Malaysia’s Claims in the South China Sea: A Strategy of Quiet Diplomacy and Legal Assertion

Introduction

The South China Sea (SCS) dispute is a complex and multifaceted geopolitical issue involving overlapping territorial and maritime claims by China, the Philippines, Vietnam, Malaysia, Taiwan, and Brunei. Malaysia, as a key claimant, asserts sovereignty over parts of the Spratly Islands and maritime rights within its 200-nautical-mile exclusive economic zone (EEZ) off the coasts of Sabah and Sarawak, grounded in the United Nations Convention on the Law of the Sea (UNCLOS). Its approach is characterized by quiet diplomacy, prioritizing economic ties with China while defending its legal rights through diplomatic protests and international submissions. Malaysia’s claims, particularly around Luconia Shoals and other Spratly features, are driven by economic imperatives, including oil and gas exploration, and strategic interests in maintaining regional stability. This article provides an analysis of Malaysia’s claims in the SCS, its historical and legal basis, current policies, challenges, and role as ASEAN chair in 2025, offering insights for policymakers and researchers as of August 9, 2025.

Historical and Legal Foundations

Malaysia’s claims in the SCS are rooted in a combination of historical presence, legal frameworks, and physical occupation:

• Historical Basis: Malaysia’s claims are based on its administration of maritime areas off Sabah and Sarawak, which were part of British colonial territories before Malaysia’s independence in 1957. Historical records, including British surveys and fishing activities, support Malaysia’s presence in the southern Spratlys. Unlike China or Vietnam, Malaysia does not rely heavily on ancient historical claims but emphasizes modern administrative continuity.
• UNCLOS Framework: Malaysia, a UNCLOS signatory since 1996, claims a 200-nm EEZ and continental shelf off its Borneo coast, encompassing areas like Luconia Shoals and James Shoal. Its 1979 Peta Baru(New Map) delineated these maritime boundaries, which overlap with China’s “nine-dash line.” In 2009, Malaysia and Vietnam submitted a joint claim to the UN Commission on the Limits of the Continental Shelf (CLCS), asserting extended continental shelf rights, prompting China’s formal nine-dash line submission in response.
• Physical Presence: Malaysia occupies five features in the Spratlys: Swallow Reef (Layang-Layang), Ardasier Reef, Mariveles Reef, Erica Reef, and Investigator Shoal. Swallow Reef hosts a naval station, airstrip, and diving resort, reinforcing Malaysia’s effective control. Unlike Vietnam’s 21 outposts or China’s militarized artificial islands, Malaysia’s presence is modest but strategically significant.
• 2016 PCA Ruling: Malaysia supports the 2016 Permanent Court of Arbitration (PCA) ruling, which invalidated China’s nine-dash line and affirmed UNCLOS-based EEZ rights, though it has not pursued arbitration itself, preferring diplomatic channels.

Malaysia’s Territorial and Maritime Claims

Malaysia’s claims in the SCS encompass both territorial sovereignty over specific features and maritime rights within its EEZ, as outlined below:

1. Territorial Claims: Spratly Islands

• Features Claimed: Malaysia asserts sovereignty over five features in the southern part of the Spratly Islands, located within its EEZ:
  • Swallow Reef (Terumbu Layang-Layang): Malaysia’s primary outpost, hosting a naval station, airstrip, and diving resort, serving as a key administrative and military base.
  • Ardasier Reef (Terumbu Ubi): Occupied with a small military presence.
  • Mariveles Reef (Terumbu Mantanani): Maintained as a claimed feature with minimal infrastructure.
  • Erica Reef (Terumbu Siput): Occupied with basic facilities.
  • Investigator Shoal (Terumbu Peninjau): Claimed with limited physical presence.
• Basis: Malaysia’s territorial claims are based on effective occupation and administration, supported by its 1979 Peta Baru (New Map), which delineates these features as part of its territory. Unlike China or Vietnam, Malaysia does not rely on ancient historical claims but on modern administrative control and UNCLOS principles.
• Occupation: Malaysia maintains physical control over these features, with Swallow Reef serving as the primary hub for naval and coast guard operations. These outposts are modest compared to China’s extensive artificial islands or Vietnam’s 21 Spratly outposts.

2. Maritime Claims: Exclusive Economic Zone (EEZ) and Continental Shelf

• EEZ: Malaysia claims a 200-nm EEZ off the coasts of Sabah and Sarawak, extending into the SCS and encompassing areas such as Luconia Shoals and James Shoal. This zone grants Malaysia exclusive rights to fisheries, oil, and gas resources under UNCLOS.
• Continental Shelf: In 2009, Malaysia, jointly with Vietnam, submitted a claim to the UN Commission on the Limits of the Continental Shelf (CLCS) for an extended continental shelf beyond 200 nm, covering parts of the SCS south of the Spratly Islands. This submission asserts Malaysia’s rights to seabed resources, including hydrocarbons.
• Key Areas:
  • Luconia Shoals (Beting Patinggi Ali): Located approximately 100 nm north of Sarawak, this reef complex is a critical area for Malaysia’s oil and gas exploration, including fields like Kasawari, which contribute 20–30% of Malaysia’s GDP.
  • James Shoal (Beting Serupai): Approximately 80 km from Sarawak, claimed by Malaysia as part of its EEZ but also asserted by China as its “southernmost territory.”
• Legal Basis: Malaysia’s maritime claims are grounded in UNCLOS, which grants coastal states sovereign rights over resources and jurisdiction within their EEZ and continental shelf. The 2016 PCA ruling, while specific to the Philippines, supports Malaysia’s position by invalidating China’s nine-dash line, which overlaps with Malaysia’s EEZ.

Malaysia’s Current Stance and Policies

Malaysia’s approach to the SCS dispute is defined by quiet diplomacy, balancing assertive legal defense with economic pragmatism to avoid antagonizing China, its largest trading partner. Key elements of its stance include:

1. Sovereignty and UNCLOS:
   • Malaysia asserts sovereignty over its occupied Spratly features and maritime rights within its EEZ, particularly around Luconia Shoals, a key oil and gas exploration area. It has consistently protested Chinese incursions, such as coast guard patrols and survey vessels, through diplomatic notes, as seen in 2020 during the West Capella drilling incident.
   • In 2020 and 2023, Malaysia submitted notes verbale to the UN, reaffirming its UNCLOS-based rights and rejecting China’s nine-dash line, citing the 2016 PCA ruling as a legal precedent.
   • Malaysia emphasizes freedom of navigation and overflight, aligning with international norms to protect its maritime trade routes.
2. Economic Imperatives:
   • Malaysia’s SCS claims are driven by its reliance on offshore oil and gas, which account for 20–30% of its GDP. Luconia Shoals and nearby fields, such as Kasawari, are critical for energy security, making Chinese disruptions a significant concern. Malaysia’s state-owned Petronas has faced Chinese coast guard harassment during exploration, prompting private protests.
   • Despite these tensions, Malaysia maintains robust trade with China, valued at $98.8 billion in 2023, and participates in China’s Belt and Road Initiative (BRI), including projects like the East Coast Rail Link.This economic dependence shapes Malaysia’s restrained approach.
3. Quiet Diplomacy:
   • Unlike the Philippines’ vocal confrontations or Vietnam’s assertive protests, Malaysia prefers private diplomatic channels to address Chinese incursions. For example, in 2024, Malaysia issued a note verbale protesting Chinese vessels near Luconia Shoals but avoided public escalation.
   • Malaysia engages bilaterally with China, as seen in 2013 talks on maritime cooperation, and supports ASEAN’s multilateral efforts for a Code of Conduct (COC) to manage disputes.
4. ASEAN Leadership:
   • As ASEAN chair in 2025, Malaysia has prioritized accelerating COC negotiations, targeting completion by 2026. It has hosted ministerial meetings and issued statements urging restraint, such as after the 2024 Second Thomas Shoal incident involving the Philippines.
   • Malaysia advocates for a COC that upholds UNCLOS, ensures freedom of navigation, and includes mechanisms for dispute resolution and environmental protection, drawing on the 2002 Declaration on the Conduct of Parties (DOC).
5. Military and Maritime Posture:
   • Malaysia maintains a modest naval presence in the Spratlys, with a permanent station on Swallow Reef equipped with radar and patrol boats. It has avoided large-scale militarization, unlike China’s 3,200 acres of reclaimed land or Vietnam’s recent outpost expansions.
   • Malaysia has bolstered its coast guard with support from Japan and the U.S., focusing on surveillance to monitor Chinese activities without direct confrontation.

Key Incidents and Flashpoints

The following incidents illustrate the recurring tensions between China and Malaysia in the SCS, particularly involving Chinese Coast Guard (CCG), maritime militia, and military activities infringing on Malaysia’s Exclusive Economic Zone.

1. 2013–Ongoing: Chinese Coast Guard Presence at Luconia Shoals

• Description: Since 2013, China has maintained a near-constant CCG presence at Luconia Shoals, approximately 100 nautical miles north of Sarawak, within Malaysia’s EEZ. Chinese vessels, including large CCG ships, have been stationed at Luconia Breakers, a reef complex Malaysia claims as part of its continental shelf. This area is critical for Malaysia’s oil and gas operations, contributing 20–30% of its GDP.
• Details: The CCG’s presence includes patrols and occasional harassment of Malaysian fishing vessels and energy exploration activities. Reports indicate aggressive maneuvers, such as shadowing or intimidating Malaysian boats, though many incidents go unreported due to Malaysia’s preference for quiet diplomacy. For example, Malaysian fishermen off Sarawak have faced harassment, with Chinese vessels asserting control over fishing grounds.
• Malaysian Response: Malaysia deploys its navy and coast guard to shadow Chinese vessels without direct confrontation, adhering to its policy of monitoring rather than challenging. Diplomatic protests are issued privately, and Malaysia has avoided publicizing these incidents to preserve bilateral ties with China.
• Significance: The persistent CCG presence marks a shift in the SCS status quo, challenging Malaysia’s resource extraction and testing its non-confrontational approach.

2. 2016–2019: Frequent Chinese Vessel Incursions

• Description: Between 2016 and 2019, CCG and Chinese navy vessels entered Malaysian waters 89 times, often lingering despite efforts by the Royal Malaysian Navy (RMN) to turn them away. These incursions primarily occurred near Luconia Shoals and James Shoal, the latter claimed by China as its “southernmost territory” despite being only 80 km from Sarawak.
• Details: The incursions involved CCG patrols, maritime militia activities, and occasional naval exercises. Specific incidents included Chinese vessels shadowing Malaysian fishing boats and survey ships, creating operational challenges for Malaysia’s maritime activities.
• Malaysian Response: Malaysia issued diplomatic protests through private channels and increased naval patrols. The RMN’s limited capacity, strained by operations in the Malacca Strait and Sulu Sea, restricted its ability to respond robustly. Malaysia also sought support from the U.S. and Japan for maritime surveillance equipment.
• Significance: The high frequency of incursions underscored China’s growing assertiveness and Malaysia’s resource constraints, highlighting the need for enhanced maritime capabilities.

3. 2019: CCG Harassment of Malaysian Drilling Rig

• Description: In 2019, a CCG vessel harassed a drilling rig operating in a Malaysian energy block within its EEZ, near Luconia Shoals. This marked an escalation from China’s previous tolerance of Malaysia’s offshore energy activities.
• Details: The Chinese vessel shadowed the rig, disrupting operations and signaling Beijing’s intent to challenge Malaysia’s resource exploration. The incident was part of a broader pattern of Chinese interference with Malaysian energy activities.
• Malaysian Response: Malaysia lodged a private diplomatic protest and continued operations, though the incident raised concerns about economic security. The RMN increased patrols to deter further harassment.
• Significance: This incident signaled a shift in China’s approach, challenging Malaysia’s economic interests and prompting debates about balancing economic ties with sovereignty.

4. April 2020: West Capella Drillship Standoff

• Description: From late 2019 to May 2020, a six-month standoff occurred involving the West Capella, a drillship contracted by Malaysia’s state-owned Petronas for hydrocarbon exploration in Malaysia’s EEZ near Luconia Shoals. China deployed the survey ship Haiyang Dizhi 8 and multiple CCG vessels to harass the operation.
• Details: The Haiyang Dizhi 8 conducted surveys within Malaysia’s EEZ, shadowed by CCG ships, while U.S. naval vessels conducted freedom of navigation operations (FONOPs) nearby, escalating tensions. The standoff peaked in April 2020, with Chinese vessels repeatedly approaching the drillship. The West Capella completed its mission before withdrawing in May 2020.
• Malaysian Response: Malaysia deployed its navy and coast guard to monitor the situation, issuing private protests to Beijing. The government reiterated its support for freedom of navigation but warned against U.S.-China escalation, reflecting its cautious approach. In December 2019 and 2020, Malaysia submitted notes verbale to the UN, rejecting China’s nine-dash line and affirming its EEZ rights.
• Significance: The standoff marked the first major Chinese interference with Malaysia’s offshore energy activities, challenging its economic interests and prompting debates about its quiet diplomacy strategy.

5. May 31, 2021: PLA Air Force Incursion

• Description: On May 31, 2021, 16 People’s Liberation Army Air Force (PLAAF) aircraft, including Ilyushin-76 and Xian Y-20 transport planes, flew in a “tactical formation” over Malaysia’s EEZ near Luconia Shoals, approximately 60 nautical miles off Sarawak. The aircraft entered Malaysia’s Flight Information Region without responding to air traffic control, prompting the Royal Malaysian Air Force (RMAF) to scramble Hawk 208 fighters for visual identification.
• Details: Malaysia labeled the incident a “serious threat to national security and aviation safety.” China claimed the flights were “routine training” in international airspace, denying any violation. The incident occurred amid heightened Chinese military activity in the SCS.
• Malaysian Response: The Ministry of Foreign Affairs issued a diplomatic note on June 1, 2021, and summoned the Chinese ambassador. The public condemnation by the RMAF, followed by the Foreign Ministry’s response, highlighted bureaucratic disjointedness, as the ministry preferred quieter diplomacy.
• Significance: The incident underscored vulnerabilities in Malaysia’s air defense and prompted increased investments in surveillance, influencing plans for a new naval base in Bintulu.

6. August 2023: Rejection of China’s New Map

• Description: In August 2023, China published a new “standard map” reiterating its nine-dash line, claiming areas off Sabah and Sarawak within Malaysia’s EEZ. The map overlapped Malaysia’s maritime claims, including Luconia Shoals and James Shoal.
• Details: Malaysia’s Foreign Ministry issued a statement rejecting the map, declaring it had “no binding effect” and reaffirming Malaysia’s UNCLOS-based claims. The map also drew protests from India, the Philippines, and Vietnam.
• Malaysian Response: The government emphasized resolving SCS disputes through dialogue and UNCLOS, issuing a note verbale to the UN to protest China’s claims. Prime Minister Anwar Ibrahim reiterated Malaysia’s commitment to its EEZ, particularly for Petronas’ operations.
• Significance: The incident highlighted Malaysia’s growing willingness to publicly challenge China’s claims, though it maintained a diplomatic tone to avoid escalation.

7. June 2024: CCG Vessel Incursion at Luconia Shoals

• Description: In June 2024, the CCG vessel CCG 5901 was detected patrolling near Luconia Shoals, within Malaysia’s EEZ, disrupting Petronas’ oil and gas activities.
• Details: The vessel’s presence followed a pattern of Chinese interference with Malaysian energy exploration, similar to the 2020 West Capella standoff. The incident coincided with Malaysia’s preparations for its 2025 ASEAN chairmanship.
• Malaysian Response: Malaysia issued a diplomatic note protesting the incursion, and Anwar publicly reaffirmed Petronas’ right to operate in Malaysia’s EEZ, stating in 2024 that these areas are “unequivocally Malaysian territory.” The RMN increased patrols, supported by U.S. and Japanese surveillance aid.
• Significance: The incident reinforced Malaysia’s resolve to protect its economic interests, with Anwar’s public stance addressing domestic criticism of perceived pro-China leanings.

Summary of Incidents

Incident	Date	Location	Description	Malaysian Response
CCG Presence	2013–Ongoing	Luconia Shoals	Near-constant CCG patrols, harassment of fishermen.	Naval shadowing, private protests.
Vessel Incursions	2016–2019	Luconia Shoals, James Shoal	89 CCG and navy incursions.	Diplomatic protests, increased patrols.
Drilling Rig Harassment	2019	Luconia Shoals	CCG harassed Malaysian rig.	Private protests, continued operations.
West Capella Standoff	2019–2020	Luconia Shoals	Chinese survey ship and CCG harassed drillship.	Naval monitoring, UN notes verbale.
PLA Air Force Incursion	May 2021	Luconia Shoals	16 PLAAF aircraft entered EEZ.	Public protest, ambassador summoned.
China’s New Map	August 2023	Sabah/Sarawak EEZ	Map claimed Malaysian waters.	Public rejection, UN protest.
CCG Incursion	June 2024	Luconia Shoals	CCG 5901 disrupted Petronas operations.	Diplomatic note, public affirmation.

Challenges to Malaysia’s Stance

Malaysia faces several hurdles in asserting its SCS claims:

• China’s Dominance: China’s superior naval and coast guard capabilities, coupled with its 3,200-acre artificial islands and militarized outposts, dwarf Malaysia’s modest presence, limiting its ability to counter incursions directly.
• Economic Dependence: China is Malaysia’s largest trading partner ($98.8 billion in 2023), and BRI projects like the $10 billion East Coast Rail Link create incentives to avoid confrontation, constraining Malaysia’s public rhetoric.
• ASEAN Divisions: As ASEAN chair, Malaysia struggles to unify members, with Cambodia and Laos aligning with China, diluting COC progress.
• Domestic Pressures: While less pronounced than in Vietnam or the Philippines, Malaysian fishing and energy communities demand protection of SCS resources, creating tension with Malaysia’s diplomatic restraint.

Strategic Implications

Malaysia’s quiet diplomacy has significant implications for the SCS and Indo-Pacific:

• Regional Stability: Malaysia’s restrained approach avoids escalation, fostering dialogue through ASEAN and bilateral channels, but risks being overshadowed by more assertive claimants like the Philippines.
• ASEAN Leadership: Malaysia’s 2025 chairmanship strengthens its role in COC negotiations, enhancing ASEAN’s credibility if progress is achieved.
• Economic Security: Protecting Luconia Shoals’ resources is critical for Malaysia’s energy sector, but Chinese interference threatens long-term economic stability.
• International Partnerships: Malaysia’s growing ties with the U.S., Japan, and Australia, including maritime security aid, provide a counterbalance to China, though limited compared to Vietnam or the Philippines.

Comparison with Other Claimants

Malaysia’s approach is less assertive than Vietnam’s outpost expansion or the Philippines’ legal challenges but more proactive than Brunei’s near-silent diplomacy. Unlike China’s reliance on historical claims and militarization or Taiwan’s cooperative Peace Initiative, Malaysia prioritizes UNCLOS and economic interests, avoiding direct confrontation. Its strategy aligns with ASEAN’s emphasis on multilateralism but is tempered by economic ties with China.

Comparative Analysis

Claimant	Claims	Diplomacy	Militarization	Alliances	Economic Ties with China	UNCLOS/PCA
Malaysia	Spratlys (5 features), EEZ	Quiet, private protests	Modest (Swallow Reef)	U.S., Japan (limited)	Strong ($98.8B trade)	Supports PCA, UN notes
China	Entire SCS (nine-dash line)	Bilateral, assertive	Extensive (3,200 acres)	None	Dominant (leverages trade)	Rejects PCA
Philippines	Scarborough, Spratlys	Confrontational, public	Limited (BRP Sierra Madre)	U.S., Japan, Australia	Moderate	Strong PCA advocate
Vietnam	Paracels, Spratlys (21 outposts)	Assertive, public protests	Active (120 acres added)	U.S., India, Japan	Strong ($133B trade)	Supports PCA, UN notes
Taiwan	Spratlys, Paracels, Pratas	Cooperative, isolated	Limited (Itu Aba)	U.S., Japan (informal)	Limited	Rejects PCA
Brunei	Louisa Reef, EEZ	Minimalist, private	None	None	Strong (BRI projects)	Supports PCA

• Diplomacy: Malaysia’s quiet diplomacy aligns with Brunei’s restraint but contrasts with the Philippines’ and Vietnam’s public confrontations. China’s bilateral preference and Taiwan’s cooperative isolation differ from Malaysia’s multilateral focus.
• Militarization: Malaysia’s modest presence contrasts with China’s extensive reclamation and Vietnam’s outpost expansion, resembling Brunei’s minimal approach but with stronger surveillance.
• Alliances: Malaysia’s limited U.S. and Japanese partnerships are less robust than the Philippines’ or Vietnam’s, but stronger than Brunei’s or Taiwan’s.
• Economic Ties: Malaysia’s strong trade with China aligns with Vietnam and Brunei, unlike the Philippines’ and Taiwan’s more balanced relations.
• Legal Stance: Malaysia, the Philippines, Vietnam, and Brunei support UNCLOS and the PCA ruling, while China and Taiwan reject it, highlighting Malaysia’s legal alignment with ASEAN claimants.

Strategic Implications

• Regional Dynamics: Malaysia’s restraint avoids escalation but risks being overshadowed by the Philippines’ and Vietnam’s assertiveness, potentially weakening its influence in COC talks.
• ASEAN Unity: Malaysia’s 2025 chairmanship strengthens its multilateral role, but Anwar’s pro-China rhetoric risks straining ties with assertive claimants like the Philippines.
• Economic Security: Malaysia’s economic dependence on China, similar to Brunei’s, contrasts with the Philippines’ U.S.-backed approach, shaping its cautious response to incidents like the 2024 Luconia Shoals incursion.

Under Prime Minister Anwar Ibrahim

Since Prime Minister Anwar Ibrahim assumed office in November 2022, perceptions of a “pro-China” shift in Malaysia’s foreign policy have sparked debate, particularly regarding the South China Sea. However, a closer examination of Malaysia’s actions and statements under Anwar suggests broad continuity with the country’s established policies, with nuanced adjustments rather than a fundamental shift.

• Territorial Defense: Malaysia continues to deploy naval and coast guard forces to monitor its EEZ, particularly around Luconia Shoals, where Chinese coast guard vessels, such as the CCG 5901 in June 2024, have encroached. Plans for a new naval base in Bintulu, Sarawak, facing Petronas’ upstream projects, are proceeding under Anwar, signaling ongoing vigilance.
• Petronas Operations: The state-owned energy company Petronas continues oil and gas exploration in Malaysia’s EEZ, notably at the Kasawari gas field. In April 2023, Anwar told parliament that despite China’s “concerns,” Malaysia views these areas as its territory, and Petronas will persist. In 2024, Anwar reiterated Malaysia’s resolve to develop Kasawari despite Beijing’s objections, a firm stance praised as decisive.
• Diplomatic Protests: Under Anwar, Malaysia issued notes verbale in 2023, and 2024, following up their prior issue in 2020, rejecting China’s nine-dash line and protesting incursions, such as the 2023 Chinese map reiterating Beijing’s claims and the 2024 Luconia Shoals incident. These align with Malaysia’s consistent rejection of China’s claims since 2019.

As ASEAN chair in 2025, Malaysia under Anwar has prioritized COC negotiations:

• COC Leadership: Malaysia is accelerating talks for a binding COC by 2026, building on the 2002 DOC and emphasizing UNCLOS-based resolutions. Anwar’s government has hosted ministerial meetings and issued statements urging restraint, as after the 2024 Second Thomas Shoal clash.
• Regional Dialogue: Foreign Minister Mohamad Hasan’s August 2024 statement that SCS issues should be resolved among claimant states without “external influence” sparked concerns, as it echoed China’s preference for excluding powers like the U.S. Critics saw this as a jab at the Philippines’ U.S. alliance, though Malaysia also maintains defense ties with the U.S., including joint exercises in Sabah.

Assessment

It appears that Anwar’s government has thus far not compromised Malaysia’s territorial claims or EEZ rights, maintaining a robust defense of sovereignty consistent with prior administrations. The continuation of Petronas operations and naval presence refutes claims of a pro-China capitulation.

Anwar’s emphasis on economic ties and downplaying disputes aligns with Malaysia’s historical approach, as seen under Mahathir and Najib Razak. However, his public minimization of tensions and openness to bilateral talks have fueled perceptions of a pro-China tilt, though these are consistent with past rhetorical strategies to maintain trade.

Malaysia’s focus on ASEAN-led mechanisms is consistent with past policy, but Hasan’s remarks have raised concerns about alignment with China’s stance against external involvement. This rhetoric, while not a policy shift, suggests a nuanced preference for regional solutions, potentially straining ASEAN unity. Unlike the Philippines’ confrontational approach under Marcos or Vietnam’s assertive outpost expansion, Malaysia’s restraint aligns with Brunei’s low-profile stance but risks being perceived as less resolute.

Malaysia’s Military Capabilities

According to the 2025 Global Firepower (GFP) Index, Malaysia ranks 42nd out of 145 countries with a PowerIndex (PwrIndx) score of 0.7429, where a lower score indicates greater military strength (0.0000 is theoretically perfect). This places Malaysia as a mid-tier regional power, behind Indonesia (13th, 0.2251), Vietnam (19th, 0.2854), and Thailand (26th, 0.3587) but ahead of the Philippines (47th, 0.5079) and Brunei (122nd, 1.0771) in ASEAN. Malaysia’s military is structured for defensive, non-aligned operations, with a focus on maritime security due to SCS tensions and its strategic location along the Malacca Strait.

Key Metrics and Capabilities

1. Army

• Strength: The Malaysian Army, the largest branch with 130,000 personnel (including active and reserve), isstructured into five divisions and focuses on territorial defense and regional stability.
• Equipment:
  • Tanks: 48 tanks, ranking 78th globally, indicating limited armored capabilities.
  • Armored Vehicles: 13,506 vehicles, ranking 34th, including new acquisitions to modernize mechanizedunits.
  • Artillery: 196 towed artillery pieces (44th globally) and 36 multiple-launch rocket systems (MLRS, 49th),but no self-propelled artillery, a notable gap. The 2025 budget includes 105mm Pack-Howitzer cannonsto enhance firepower.
• Modernization: The Army is undergoing modernization, focusing on new armored vehicles and artillery, butbudget constraints and reliance on foreign suppliers limit progress.
• SCS Relevance: The Army’s role in SCS disputes is secondary, with deployments focused on land-basedsecurity in East Malaysia (Sabah and Sarawak), supporting naval and air operations near disputed areaslike Luconia Shoals.

2. Navy

• Strength: The Royal Malaysian Navy (RMN) has 18,000 personnel and 100 vessels, with a total tonnage of67,735, ranking 35th globally.
• Fleet Composition:
  • Frigates: 2 missile frigates (Kasturi and Lekiu classes), ranking 16th.
  • Corvettes: 6 corvettes, including planned acquisitions of Turkish Ada-class corvettes, ranking 11th.
  • Submarines: 2 submarines (Scorpène class), ranking 16th.
  • Patrol Vessels: 71 offshore patrol vessels, ranking 15th, critical for EEZ monitoring.
  • Mine Warfare: 4 vessels, ranking 15th.
• Modernization: The 2025 budget allocates RM12 billion for naval assets, including surface-to-surfacemissiles for the KD Jebat frigate and Littoral Combat Ships (LCS), with LCS1 at 96.52% completion andLCS2–3 progressing. Littoral Mission Ships (LMS) are also under construction, with 13.8% completionexpected by June 2025.
• SCS Relevance: The RMN is pivotal for defending Malaysia’s EEZ and Spratly claims, patrolling LuconiaShoals and James Shoal against Chinese incursions (e.g., 2020 West Capella, 2024 CCG 5901 incidents).A planned naval base in Bintulu, Sarawak, will enhance monitoring capabilities.

3. Air Force

• Strength: The Royal Malaysian Air Force (RMAF) has 15,000 personnel and 135 aircraft, ranking 58thglobally.
• Fleet Composition:
  • Fighters: 26 fighters (47th), including Sukhoi Su-30MKM and F/A-18 Hornets.
  • Attack Aircraft: 12 aircraft (33rd).
  • Transports: 16 fixed-wing transports (35th).
  • Trainers: 31 trainers (50th).
  • Special-Mission: 6 aircraft (27th).
  • Tankers: 4 tankers (13th).
  • Helicopters: 45 helicopters (58th), with no attack helicopters (145th).
• Modernization: The RMAF is acquiring 18 FA-50M light combat aircraft from South Korea (48% complete,first delivery October 2026) and three Medium Altitude Long Endurance Unmanned Aerial Systems (MALEUAS) in 2025, alongside two Maritime Patrol Aircraft (MPA) by June/September 2026 for SCS surveillance.Turkish drones are also being procured.
• SCS Relevance: The RMAF’s maritime surveillance and response capabilities are critical for monitoringChinese activities, as seen in the 2021 PLA Air Force incursion of 16 aircraft over Malaysia’s EEZ.Upgraded radar systems and MPAs will enhance airspace defense near Luconia Shoals.

4. Financial and Logistical Capabilities

• Defense Budget: Malaysia’s 2025 defense budget is RM12 billion (~$2.7 billion USD), with RM5.8 billion forasset acquisitions, maintenance, and repair, ranking 50th globally. This represents 1.0% of GDP ($399.7billion in 2023), or $122 per capita.
• Economic Context: Malaysia’s purchasing power parity ($1.152 trillion) and foreign exchange reserves($113.4 billion) rank 30th and 26th, respectively, supporting modest military investments. External debt($247.5 billion, 112th) and budget constraints limit rapid modernization.
• Logistics: Malaysia ranks 37th in labor force (16.2 million), 20th in ports/harbors, and 22nd in waterways(7,200 km), facilitating maritime operations. Its 4,675 km coastline (82nd) and strategic location enhance itsSCS presence.
• SCS Relevance: Financial limitations restrict Malaysia’s ability to counter China’s superior naval and airforces, but targeted investments (e.g., Bintulu base, MPAs) bolster EEZ defense.

Comparison with SCS Claimants

• China: China’s military, ranked 3rd globally (PowerIndex 0.0706), dwarfs Malaysia’s with 2 million active personnel, 3,170 aircraft, and 425 naval vessels, including 3 aircraft carriers and 48 submarines. Its 3,200-acre artificial islands in the Spratlys give it unmatched SCS dominance, challenging Malaysia’s modest naval presence.
• Philippines: Ranked 47th (PowerIndex 0.5079), the Philippines has a smaller military (143,000 active personnel, 104 aircraft, 48 vessels) but relies on a robust U.S. alliance, unlike Malaysia’s limited partnerships.
• Vietnam: Ranked 19th (PowerIndex 0.2854), Vietnam’s 470,000 active personnel, 279 aircraft, and 65 vessels, plus 120-acre outpost expansions, outstrip Malaysia’s capabilities, though both share UNCLOS-based claims.
• Brunei: Ranked 122nd (PowerIndex 1.0771), Brunei’s military (7,200 active personnel, 5 aircraft, 10 vessels) is negligible, with no occupied outposts, making Malaysia’s forces far stronger.

Challenges and Limitations

• Budget Constraints: Malaysia’s $2.7 billion defense budget (2025) pales against China’s $296 billion, limiting modernization. Procurement issues, including inflated pricing and reliance on foreign suppliers, persist.
• Obsolescent Equipment: Much of the MAF’s equipment is outdated, with no attack helicopters or self-propelled artillery, hindering conventional warfare capabilities.
• China’s Dominance: Chinese incursions (e.g., 89 between 2016–2019, 2024 Luconia Shoals) expose Malaysia’s limited capacity to deter CCG or PLA forces.
• Recruitment and Retention: Challenges in maintaining high-quality personnel affect operational readiness.

SCS-Specific Capabilities

Malaysia’s military is tailored to defend its SCS claims, including five Spratly features and its EEZ, against Chinese actions:

• Surveillance and Patrols: The RMN’s 71 patrol vessels and RMAF’s upcoming MPAs and drones enhance monitoring of Luconia Shoals and James Shoal, critical for countering incidents like the 2021 PLA Air Force incursion.
• Naval Base Expansion: The Bintulu base will strengthen Malaysia’s presence near disputed areas, supporting Petronas’ oil and gas operations.
• ASEAN and FPDA: Malaysia’s regional exercises and partnerships provide deterrence, though less robust than the Philippines’ U.S. alliance.

Military Overview

Malaysia’s military in 2025, ranked 42nd globally, is moderately capable with 113,000 active personnel, a modernizing navy, and an air force transitioning to advanced platforms like the FA-50M and MPAs. While sufficient for monitoring its SCS claims, including five Spratly features and its EEZ, Malaysia’s forces are constrained by budget limitations, obsolescent equipment, and China’s overwhelming military superiority.Strategic hedging, regional cooperation, and a RM12 billion investment in 2025 strengthen Malaysia’s ability to defend its interests against Chinese incursions, such as those at Luconia Shoals. By leveraging ASEAN’s COC negotiations and external partnerships, Malaysia can enhance its military posture, ensuring economic security and regional stability in the SCS as of August 9, 2025.

Policy Recommendations

To strengthen Malaysia’s position and contribute to SCS stability, the following recommendations are proposed:

1. Enhance Strategic Communication: Anwar’s administration should articulate a clear, consistent narrative on SCS sovereignty, addressing domestic concerns through public campaigns and parliamentary briefings to counter misperceptions of a pro-China shift.
2. Lead COC Negotiations: As 2025 ASEAN chair, Malaysia should push for a binding COC with clear enforcement mechanisms, leveraging its diplomatic credibility to bridge divisions among members.
3. Enhance Maritime Surveillance: Invest in coast guard and radar capabilities, with support from Japan and the U.S., to monitor and deter Chinese incursions at Luconia Shoals without escalating tensions.
4. Promote Joint Development: Explore resource-sharing agreements, as proposed by Taiwan and some Chinese scholars, focusing on oil and gas at Luconia Shoals to reduce economic losses while sidestepping sovereignty disputes.
5. Strengthen International Partnerships: Deepen maritime security cooperation with the U.S., Japan, and Australia through joint exercises and technology transfers to counterbalance China’s influence. This helps ensure Malaysia’s neutrality is perceived as strategic hedging, not pro-China alignment.
6. Amplify Legal Advocacy: Increase public references to the 2016 PCA ruling in UN submissions and ASEAN statements to reinforce Malaysia’s UNCLOS-based claims and pressure China diplomatically.
7. Engage Domestic Stakeholders: Address concerns of fishing and energy communities through transparent communication and economic support, ensuring domestic backing for Malaysia’s SCS policies.
8. Increase Trade with Other Partners: By increasing trade with other parties, such as the United States, Japan, Australia, Malaysia can decrease its economic dependency on China, allowing Malaysia to better assert its national claims in the SCS with reduced fear of Chinese economic retaliation.
9. Accelerate Military Modernization: Prioritize RM12 billion investments in LCS, MPAs, and drones to enhance SCS surveillance and deterrence.
10. Increase Defense Spending: Malaysia currently spends around 1% of its GDP on defense. Increasing this percentage will allow Malaysia to better defend its strategic interests, and may also boost its economy.

Conclusion

Malaysia’s claims in the South China Sea, centered on its Spratly outposts and EEZ off Sabah and Sarawak, reflect a strategy of quiet diplomacy that balances legal assertions with economic pragmatism. As of August 9, 2025, Malaysia’s leadership in ASEAN’s COC negotiations positions it as a key player in fostering regional stability, despite challenges from China’s military dominance and ASEAN’s internal divisions. By leveraging UNCLOS, strengthening maritime capabilities, and exploring cooperative frameworks, Malaysia can protect its economic interests and contribute to a rules-based order. Its restrained yet principled approach offers a model for managing tensions in this critical maritime region, provided it navigates the delicate balance between economic ties with China and international partnerships.

Malaysia’s stance on the South China Sea under Prime Minister Anwar Ibrahim, as of August 9, 2025, reflects continuity with its historical three-pronged policy of asserting sovereignty, decoupling economic ties, and supporting ASEAN-led diplomacy. While perceptions of a “pro-China” shift arise from Anwar’s rhetoric and regional dialogue emphasis, actions like Petronas’ operations, diplomatic protests, and naval base plans demonstrate no compromise on Malaysia’s claims. Nuanced adjustments, such as bilateral maritime talks and downplaying tensions, align with past strategies to preserve economic ties with China but risk misinterpretation amid domestic and ASEAN scrutiny. By enhancing communication, leading COC negotiations, and balancing partnerships, Malaysia can reinforce its neutral, principled stance, safeguarding its interests in this critical maritime region.