MALAYSIA – CHINA SHARED PROSPERITY AND MARITIME SECURITY RISKS

China and Malaysia’s economic relationship will grow exponentially through the recently launched Regional Comprehensive Economic Partnership (RCEP). The RCEP, signed by the 10 members of ASEAN + China, Australia, New Zealand, South Korea and Japan, combines together a population of 2.3 billion people and US$26.3 trillion of gross domestic product, almost a third of the world’s GDP.  It is the world’s largest Free Trade Agreement (FTA). With Southeast Asia, regional trade enmeshed with China, merchant shipping, and secure sea lines of communication (SLOCs) will be of utmost importance.

Both China and Malaysia can use this economic bloc as an opportunity to manage geopolitics and capitalise on mutual geostrategic interests to build strategic convergences for mutual interests especially maintaining the security of sea lines of communication (SLOC).

While the RCEP is still new, and there is much optimism about its prospects, the true potential will only be realised between 1 to 2 decades. However, in the context of China and Malaysia, both of these countries have more extended traditional ties – bonds that are centuries old. Modern trade and strategic ties between China and Malaysia can be traced back to the Malacca Sultanate in the 15th century.

In today’s context, just before the inception of RCEP, Malaysia and China have been Comprehensive Strategic Partners since 2014, and Malaysia is one of the key partners in China’s Belt and Road Initiative (BRI) and its subcomponent – the Maritime Silk Road. China has been consistently Malaysia’s largest trading partner for the last 13 years.  The latest bilateral trade figure between these two countries in 2021 is US$ 176.8 billion (a 35% increase over 2020) and could surpass US$190bil (RM856bil) this year. Some economists even forecast that it may touch US$200 billion by the end of this year!

Malaysia is located in a key geostrategic location connecting the East and West maritime trade routes. Malaysia has access to the Andaman Sea, Strait of Malacca, Strait of Johor, South China Sea, and further east in the Borneo Island where Sabah and Sarawak are located, the Sulu Sea and the Sulawesi Sea.

Historically, for centuries and continuing to today, using Carl von Clausewitz’s famous dictum, Malaysia has been a Centre of Gravity for maritime connections between the Eastern and Western spheres of trade.

With the inception of RCEP, China and Malaysia will see continued increases in bilateral trade. These countries have shared strategic interests in keeping their maritime connectivity safe and secure. Today, Malaysia’s maritime sector contributes about 40% of its GDP and will rise in the future.

Although there are numerous maritime security initiatives with which both China and Malaysia can cooperate, there is an emerging maritime security risk that both of these states can commence collaborating in new innovative approaches to mitigate.

This emerging security risk is a cyber threat to maritime security.  As more merchant vessels use automated navigation systems, GPS guidance (or Global Navigation Satellite System-GNSS), Automated Identification System (AIS), and shore-based facilities with cyber networks, pirates can take advantage in infiltrating cyber vulnerabilities and conduct cyber-attacks to facilitate hijackings and robberies.

Ships’ Operating Technology systems, such as engine controls, ballast pump systems and cargo-management systems, can also be infiltrated through crew’s emails, internet surfing, and compromised storage devices such as thumb drives.

Pirates can hack into these systems to steal shipping data, learn about each vessel’s important cargo, track ships’ movement, and assist in their physical attacks. A ship’s GNSS system can be spoofed, and the ship can be diverted to isolated waters. Engine controls will then be attacked, resulting in the ship slowing down or breaking down, enabling the pirates to launch a hijack. The ship’s AIS system can be spoofed to hide the actual location of the hijacked ship.

This example could be a stark reality as there are already early warnings that cyber tools are being used to attack the maritime industry.  The World Economic Forum’s Global Risk Report in 2020 stated that cyber-attacks on maritime infrastructure are the fifth top risk of 2020. In 2017, shipping giant Maersk was hit by a ransomware attack causing a complete IT system outage, also known as the 2017 NotPetya ransomware.  All of Maersk’s 50,000 laptops, computers and servers were blocked. Maersk handled 20% of the world’s shipping, and the ransomware attack caused substantive disruptions to global shipping, cost about Maersk US$300 million in damages and took weeks to restart its IT network.

As a proposed strategy to keep maritime connectivity remains secure and safe, a joint Cyber Centre operated by China and Malaysia may be set up to conduct research, sharing of information, and design practical cyber security solutions. Both China and Malaysia have shared prosperity, shared strategic history and shared future, and should continue to build mechanisms for security cooperation in connected maritime spaces through unique and innovative approaches.

 

[Photo credit: Ministry of Foreign Affairs, Malaysia]

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