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NEW ZEALAND MALAYSIA RELATIONS – FROM A NEW ZEALAND PERSPECTIVE “I have always opposed the idea of Australia and New Zealand being in the group (ASEAN) simply because Australia and New Zealand are not really East, nor are they Asian.” Prime Minister Mahathir INTRODUCTION 1. New Zealand's links with Malaysia today are primarily visible in terms of trade, tourism, educational services and the like. During the quarter century after World War II however, security considerations were paramount in defining relations with Malaya (Malaysia from 1963). In 1955, for example, Prime Minister Sidney Holland described Malaya as the front-line of New Zealand's very defence system.[1] A decade later, when being pressed to support American military efforts in Vietnam, Keith Holyoake's government reaffirmed that Malaysia represented the first priority within New Zealand's defence commitments and obligations in South-East Asia[2]. This set the scene for what has become a profitable and enduring relationship between the two countires. 2. New Zealand has had a long standing commitment to Malaysia when it came to offering tertiary education assistance for the youth of the Country and has more recently taken active steps to ensure that Malaysian students studying in NZ feel more welcome and are better intergrated into NZ society and culture for the during of their stay. NZ educational institutions have produced many fine graduates for Malaysia who have progressed to key leadership positions within Malaysian business and the public sectors. Malaysia is also viewed as an important trading partner to New Zealand within the ASEAN block and represents a valuable source of two way trade. Malaysia has usually been a strong supporter of New Zealand and its free trade aspirations and the movement from parrell studies on the benefits of a free trade agreement to negotiations to discuss the detail of the free trade agreement under Prime Minister Abdullah Badawi term is indicative of how the two countires view the importance of this aspect of their relationship. 3. As with any relationship the key is to determine how to utilise the strengths and nullify the problems between friendly states. There are areas of key importance to both countries and through continuing dialogue at Ministerial level there is the potenial for further synergies between the two nations. Does New Zealand have a role in any capacity, in assisting Malaysia achieve its 2020 Vision. Can NZ and Malaysia who are both religious and political moderate states, engage other less moderate states on matters of religion which seem to divide the world now more than ever' Is there the possibility that the two Nations can continue to build a relationship of friendship and empathy that provides an example for other Nations of differing racial tones to follow' THE ORIGIN OF THE NEW ZEALAND – MALAYSIA RELATIONSHIP It isn't enough to talk about peace. One must believe in it. And it isn't enough to believe in it. One must work at it. Eleanor Roosevelt 4. During the 1950s NZs focus gradually shifted from the Middle East to South East Asia. This was evident by its membership in ANZAM which was originally intended for Air and Naval contingency planning for convoy protection by Australia, New Zealand and Britain in South East Asia and the south west Pacific. In 1953 its focus was enlarged to include the defence of Malaya[3]. In 1951 ANZUS was formed and it became the cornerstone of NZ’s Defence Security arrangements, however ANZUS lacked the machinery for contingency planning and by 1953 ANZAM became this planning agency. The US was excluded from ANZAM, and as Caird states, they had no desire to be included in security discussions of British colonies and similarly the UK was excluded from ANZUS[4]. With its focus on Malaya, Australia and NZ walked something of a tight rope between the UK and US with at times competing priorities evident in ANZAM, ANZUS and SEATO. Between 1951-54, a five power staff agency (UK, France, US, Australia and NZ) existed. This ceased to operate after the French defeat in Indo China and the creation of SEATO coincided with its demise. SEATO was signed in Manila in 1954 with the membership of US, UK, France, Pakistan, Philippines, Thailand, Australia and NZ. Its aim was to counter aggression in general with a US focus on communist aggression. 5. As further general background to the NZ Malaysian defence relationship, there was an agreement in 1955 that the base for the Commonwealth Far East Strategic Reserve would be in Malacca[5]. In 1960 SEATO members were asked to declare their forces for the SEATO military plans. NZ had ended compulsory military training in 1957 and had shifted to a Regular Force with a Territorial Force round out capability. Following a Defence white paper in 1961 NZ withdrew its provision to provide a Division to SE Asia and a regular force Battalion was designated to meet lower level commitments during the 1960s. New Zealand’s Military Commitment to Malaya 6. On 20 September 1949 NZ made its first military contribution to the defence of South East Asia. Alpha Flight, Number 41 (transport) Squadron RNZAF equipped with three Dakota aircraft deployed to Changi air base. The UK was concerned about the defence of Hong Kong with the communist victory in China and the establishment of the People’s Republic of China. Alpha Flight, Number 41 Squadron was New Zealand’s first response to the UK request for a military commitment. The NZ Prime Minister agreed to the Dakotas being used in anti bandit operations in Malaya. Also at this time a small number of NZ regular army officers were attached to British units in both Malaya and Hong Kong.[6] In 1946 the Malays opposed the British imposition of the Malay union which would have given citizenship to immigrant Chinese and Indians. The British backed off the union concept and formed the Federation of Malaya in February 1948 and restored traditional Malay dominance[7]. The Federation comprised the nine Malay States and the British settlements of Penang and Melacca while Singapore remained a separated Crown colony. In March 1948 Chin Peng chaired the central executive committed when it decided on a policy of armed struggle with the long term aim of the MCP was to overthrow the colonial administration and establish a communist state[8]. 7. In December 1955 the NZ Special Air Service Squadron deployed to the Federation to serve with 22 SAS Regiment (UK) which was based in Kuala Lumpur for deep jungle operations in Malaya. The NZ Defence deployments preceded any NZ Diplomatic or Trade representation. During its two year tour, the NZSAS were involved in 14 separate contacts in which 15 CTs were killed, one was captured and nine surrendered[9]. The squadron suffered one combat fatality. It returned to NZ to be disbanded but many of its members served in subsequent units deployed to Malaya. 8. 1 NZ Regiment deployed to the federation for the period 1957 to 1959. As with the married members of the NZSAS their families lived in the local communities: NZSAS in Kuala Lumpur and 1 NZ Regiment in the Poh region. This proved a valuable cultural experience for many NZ families but unfortunately the same contact did not exist when the families were based in Terendak Military Camp, Malacca. As the tours progressed there was a growing contact with the expanding Federation Army and on several occasions the NZ units were under operational control of Federation brigades. The Emergency ended in 31 July 1960 and a company from 2 NZ Regiment took part in the victory parade in Kuala Lumpur on 4 August 1960[10]. As the emphasis moved to border security joint operations, centres were established in Alor Star and in Thailand at Sonkhla. This is the broad background against which 7 NZ Regiment during 1960-61 and 1 NZ Regiment during 1962-63 were deployed. The latter Regiment was the first to occupy Terendak Camp which opened 5 August 1960 and became the home of 28 Commonwealth Brigade. 9. In the period May to September 1962 NZ deployed under SEATO Operation SCORPION three Bristol freighters and a detachment of 30 NZ SAS to the Thailand/Laos border from NZ. On 29 August 1963 the Prime Minister announced the establishment of the Federation of Malaysia and it was formed on 16 September 1963 and comprised greater Malaysia, Singapore, Brunei, Sabah and Sarawak. The Prime Ministers declaration for the Federation of Malaysia Sukarnos initiated KONFRONTASI in response to what he saw as a direct threat to Indonesia’s position as the leading emerging power in SE Asia[11]. NZ initially declined to deploy forces apart from the Bristol freighters and the RNZN already on anti piracy patrols. SEATO commitments were the primary concern and NZ saw confrontation as very much a UK/Malaysian concern. In July and August of 1964 there were politically inspired riots in Singapore and on 17 August Indonesians landed on the West Coast of Malaysia in the Pontian area of Johore State in strength of between 50-100 in five different locations. There were further Indonesian landings before Federation Day. As a result the NZ Government approved the deployment of 1RNZIR to Pontian which permitted the release of 5 and 6 Battalions RMR to deploy to Singapore. 10. Between 17 Aug and 30 September Indonesia deployed 855 Infiltrators, regular soldiers, policeman, airmen, marines, local volunteers and conscripted boatmen. 100 turned back, 436 landed, 102 were killed and 301 were captured[12]. The growing involvement of Indonesian regulars in cross border raids into East Malaysia led to the approval on 1 May 64 for hot pursuit operations to be conducted to a depth of 3,000 yards into Kalimantan. This aggressive defence was a major problem for the NZ Prime Minister in committing NZ combat elements to East Malaysia. However as the confrontation continued NZ was persuaded to commit additional assistance and in Jan 65 an SAS detachment of 40 men was committed to these operations. Four detachments of 40 men each were deployed over the period February 1965 to December 1966 (seven to eight month deployments for each detachment). In May 1965 1RNZIR were deployed to East Malaysia and they were replaced by 1 Battalion Malaysian Rangers at the end of the tour. In May 1966 1RNZIR deployed on its second tour to Borneo as part of West Brigade. The last stages of Indonesian incursions occurred elsewhere even after the Indonesian post-coup chaos had settled down after the bloody suppression of the communists in Java and Sumatra and the beginning of the Bangkok peace talks in June. 1RNZIR had a very quiet tour and returned to Terendak in October 1966 after handing over to 8 RMR. 11. New Zealand and Malaysia enjoy a significant and long-standing defence and securiuty relationship which stems from the 1950’s. The offer of the PJM medal is an acknowledgment by the Government of Malaysia of the high value which is placed upon the contribution made by New Zealanders to the security of Malaysia and the region. To highlight the importance placed upon the NZ contribution by the Malaysian Government, in all possible circumstances senior representatives from the Government of Malaysia will present medals in person to recipients, including the next of kin in cases of posthumous awards. It was inevitable that the relationship between the five countries would have another iteration that would remain in place for decades. The birth of the FPDA was a logical progression for Australia, NZ and the United Kingdom to take for whilst the threat to security and stability in the region had receeded there was a requirement to maintain some force elements in place as well as continuation of a firm policy of deterence against would be aggressors. This episode in the history of Malaysia has served to draw New Zealand and Malaysia together which is reflected in the closeness of the relationship today. THE CURRENT STATE OF THE NEW ZEALAND – MALAYSIA RELATIONSHIP A faithful friend is a strong defense: and he that hath found such a one hath found a treasure. Ecclesiasticus 6:14 12. Malaysia is important to New Zealand for strategic, political and economic reasons. There is a history of close and friendly links stemming originally from Commonwealth ties and shared security concerns. The relationship is wide ranging, friendly and significant to both countries. It is characterised by regular high-level contacts, a range of official dialogues and growing business links as demonstrated by the growth in two way trade. The NZ Government has identified Malaysia as a key country in South East Asia with which New Zealand wishes to strengthen bilateral and regional ties under the Seriously Asia Strategy[13]. The parameters of New Zealand’s relationship with countries in Asia shifted dramatically during the period of 2003. The negotiation of important new trade agreements dominated headlines throughout the year but political engagement at Prime Ministerial level with the new Prime Minster of Malaysia attracted particular attention in New Zealand. The commitment of the NZ $2 million to the Seriously Asia Strategy project signaled that the time had come to reinvigorate the relationship and subsequently three important goals were set by the NZ Government. 14. The first goal was to commit long term to the Asian region and to Malaysia, all of which required the development of a road map for NZ’s future relationships. This was achieved by conducting a thorough analysis of opportunities and challenges. The second goal was to understand and engage Asians within NZ, particularly those within the education system who intended returning to their home countries on the completion of their qualification. Within the large body of Asian students in NZ, there were over 1000 Malaysian students entering NZ annually to commence tertiary training and it was important to determine if the needs of these students were being met[14]. The last goal was to ensure sustainability. It is not that relations with Malaysia were in crisis, far from it as Rolls states, however there was a concern that NZ was not yet maximizing the potential of the relationship particularly given the moderate nature of both countries[15]. This is perhaps best illustrated by comments made by the NZ Prime Minister in her opening address to the Seriously Asia Conference in Nov 2003 when she stated that “the reality is that the nations of Asia matter far more to us than our small, geographically isolated, trading nation does to them”[16]. The importance of Asia to NZ’s security and prosperity is well known but for the nations of Asia and in particular Malaysia with whom we had such a close relationship with previously, we are a small blip on the radar screen of a country intent on expanding rapidly under the Vision 2020 framework. Security and Defence 15. The withdrawal of British Forces along with the immature state of the Malaysian and Singapore Armed Forces necessitated an arrangement that would cater for the external defence of Malaysia and Singapore. The FPDA was established and then HQIADS was soon after established with a charter and operational mission to ensure the integrity and sovereignty of Malaysian and Singapore airspace. The directive to Comd IADS included emergency powers and the assignment of forces to meet his operational responsibilities[17]. As the security environment has changed and the capabilities of the Malaysian and Singaporean Armed forces have advanced, the role of HQIADS has changed.  In 1994, the FPDA Defence Ministers removed Comd IADS of his emergency powers and redefined the roles of IADS.  In July 2000, the FPDA Defence Ministers endorsed a paper “The Future of the FPDA Operational Arrangements” which paved the way for a greater jointness in FPDA activities[18].  16. The FPDA was formed in 1971 as a consultative arrangement. In the event of an external threat to Singapore or Malaysia, the members consult each other on the appropriate measures to be taken. The FPDA continues to be relevant in the prevailing security environment. Although Singapore and Malaysia have developed their own independent defence capabilities, the FPDA continues to provide an additional layer of defence and deterrence vital to the two countries’ security. The FPDA also contributes to regional security and stability. This loose military arrangement has evolved from one that initially intended to give confidence to Malaysia and Singapore to one of interoperability and joint military exercises[19]. By the early 1990s major sea and air exercises were held often involving up to thirty warships and fifty aircraft in comprehensive exercises including all aspects of land, sea, and air defense and electronic warfare systems. The FPDA has been criticized by those who view it as a product of either British colonialism or the Cold War and by those who see it as contrary to greater Southeast Asian multilateralism and self-reliance however it continues to serve the needs of Malaysia and Singapore. Trade 17. Malaysia and NZ are open and dynamic market economies that depend on international trade for stimulating economic growth. Strong global connections and improved access to markets are fundamental to the economic strategies of both countries. The governments of Malaysia and NZ both pursue active trade policies and are leaders in regional and global trade liberalisation and economic reform. Two-way trade between NZ and Malaysia is significant and valued at around NZ$1.3 billion for the year to June 2004.[20]  Malaysia is New Zealand's 10th largest bilateral trading partner. The bulk of New Zealand exports to Malaysia are agriculture-related with dairy products (mainly milk powder) comprising over 50 percent. New Zealand exports to Malaysia stood at NZ$534 million for the year to June 2004[21].  Dairy products have consistently accounted for over 50 percent of these exports.  Other major exports include meat, fish, pulp and paper, fruit and vegetables.  18. The trade relationship is underpinned by cooperation at the official level. The bilateral Trade Agreement between New Zealand and Malaysia was signed in 1997 and entered into force on 1 January 1998.  A key recent development in the Malaysia and New Zealand economic relationship was the announcement in September 2004 by Trade Minister Rafidah and Trade Negotiations Minister Sutton that Malaysia and New Zealand would undertake parallel studies to determine the benefits that could be derived from a bilateral FTA[22]. Investment is another aspect of the New Zealand and Malaysian economic relationship.  About 20 New Zealand companies have major investments in Malaysia covering a wide variety of sectors, including food, food technology, telecommunications, electronics, software, information technology and building products.  Malaysian businesses have invested in the hotel and property sectors, forestry and food processing in New Zealand as well as in a major consultancy group.  Business Councils are established in New Zealand and Malaysia.  Tourism and Education 19. Malaysia and New Zealand also share close educational links.  Many New Zealand universities have well-established contacts and formal agreements with Malaysian education providers.  Malaysia has been one of New Zealand’s largest sources of overseas fee-paying university students.  An estimated 13,000 Malaysians have been educated in New Zealand and Malaysia has become an important source of overseas students with an estimated 1100 tertiary and private institution students enrolled in New Zealand in 2003[23]. Malaysia students contribute an estimated NZ$38 million to the New Zealand economy.  A Chair of Malay Studies was established at Victoria University in 1996. A bilateral Education Memorandum of Understanding (1996) provides a means for policy cooperation between both countries education authorities.  The latest JWG was held in Kuala Lumpur in May 2004.  The NZQA has since 2001 had an MOU with the Malaysian National Accreditation Board and the Minister of Education the Honorable. Trevor Mallard visited Malaysia in May 2004 to raise the profile of New Zealand education expertise in Malaysia.  There has been a recent trend towards the provision of education services by overseas suppliers in Malaysia. This means that some Malaysian students will continue to be educated in other countries or in joint venture arrangements with campuses in Malaysia. Malaysia currently ranks as the number one market in terms of programmes offered for NZ’s offshore education programmes.[24] Currently foreign providers wanting to establish a commercial presence have to be invited but commercial presence is restricted by the requirements to have a Bumiputera Company as a partner however this may be reviewed in NZ’s case during the FTA negotiations. 20. The positive impact of Malaysia’s strong growth can already be seen by the increase in two-way trade between Malaysia and New Zealand. While trade and commerce has long been the mainstay of Malaysia-New Zealand interaction, new areas, in particular investment cooperation are becoming increasingly more attractive to both sides. The strong existing linkages in the area of education has obvious benefits to both countries however more work is required before its full potential can be gained. As more Malaysian students continue to travel to NZ and pursue their tertiary studies the stronger the affiliation becomes between the two countries. The networks established whilst in these institutions by Malaysian and NZ students has perhaps become the new bonding method between the two countries just as the deployment of NZ soldiers once was in an earlier part of the shared history. As the world struggles to reconcile religious differences there would appear to be a bridge being built between an Eastern and Western country that could possibly become a model for others. Malaysia and New Zealand currently enjoy a healthy and respectful relationship partially based on the manner in which it was forged but also due to the moderate and progressive natures of both countries. Whilst there remains much progress to be achieved the gains to date put the relationship on a sound foundation that should allow a strong structure to be built on it. As the two countries negotiate their way through a FTA they should not lose sight of where we have come from together for that will shape where the two countries can go together. Mutual tolerance and respect have served NZ and Malaysia well up to this point but what is needed now is a firm sense of direction about where the relationship is being deliberately pointed. ANALYSIS ON THE FUTURE OF THE BILATERAL RELATIONSHIP The wave of the future is not the conquest of the world by a single dogmatic creed but the liberation of the diverse energies of free nations and free men. John F. Kennedy 21. The visit relatively early in the term of Abdullah as Prime Minister indicates the priority attached to deepening Malaysia’s relationship with New Zealand[25]. The decision to instigate parallel studies between the two countries on the advantages of an FTA has been the catalyst not only for strengthening the trade relationship but also for stimulating more links in other areas as diverse as science and technology, tourism, and education. A FTA can be the means by which the two countries can develop a forward looking relationship appropriate for the 21st century. A new initiative for New Zealand is the appointment of education counselors offshore to develop international education relationships[26]. The new regional education counselor for South East Asia will be located in Kuala Lumpur both because of the depth and breadth of the education relationship with Malaysia but also because it is believed it is a good base from which to extend into the wider region. Steps have been taken to reinvigorate relations with the nations of Asia and to ensure that NZ stays engaged with the dynamic process of regionalisation which is still occurring. For that reason NZ has been studying the possibility of acceding to ASEAN's Treaty of Amity and Co-operation as a means of signaling NZ’s strong interest in growing the relationship further[27]. NZ is on record as welcoming the vision which ASEAN has outlined for an increasingly integrated ASEAN community. Malaysia's leadership in the development of that vision has and will continue to be instrumental in carrying this vision through to fruition. 22. Overall the development and prosperity of Asia is critical to New Zealand's future. Almost 35 per cent of NZ’s trade in goods is with Asia and around seven per cent of the people in NZ are of Asian origin and that figure is expected to double over the next fifteen years[28]. There is a strong belief that Asia's stability enhances NZ’s sense of security and that gives further compelling reasons for NZ to be actively engaged with the region. Malaysia under Prime Minister Abdullah has given an address on Islam Hadhari at Victoria University in New Zealand where he outlined his vision of Islam as one compatible with modernity and yet firmly rooted in the values of Islam[29]. The vision for Malaysia of being a working model of renewal, reform and the beginnings of a renaissance for the Muslim world at large are entirely compatible with NZ’s views on this subject. This is a subject that is assuming tremendous importance on the world stage. In the post September 11 world, for western countries like NZ it has become increasingly vital to reach out and start dialogue with nations with significant Islamic populations. 23. The Muslim population in NZ is small but growing. Malaysia has for many years looked after Muslims from New Zealand as they travel to perform hajj in Saudi Arabia and that support and mentorship from Malaysia is almost unprecedented within a Western country such as New Zealand. NZ has recognised Malaysia as a being a leading voice among developing nations. These insights Malaysia has on the perspectives of not only ASEAN and South East Asia but also from Malaysia's time as the chair of both the Organisation of Islamic Conference and the Non-Aligned Movement have been valuable to NZ and have helped shaped attitudes and policies of the NZ Government. There has been considerable progress in the development of the two countries and this has been well documented both in this paper and elsewhere. In particular the negotiations for a FTA are particularly positive however there are other areas of equal importance that can be developed to the benefit of both nations. This Chapter will provide some analysis as to an area where the relationship has potential for growth as well as future challenges and limitations to the bilateral relationship. A Potential Area for Enhancing the Relationship 24. New Zealand has a developed a reputation as a country than can deliver world class research and development results disproportionate to its size specifically in the area of bio-technology. This has largely been due to innovative approaches, a quality tertiary education system as well as generous government funding but also because the country is highly dependant on its agricultural and horticultural sector which forms the backbone of export earnings and economy. Organisations such as the Crown owned AgResearch have led the way in this field and their work is at the heart of pastoral industries, food processing and innovative products that benefit all New Zealanders[30]. Expertise has been acquired and nurtured in this specialised area without compromising the integrity of products through genetic manipulation. Through Government policies, research has been carefully channeled into maximizing production and effectiveness and minimizing risk to human beings. New Zealand has now a hard earned reputation for produce that is healthy and disease free and as a result has developed export markets in all corners of the world. 25. Malaysia was also an agricultural based economy before it commenced transforming itself into an industrial based economy. This initiative was designed to move Malaysia towards developed nation status by providing more employment for its people, improving the literacy rate and raising the standard of living. This has largely been a success and Malaysia has succeeded in lifting itself out of the third world band and into the developing nation grouping. Most estimations of its progress see Malaysia achieving its goal of developed nation status with fifteen to twenty years and so in the respect of moving the country forward, the change has been a success. It has had a substantial impact though on the amount of food and produce that Malaysia now requires from external sources to sustain its own population’s needs. New Zealand has benefited from this by being one of many countries exporting to Malaysia to fulfill its shortfall but no area more so than diary products. This has created both an opportunity and a possible cost for New Zealand. 26. The key to moving this forward will be to adopt an attitude of complimentary research and development. There is a requirement for analysis on what the specific areas of research and development that could be transferred into the Malaysian environment successfully. By seeking to partner Malaysia in this area NZ will again demonstrate the level of commitment and importance it places on the long term value of the relationship. It will be far more advantageous for NZ to not directly compete or seek to protect its export position but more to determine how best to develop NZ’s dynamic research and development niche in this area so that both countries profit.[31] Whilst there will be areas within the field that are not suitable for transfer to a tropical environment or would be to the detriment of NZ’s export position, there are many that will be and could benefit Malaysia in its goal to create a third engine of growth. Cooperation through joint research and development is a potential direction that NZ could grow the relationship that is outside of the traditional areas considered. If successful it could unlock a series of further expansions into the ASEAN group that could provide substantial reward to both NZ and potential ASEAN partners. It also has the ability to lift NZ standing as a collaborative partner and reinforce the image that NZ does not simply seek to improve its own well being but is country that seeks to improve others as well. Limitations and Future Challenges to the Bilateral Relationship 27. The relationship has a sound foundation that will only be strengthened further by the achievement of a FTA. There are however, certain limitations that will be difficult to overcome for NZ and a number of future challenges that will require thorough analysis in order for NZ to stay relevant to Malaysia. [32] The first key limitation relates to the foreign ownership and investment laws that Malaysia has in place which are somewhat restrictive. These can be traced back to the societal and economic restructuring brought about because of the race riots in 1964. The government of the day settled on affirmative action as a means to defuse racial tensions. Most jobs in the bureaucracy were reserved for Malays as were the majority of government contracts. Companies were supposed to place at least 30% of their shares in Malay hands and foreign investments in particular have been highly regulated. In 2003 a Government stimulus package was announced and for acquisitions by Malaysian and foreign interests the only equity conditions imposed were[33] Bumiputera (indigenous Malay) equity of at least 30%. In the case of acquisitions by a foreign interest, the remaining equity can be held either by foreign interests or jointly by foreign and Malaysian interests. This still presents a substantial impediment to NZ companies seeking to establish a Malaysian branch or office or factory as there can be difficulties in finding a Bumiputera partner that suits the investing company. This may be due to the specialised nature of the business of the foreign company or simply because there is little interest from Bumiputera. 28. The second key limitation with the relationship is one of religion. NZ is a largely Christian country with a small but growing Muslim population. NZ has been very careful in the dialogue it has had to date in regards to Islam and Islamic states. There is however a very fine balance in the respect for beliefs of Islam against rights that can differ considerably in some Western Nations. This was demonstrated recently in Denmark and other countries with the unnecessary printing of the derogatory cartoons of the Prophet Mohammad by Western media[34]. Western media claimed that this was part of the right to free speech however the action taken was extremely offensive to Muslims around the world. NZ has few if any Muslims in the public and private sector and this is a limitation when NZ attempts to negotiate its way diplomatically or in trade with states that are predominately Islamic. NZ does have a history, albeit a short one, or being able to navigate through the various issues that arise but being a non Islamic state means there are limitations on the understanding of why some issues are important and how some issues need to be dealt with in an appropriate manner. 29. The third limitation is the size of NZ economically and as a state actor in the international stage. NZ has had difficulty in making in-roads in some areas due to the lack of international clout and economic measure. There have been a number of occasions where NZ has been able to lift its profile in recent times when a New Zealander had the chairman’s position of the WTO and when NZ had a seat on the UN Security Council[35]. This however is tempered by the geographic location of the country and that the fact that NZ is dwarfed in size and economy by its friendly neighbor Australia who isn’t always in agreement with NZ on some key international issues. NZ being a leader in free market policies does not equate to having influence in the international arena however the active and appropriate contribution NZ does make in most areas of significance does in some measure go towards addressing this limitation. Fundamentals that will guide the Relationship 30. There are three fundamentals that have guided the NZ – Malaysia relationship and should continue to do so in the future. A shared security interest is the first. NZ views South East Asia as critical to its own security both in terms of trade and in terms of the spread of threats such as terrorism. By maintaining an active focus on the area and contributing where relevant and possible. As there is already a well established history there dating back to the Emergency and Confrontation period that has been built on since through the FPDA and the bilateral agreement. As long as there is a continuation of mutual intent to maintain these commitments then this will continue to form part of the back bone of the relationship. The second fundamental is trade as a means to growing each country. Both countries have a shared vision of how a open market economy can both help grow and develop each nation but also draw other nations together and in doing so potentially avoid conflict. A strong trade relationship which has mutual investment in either country by the other party as well as fair and equitable trade arrangements will form the critical part of the back bone of the relationship. 31. The third fundamental is the mutual respect each country has for each other. This has been borne out of the shared security interests and the joint educational efforts as well as non-intervention in the affairs of state. It also is based on the moderate position each country has taken in regards to religious issues and how there has been no polarisation of each states policies. NZ respects the Malaysia as an Islamic state and believes it sets a very good example for other Islamic states to follow. Malaysia in turn respects NZ positive example toward the Islamic world as a whole and how it has not sought to capitalize out the division between religions. 32. As has been identified in this paper there is considerable room for growth in the relationship between NZ and Malaysia in the areas of trade, education and tourism. Of course the security relationship which is already well developed and strong can be further enhanced as mutual cooperation ensues on how to press forward with the various threats groups that seek to disrupt stability in the region. The is also opportunity for the two nations to come together in the area of agriculture and in particular the research and development field. There is sufficient depth of knowledge and experience to allow successful transfer of Biotechnology which will be advantageous to both countries. Additionally NZ can be positioned to both assist and benefit from the development of the third engine of growth under the 9th Malaysian Plan. 33. As with any relationship there are both limitations and challenges. In the case of the NZ – Malaysia relationship the three key limitations are NZ size both as a potential market and as an economy and as a consequence the impact NZ can have in the face of a multitude of other countries equally interested in developing deeper relations with Malaysia. The second limitation is the foreign ownership rules in place in Malaysia and whilst they have been relaxed somewhat there is still a requirement for a NZ venture to locate a suitable and willing Bumiputera partner. This has the potential to be expensive, time consuming and cumbersome to NZ Companies. The third limitation is religion. At a time when the world is becoming polarised by religion NZ seeks to develop relationships with a number of Islamic states. The limitation is there is little experience and understanding of the nuances with the Islamic faith and there is always the danger of been put in the situation of having to decide between pursuing a course that is right and unbalancing relationships with Islamic countries. This however has not been an issue to date for NZ and the decision not to participate in the Invasion of Iraq is a good example of how this has been avoided to date. The loss of creditability to NZ in the eyes of the MAF is evident but with time and continuation of the commitment that has been shown to the security of the region and in particular Malaysia by NZ this can be alleviated. Improvement in the US and NZ relationship at a time when Malaysia sees a more active role for the US in the region and regularly exercise with the US military is important and it is assessed that military relations could be restored with then next decade. 35. As long as the fundamentals of the relationship remain extant which are shared security interests, trade and mutual respect, the relationship should continue to deepen and be of benefit to both countries. The FTA will play a major role in pushing the relationship forward and will be of considerable benefit to NZ as a door opener to other countries within the region. CONCLUSION 36. The New Zealand- Malaysia relationship has been built on a shared sense of security and common interests since the 1950’s. It commenced when security considerations were paramount and New Zealand firmly had its focus on the Middle East. This focus quickly shifted to SEA as it was percieved that this was far too close to New Zealand’s back door and if something wasn’t done then there was a distinct possibilty that communisim could spread through to the pacifc region. NZ’s participation and contirbution to the Far East Strategic Resreve was significant for a small nation however it was the contribution to the Emergency in Malaya in 1955 of NZ SAS troops that signalled the importance NZ placed on secuirty in Malaya. 37. This was followed by 1 NZ Regiment in 1957 and from then until the 1970’s NZ maintained a military presence in Malaysia including during the Confrontation period. Thousands of NZ soldiers, airmen and sailors passed through Malay(sia)a and developed a profound sense of attachement to the Country. Relationships borne through conflict can be the most enduring kind and the relationship that spawned from this period between NZ and Malaysia was no exception to this. NZ Forces eventually moved South into Singapore due to the increasing costs of manitaining Terrandak Camp in Malacca. However this was preceeded by a scaling down of the military commitment to Malaysia due to the refocus toward fighting communisim in Vietnam. This did not signal an end to the relationship between NZ and Malaysia but moreover signalled the start of a new type of relationship between the two Countries, one which encompassed diverse areas such as education, trade and a continuation of shared security albiet in a different form. The FPDA was the nemisis of various arrangements and agreements post Confrontation and is one of few enduring arrangements still in place having survived a period of substancially global change. Not only is it still in place but it actively engaged in by all five consultative partners in the arrangement as well as having evolved over time to retain its relevancy in the current security climate. Additionally NZ and Malaysia have developed a military bilateral agreement that has persisted over time and sees an ongoing commitment that is still valued today. 38. The ongoing FTA negotiations mark an important point in the trade realtionship between the two countires. It is a sign of the maturity of the trade relationship and it is important to recognise that the relatiuonship is complimentary in the repsect of imports and exports. NZ exports a substancial amount of agricultural products and imports a substancial amount of electronic products from Malaysia. There is current a trade balance in favour of Malaysia however with areas of potential growth like biotechnology NZ has the ability to lift its exports earnings higher in the future. This potential could be to the advantage of Malaysia as it seeks to add a third engine of growth to its economic expansion being agriculture. NZ could play an important albiet minor role in assiting Malaysia achieve this goal by drawing on the expertise and world class research and development capabilities to transfer knowledge. 39. It is important to also recognise that there are still limitaions within the relationship that could prevent it developing as fully as it otherwise could. The restriction on NZ companies who wish to establish themselves in Malaysia have a potential barrier with Malaysia’s foreign investment laws and this could deter an otherwise healthly foreign investment cross pollination. There is the possibility that in the future this could be addressed once a FTA has been signed and allowed to settle then the issue could be revisited with a system such as preferred nation status allowing certain foreign nations to establish themselves without the Bumiputra partnership restriction. 40. Education has played an important historical role in the relationship and NZ has had over thirteen thousand Malaysian students studying over the years at its various academic institutions. Annally NZ attracts over 1000 Malaysian students per annum as well as the 100 students that are also exchanged annually and sponsered by each Government. There have been a number of educational initiatives that have strengthened the relationship and the creation of the Alumni conventional to reunite graduates from both countries can only strengthen those ties. NZ has contributed to the education of a number of key people within the private and public sector and that too has assisted both countries as they seek to understand each other better. 41. Tourism has been a key exporter earner with over 23,000 Malaysians visiting NZ in 2003 alone. Through the NZ tourism board and continuation of the efforts to raise the profile of NZ with Malaysia there is no reason why this figure should not grow. However there needs to be balance and promotion of Malaysia as a tourist destination for New Zealanders has to be developed further in order to continue to strengthen the ties in this area. The historical nature of Malaysia to NZ as a country where New Zealanders have fought and died in order to preserve the security of the country and the region is of great interest to a number of younger New Zealanders who cherish the contribution the Country has made toward stability in the world and this should not be undervalued. 42. Religious differences have and will continue to have a major impact on policy and dialogue between the two states. NZ to date has respected the internal politics of Malaysia and this has been reciprocated. However there is a potential friction point as Malaysia is an Islamic state and its policy makers view some matters quite differently to NZ policy makers. The dialogue that occurs at senior level between the two countries as evidenced by Prime Minister Abdullah’s speech to Victoria University in 2003 is a positive sign that Malaysia understands that it is itself a voice of moderation for all of Islam and that it takes this responsibility seriously. In a time when religion is beginning to polarise nations there is a need for both countries to retain the moral responsibility they have inherited to strive to bring some balance to this divide. By continuing to demonstrate that states such as NZ and Malaysia who have populations of differing faiths can establish friendly and beneficial relationships brings a positive example to bear for other such states. 43. The fundamentals of the relationship between NZ and Malaysia have been built on a solid foundation of shared security. Throughout the fifty plus year relationship the two countries have developed strong linkages that have been of significant benefit to both. 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New Zealand’s Foreign Policy and Malay / Malaysia 1955-65, Christchurch New Zealand: University of Canterbury, 1970, p 21 [2] Ibid, p 37 [3] Grey, Jeffrey, From Emergency to Confrontation: The New Zealand Armed Forces in Malaya and Borneo 1949-66, New Zealand International Review, Vol. 29, 2004 p 12-16 [4] Caird, R.J. New Zealand’s Foreign Policy and Malay / Malaysia 1955-65, Christchurch New Zealand: University of Canterbury, 1970, p 16 [5] Caird, R.J. New Zealand’s Foreign Policy and Malay / Malaysia 1955-65, Christchurch New Zealand: University of Canterbury, 1970, p 86 [6] Rolfe, J.S. The Armed Forces of New Zealand, NSW Australia: Allen & Unwin, 1999, p 79 [7] Lau, Albert. The Malayan Union Controversy 1942-1948 (South East Asian historical monographs), Oxford University Press: New York, 1991 p19 [8] Clutturbuck, R. The Long Long War: The Emergency in Malaya 1948-1960, London: Cassell Publishers, 1967, p 13-35 [9] Rolfe, James, Seager. The Armed Forces of New Zealand, NSW Australia: Allen & Unwin, 1999, p 41 [10] Grey, Jeffrey, From Emergency to Confrontation: The New Zealand Armed Forces in Malaya and Borneo 1949-66, New Zealand International Review, Vol. 29, 2004 p 110 [11] Grey, Jeffrey, From Emergency to Confrontation: The New Zealand Armed Forces in Malaya and Borneo 1949-66, New Zealand International Review, Vol. 29, 2004, p 153 [12] Chin, Kin Wah. The Defence of Malaysia and Singapore: The transformation of a Security System 1957-1971, Cambridge: Cambridge University Press, 1983, p 66 [13] Asia: New Zealand Foundation, Seriously Asia Action Report – December 2003-04, p3 [14] Keen, David. A Case Study in Cross Cultural Literacy: The Experience of Malaysian Students at a Tertiary Institution in New Zealand, Dunedin College of Education Press, 1999 p 21-24 [15] Rolls, G & Smith A.L. Growing Apart: New Zealand and Malaysia, Malaysia: Institue of Southeast Asia Studies and New Zealand Institute of International Affairs, 2005, p34 [16] www.beehive.govt.nz/Print/PrintDocument.aspx'DocumentID=18456 [17] Bergin, Anthony. The Five-Power Defence Arrangements, London: ASEAN Academic Press, 1999, p 79 [18] Ibid, p 117 [19] Sheldon W. Simon, ASEAN's Strategic Situation in the 1980s, Pacific Affairs, Vol. 60, No. 1 (Spring, 1987), pp. 92 [20] Asia: New Zealand Foundation, Seriously Asia Action Report – December 2003-04, Feb 2005, p 6 [21] NZMFAT, Study on Benefits of a Free Trade Agreement, Wellington: Govt Press, 2005, p 25 [22] Speech by the Governor-General of NZ Dame Silvia Cartwright at the State Banquet at Istana Negara, Kuala Lumpur, Malaysia 28-Sep-2004 [23] NZMFAT, Study on Benefits of a Free Trade Agreement, Wellington: Govt Press, 2005, p 7 [24] NZMFAT, Study on Benefits of a Free Trade Agreement, Wellington: Govt Press, 2005, p 58 [25] http://www.beehive.govt.nz/ViewDocument.aspx'DocumentID=22621 [26] http://www.bc.edu/bc_org/avp/soe/cihe/newsletter/ihe_pdf/ihe41.pdf p 5 [27] http://edition.cnn.com/2004/WORLD/asiapcf/12/01/laos.asean/index.html [28] http://www.stats.govt.nz/additional-information/projections-overview.htm [29] Speech by Dato' Seri Abdullah Bin Haji Ahmad Badawi at Victoria University NZ on the 31 May 2005 [30] New Zealand, Ministry of Agriculture and Fisheries, Report of the Ministry of Agriculture and Fisheries, Wellington, Government Press, 2001, p 34