Academic journal article Contemporary Southeast Asia

Challenges of Globalization: Malaysia and India Engagement

Academic journal article Contemporary Southeast Asia

Challenges of Globalization: Malaysia and India Engagement

Article excerpt

Introduction

India is not a major player in the global trading system because its share of total global trade is less than 1 per cent. Nonetheless, India's population base of over 1.07 billion and an expanding middle class of around 300 million to 340 million and as the third largest economy in Asia, ensures that it receives attention from its major trading partners in Europe and North America (United States and Canada). One of the facets of globalization has been trends towards increasing economic linkages between countries and between regions, while the other was strategic security in a post-Cold War world. India's own involvement in the South Asian Association for Regional Cooperation (SAARC) has not resulted in greater trade and security. The level of intra-regional trade among SAARC members was low because their economies lacked comparative advantage. Moreover, the smaller economies feared that Indian capital and lower-priced goods will flood their markets if they were to liberalize their economies. SAARC countries have resorted to non-tariff policy barriers such as anti-dumping measures to limit trade with India (Financial Express, 2005). Contrary to the principles of SAARC, bilateral disputes between India and Pakistan such as over the disputed territory of Kashmir had also stalled trade in SAARC. India has become increasingly concerned that it will be marginalized with the formation of regional trade blocs. Table 1 indicated that India's total trade share with the major trade blocs has decreased.

The objective of this article is to examine the challenges of globalization (1) facing India and Malaysia and their responses to these challenges. From the Indian perspective it needs to diversify trade away from the European Union and the United States and counter China's influence in the Asian region. From the perspective of the Association of Southeast Asian Nations (ASEAN) members, India has the potential to be an alternative market, a source of capital, and technology to rival China. At the bilateral level, India has strong historical, social, and cultural linkages with individual ASEAN members such as Malaysia. Malaysia also hosts the largest ethnic Indian community of two million people among all the ASEAN members and is one of India's largest trading partners in ASEAN. As a trade-dependent economy, Malaysia was exploring the bilateral trade route as alternative paths to forging closer economic linkages with its major trading partners (Hew and Sen 2005). Furthermore, Malaysia also made an interesting case study due to its Islamic identity and Islam being the official religion. Malaysia's projection of its Islamic identity on the international stage is mainly through its membership in the Organization of Islamic Conference (OIC) and support for other Islamic countries and issues. In this context, Malaysia has close links with Pakistan, India's rival in South Asia. This is likely to impede Malaysia's efforts to strengthen ties with India.

Islamic Ties

Malaysia's vision of neutrality in its foreign policy was interlinked with its vision for fostering closer linkages with other Islamic states. In the 1960s, during the regime of Malaysia's first Prime Minister Tunku Abdul Rahman, it was accepted that although Malaysia is a Muslim country, its international relations had to be placed above other considerations. In this context, Malaysia extended its support for India in the second Indo-Pakistani war. Subsequently, Malaysia also severed diplomatic ties with Pakistan in October 1965 following Malaysian support for India in its dispute with Pakistan over Kashmir (Nair 1997, p. 57). The turning point for Malaysia's foreign policy occurred during the Confrontation with Indonesia from 1961 to 1966. Malaysia realized that although it managed to secure the aid of British and Commonwealth countries, Indonesia on the other hand managed to gain support from fellow Muslim countries (Nair 1997, p. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.