According to the latest brief of Asia Maritime Transparency Initiative (AMTI) the tension between China and its neighbors is growing. Vietnam and Philippines report of growing number of harassment of innocent fishermen by Chinese Coast Guard vessels. The concerns lead to further cooperation between the countries of South China Sea. Japan and Philippines conducted military drills 22-26 June 2015 and this is the most obvious reaction to the expansion of the Chinese sphere of influence around the region.
Apart of the constant military drills closer to the coast, China has and puts in action its plans for the control of the seas hundreds of kilometres away from its coasts. The latest photographs of Spratly Islands in the media show that China has ‘built up’ the islands and equipped those islands with military outposts. Another concerning points on the map are Fiery Cross Reef and Johnson South Reef which are already functioning as naval bases and yet undergoing the noticeable land reclamation.
US military experts, now joint with Australians, are raising the awareness around the region scarring the ASEAN countries with predictions of Chinese taking full military control of South China Sea and beyond. Such predictions are always followed with possible scenarios of regional security braking from the ‘concern worth’ status to a bad one in short period of time.
The growing hysteria is never about the naval power itself, even though it is mostly talked about as the reason for such. The other points of the expansion are the resources of the South China Sea like oil and gas, found in the last decades. The very first Chinese rig platform known as ‘Ocean Oil 981’ opened in 2012 is placed in the same region of South China Sea, its main shareholders are J.P. Morgan Chase & Co. (19.01%), Commonwealth Bank of Australia (14.05%). The years old sea dispute looks in a different light when money talks.
Since American and Australian companies are not afraid to do business with Chinese regardless what the military experts warn about. What’s in it for Malaysian business? Malaysia definitely has a voice in this sea argument but what about incomes from further oil extraction which is going to grow in number and Chinese are currently working on this issue. Could Malaysians be the main shareholders of those new rigs coming up to profit, instead of being scared off by military experts?
Taking into account that the area is already secured by Chinese and it is safe to say no one is going to mess with them. Fact is, the new rigs are to be installed and the possible incomes are yet to be counted, thus before it is all done, Malaysian business could easily start cooperation with Chinese companies meanwhile Americans are scaring the rest of the region.
Could Malaysia become a bigger business partner to China? Even the island building process is set in motion by Chinese is point to be considered by Malaysians as another opportunity to invest instead of being a neighbour witness. Fact is, China has completed a major part of the land reclamation, the abovementioned islands are not the end since no expert said that China’s plan is fulfilled, consequently, there are more islands coming. Meanwhile the story repeats, more business can be done.
Part 1 of The Malaysia Global Business Forum’s series on the “Economics of the South China Sea” we will explore what the changes mean for business in the region and keep track of how is winning the battle to control the resources above and below the waves, as the situation unfolds. Contributed by Sergey Ivankov is an associate researcher for Malaysia Global Business Forum and commentator on the socio-economic dynamics of global change