Courting Washington
Issue 21— Key Developments Across Brunei, Indonesia, and Malaysia
Editor’s Note
by Haniva Sekar Deanty, Lead Editor - Maritime Crescent Desk
This week’s Maritime Crescent looks at how Southeast Asia’s economic and governance strategies are evolving.
Muhammad Aiman in Malaysia examines the new trade and critical minerals agreement with the United States and how it signals both opportunity and constraint. The deal opens the door to advanced technologies, industrial growth, and deeper foreign investment. Yet, by committing not to restrict critical mineral exports, Malaysia also surrenders a measure of flexibility over its strategic resources.
Meanwhile Wira Gregory in Brunei reflects on the country’s decision to sign the UN Convention against Cybercrime is quieter in scale but no less significant. In a region increasingly targeted by online fraud and transnational cybercrime, the move strengthens Brunei’s hand by embedding it in international cooperation networks.
Rayhan Prabu in Indonesia then dissect Danantara’s ambition but no bold execution. The sovereign wealth fund was created to drive industrial transformation and technological leapfrogging. Yet a year in, its portfolio remains conservative, mirroring private investors rather than leading national reinvention.
Malaysia 🇲🇾
Malaysia’s Trade Pivot
by Muhammad Aiman Bin Roszaimi, in Cyberjaya
Malaysia’s decision to sign a landmark trade and critical minerals agreement with the United States marks a significant shift in its economic diplomacy. On 26 October 2025, Malaysia and the U.S. inked the Agreement between the United States of America and Malaysia on Reciprocal Trade, under which Malaysia opened up market access to U.S. goods and made binding commitments in sectors spanning agriculture, industry, digital trade and critical minerals.
A separate memorandum of understanding on critical minerals and rare earths requires Malaysia to avoid export restrictions to the United States and to issue longer-term licences that allow firms to expand production. For Malaysia, the deal opens multiple promising avenues. The trade agreement grants U.S. firms preferential access to Malaysia’s market that includes U.S. industrial equipment, agricultural products and advanced technologies, which in turn could enhance Malaysia’s own industrialisation push and boost foreign direct investment.
By committing to the critical minerals sector, Malaysia is positioning itself as a valued partner in the U.S.-led effort to diversify away from Chinese dominance in rare-earth supply chains. Plus, the agreement strengthens Malaysia’s geopolitical relevance. By cooperating with the U.S. in high-tech and supply-chain sensitive sectors, Kuala Lumpur may enhance its bargaining power both regionally and globally.
However, the commitment to not impose export bans or quotas on critical minerals in the U.S. may limit Malaysia’s flexibility in managing its own strategic resources. As the agreement states, Malaysia “has committed to refraining from banning, or imposing quotas on, exports to the U.S. of critical minerals or rare earth elements.”
Should global demand surge or Malaysia want to reserve strategic resources for domestic downstream processing, this clause could become a constraint. Another risk lies in the full breadth of non-trade obligations: Malaysia agreed to streamline U.S. imports, recognise U.S. regulatory standards, remove digital-services taxes, and address issues of labour, environmental protection and state-owned enterprise distortions. These commitments may expose Malaysia to external pressure, reduce policy space or impose costs on domestic industries shielded until now.
Moreover, from a regional perspective, Malaysia must balance the U.S. alignment with its ASEAN commitments and its relations with other major powers (especially China). If the U.S. deal is viewed as tilting too far, ASEAN’s credibility of neutrality or centrality could be undermined.
To extract value without sacrificing sovereignty, Malaysia must adopt strategic prudence. A clear roadmap for the critical minerals sector is essential to ensure that Malaysia keeps adequate downstream capacity and retains technological partners, not only becoming its export pipelines. Simultaneously, domestic industries that may face an influx of U.S. imports or face stricter standards should be cushioned through transition policies. While Malaysia must retain diplomatic flexibility while cooperating with the U.S, it must also continue to engage with China, ASEAN neighbours and multilateral mechanisms so that it remains a balanced actor in Southeast Asia.
Ultimately, the deal holds high promise for Malaysia’s industrial upgrade and international role but its success will depend on how Malaysia navigates the fine line between opening up and maintaining policy space.
Aiman is a PhD candidate in Security and Strategic Analysis at the National University of Malaysia. His research focuses on Malaysia’s space policy, ASEAN regional security, and the strategic implications of emerging technologies. His work explores how Malaysia’s defense policy and strategic culture shape its approach to outer space.
Brunei Darussalam 🇧🇳
Brunei’s Capacity and Cooperation against Cybercrime
by Wira Gregory Ejau, in Bandar Seri Begawan
Brunei Darussalam’s signing of the United Nations Convention against Cybercrime in Hanoi on 27 October is a pragmatic signal that recognises cybercrime as a transnational challenge that simply cannot be managed in isolation. This act hopefully embeds Brunei in a wider legal and operational architectural framework that, if implemented thoughtfully, can shore up weak links in enforcement, information‑sharing, and technical capacity.
Signed during the momentum of the 47th ASEAN Summit, this move also comes at a moment when respective regional leaders are independently grappling with entrenched roots of organised online fraud, of digital economy governance, cross‑border crime, and the integrity of financial and information systems.
It is important to recognise that the mechanisms of the framework, which include a shared baseline for criminalising key cyber offences, standardised procedures and mutual assistance, are especially important in future practice. Fundamentally, many cybercrime networks can easily operate across jurisdictions while exploiting gaps in national laws and capitalising differences in investigative capacity. It is important, therefore, that Brunei increases its options for joint investigations and intelligence exchange to sustain itself domestically against sophisticated perpetrators based abroad.
This observed broader regional imperative presents a difficult situation. Over the years, Southeast Asia has seen the rapid professionalisation of cyberfraud operations, from “fraud factories” that coerce or employ large numbers of individuals, to networks that exploit cryptocurrencies and deepfakes; recent reporting and general UN assessments point to a billion‑dollar, expanding cyberfraud industry that is increasingly transnational in nature. For states with limited prosecutorial bandwidth, predictable legal instruments and shared investigative channels reduce transaction costs and improve the odds of disrupting networks rather than only responding after the fact.
Strategically, the decision sits comfortably within Brunei’s small‑state playbook that privileges multilateralism to amplify limited capacity. Rather than relying solely on domestic remedies, Brunei can make use of conventions like these to leverage external partnerships and shared legal frameworks to extend its reach without overstepping its boundaries. The diplomatic timing of the ASEAN Summit also creates opportunities for sideline conversation and a demonstrated commitment to progression.
However, it should be noted that signing does not immediately close capability gaps or guarantee deterrence. For Brunei, the immediate policy priorities will be on aligning national law with convention standards, investment in digital capacities, and sustaining engagement with regional law enforcement partners.
In short, Brunei’s signature is significant because it is useful rather than transformative. It acknowledges a difficult regional reality and buys the country access to tools and partnerships it currently needs.
Gregory is an MSc candidate in Strategic Studies at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University. He works as a freelance writer specializing in international history, conflict, and counterterrorism. With experience in academia, investigative journalism, and voluntary uniformed service, he focuses on regional security developments across the Asia-Pacific, combining strategic analysis with practical field insight.
Indonesia 🇮🇩
$900 Billion Paper Tiger
by Rayhan Prabu Kusumo, in Jakarta
After President Prabowo assumed office last year and leveraged his commanding political capital to establish it, Indonesia’s Danantara commands $900 billion in assets and enjoys unprecedented political backing—the kind of sovereign wealth fund that should be making audacious, transformative bets on the nation’s industrial future, which has been prematurely declining even as demographic pressures and persistent job quality deficits make such development more urgent than ever.
The institution’s mission sounds ambitious: “Acting as a catalyst for national economic growth by investing in key strategic sectors that drive global competitiveness.“ Yet one year into operation, the gap between mandate and reality is glaring.
Consider the portfolio. On the real sector side, flagship “lighthouse” projects include waste-to-energy facilities and the familiar downstreaming pushes —resource processing and the usual commodity value chain rhetoric. These are proven, incremental ideas with modest returns and zero frontier innovation. Waste-to-energy facilities, even leaving aside the questionable climate credentials and perverse incentives around waste generation, build neither industrial capabilities nor genuine competitive advantages. On the investment side, Danantara has begun purchasing government bonds and building conservative allocations that any institutional investor could replicate.
Danantara’s executives, dominated by investment banking and private equity professionals, instinctively minimize risk and pursue predictable returns. But sovereign wealth funds with such political and institutional protection exist precisely to absorb risks that would sink private capital. Indonesia already has pension funds and insurance companies for conservative allocations. While Danantara buys bonds and waste incinerators, the high-risk, long-gestation industrial and technology sectors that could transform Indonesia’s economic structure—the very areas demanding patient, risk-tolerant capital—remain chronically underfunded.
So what does catalytic investment actually look like? It means deploying capital in frontier sectors where risk and long timelines deter traditional investors, but where success could fundamentally reshape Indonesia’s economy. The Coordinating Ministry for Economic Affairs’ draft Presidential Regulation on semiconductor and novel technologies points toward one such opportunity: building advanced fabrication ecosystems from scratch. It’s a 15-year project that requires patient, large-scale investment—the kind no venture capitalist would touch. Such transformative bets include deep manufacturing technology partnerships with global leaders, frontier biotech and materials science leveraging Indonesia’s biodiversity advantages, green industrial commons and new-renewable energy manufacturing ecosystems, as well as indigenous advanced defense industries.
Indonesia’s industrial revival, and the broader economic transformation the country urgently requires, won’t come from the cautious, incremental approach Danantara currently prefers. The fund possesses what few institutions ever attain: massive capital reserves coupled with political insulation from short-term pressures. Those conditions should allow it to drive the industrial and technological leaps Indonesia needs, yet they remain largely unused.
Instead, the current trajectory—bond purchases, safe-bet infrastructure, commodity processing redux—reflects a fundamental misunderstanding of Danantara’s purpose. The question now is whether its leadership recognises the narrowing window of opportunity, or whether it will continue to behave like any other conservative portfolio manager. No sovereign wealth fund ever catalyzed national competitiveness in strategic sectors by purchasing its own government’s debt.
Rayhan has a background in government affairs and public policy, with experience across government institutions and advisory firms. His work focuses on the intersection of geopolitics, policy, and risk, with expertise in advocacy, regulatory analysis, and stakeholder engagement. He holds a degree in Government from Universitas Padjadjaran, and has completed an exchange at Universitat Pompeu Fabra in Spain, focusing on global politics and sustainability.
Editorial Deadline 25/10/2025 11:59 PM (UTC +8)
