan at the entrance. Devotees and tourists climb 272 steps to reach the temple inside the caves. The photo above shows the Batu Caves in the 1950s. Image source: Astro Ulagam

The Indian influence continued to grow with the arrival of Muslim traders from India, who introduced Islam to the region and converted many of the local rulers and people. The Malay sultanates that emerged in the 15th century were heavily influenced by Islamic culture and law from India, as well as Persian and Arabic sources. The Malay language also incorporated many words from Sanskrit, Tamil, Hindi, Urdu, and Arabic.

The most significant wave of Indian migration to Malaysia occurred during the British colonial period when millions of Indians were brought to work as indentured labourers in plantations, railways, mines, and ports. Most of these migrants were from South India, especially Tamil Nadu, Kerala, Andhra Pradesh, and Telangana. They brought with them their languages, religions, cuisines, music, dances, festivals, and customs. They also faced discrimination, exploitation, and poverty under British rule.

Today, the Indian community accounts for about 7% of Malaysia’s population and is considered the third-largest ethnic group in the country. The majority of Malaysian Indians are Hindus (84%), followed by Muslims (8%), Christians (6%), Sikhs (1%), and others (1%). They speak various languages such as Tamil, Malayalam, Telugu, Hindi, Punjabi, Urdu, Gujarati, Sindhi, Bengali, and English.

Final Say

India and Malaysia possess unique strengths that, when combined through collaboration, can lead to mutual growth and prosperity. By leveraging their economic potential, technological expertise, cultural diversity, and strategic advantages, these two nations can forge a strong partnership.

It is imperative for India and Malaysia to recognize the benefits of working together and actively engage in initiatives that promote trade, knowledge exchange, and cultural understanding. Through collaboration, India and Malaysia can create a brighter future for their citizens and contribute to the development of the region as a whole.