Subtle Strategy
Issue 15 — Key Developments Across Brunei, Indonesia, and Malaysia
Editor’s Note
by Haniva Sekar Deanty, Lead Editor - Maritime Crescent Desk
In this issue, we examine how Southeast Asia quietly builds the scaffolding of its security, diplomacy, and economic resilience.
Off Brunei’s shores, the 25th Exercise Penguin reflects how sustained naval cooperation can generate trust and operational fluency beyond the size of the ships involved. Training alongside Australia’s frigate and maritime patrol aircraft allows Brunei to sharpen its readiness while reinforcing ties with a partner that straddles AUKUS and ASEAN concerns: an understated hedge in contested waters. In Kuala Lumpur, the debate over hosting the U.S. president at the upcoming ASEAN Summit captures Malaysia’s careful balancing act: safeguarding solidarity with global causes while preserving ASEAN’s diplomatic reach and relevance. And in Jakarta, Indonesia’s shift from fiscal restraint to an expansionary growth agenda signals a gamble to unlock credit and productivity, one that will demand discipline if it is to strengthen rather than erode the institutional credibility built over the past decade.
Together, these stories reveal a region shaping its resilience through steady partnerships, deft diplomacy, and careful economic recalibration. They remind us that in Southeast Asia, strength is often built not in grand gestures but in the quiet architecture of cooperation, engagement, and reform.
Brunei Darussalam 🇧🇳
Exercise Penguin: Strategic Depth in South China Sea’s Shadow
by Wira Gregory Ejau, in Bandar Seri Begawan
Off the waters of Muara, the Royal Brunei Navy and the Royal Australian Navy have met once more for the 25th iteration of Exercise Penguin, a bilateral drill dating back to the early 1980s. Evolving from a basic seamanship exchange into a multi-domain engagement over the years, this year’s iteration includes several sea and air surface warfare training exercises off the coast of Brunei Darussalam.
For Brunei, whose navy is small but professional, these exercises certainly function as force multipliers, offering experience regarding operational readiness while strengthening its ties to a major AUKUS partner in the region. The Royal Brunei Navy’s team consisted of Patrol Vessel KDB Darussalam, Ijhtihad-Class Fast Patrol Boat KDB Afiat, while including a Naval Surface Action Group team.
For Australia, the benefits are subtle but clear. Brunei’s location, which straddles the South China Sea’s vital shipping lanes while standing adjacent to contested waters, makes it a valuable maritime partner. The Royal Australian Navy contributed its ANZAC-class frigate (HMAS Ballarat) along with a Royal Australian Air Force P-8A Poseidon maritime patrol aircraft.
Astute observers would note that while the exercise is modest in scale, its symbolism is significant. As Brunei maintains its careful diplomatic balance between major powers, deepening its defence ties with a major country such as Australia while avoiding overt alignment rhetoric is a hallmark of its pragmatic foreign policy.
From an operational perspective, the Commander of the Royal Brunei Navy, First Admiral Sahibul Bahari bin Haji Zainal Abidin, stated that the exercise would continue to build maritime security and cooperation between the countries. He went on to pay tribute to Australia and Brunei’s long-standing defence relationship, which dates back to World War II, and “is underpinned by strong people-to-people links and a shared interest in a stable, secure, and prosperous region.”
Exercise Penguin builds an “interoperability capital” that is difficult to quantify, but invaluable in times of crisis. Shared procedures, common communications protocols, and mutual familiarity between crews mean that, should a real‑world contingency arise, whether piracy, search‑and‑rescue, or grey‑zone coercion, the two navies can operate seamlessly. In maritime security, deterrence is not only about the size of one’s fleet, but about the credibility of one’s partnerships. This partnership presents the potential for the Royal Brunei Navy to pinpoint areas for operational enhancement and gain insight into the operating methods of larger navies. Exposure to a more experienced counterpart provides a practical avenue for adopting more efficient procedures and strengthening overall military proficiency.
As the Indo‑Pacific’s maritime environment grows more contested, small‑scale, high‑trust exercises that have run for many years, such as Exercise Penguin, may become more strategically significant than their modest profile suggests. They are the connective tissue of a resilient regional security architecture, one built not solely on grand alliances, but on a lattice of bilateral and minilateral ties.
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.
Malaysia 🇲🇾
Malaysia’s Balancing Act as ASEAN Chair
by Muhammad Aiman Bin Roszaimi, in Cyberjaya
The announcement that U.S. President Donald Trump will attend the 47th ASEAN Summit in Kuala Lumpur this October has drawn both diplomatic anticipation and public backlash. As ASEAN chairman this year, Putrajaya finds itself needing to manage a delicate balance between regional responsibilities and domestic sensitivities, while navigating the broader contest of great power politics.
Earlier this month, a peaceful protest drew hundreds of participants to the streets of Kuala Lumpur. Demonstrators marched with banners and chanted slogans rejecting Trump’s visit, citing his foreign policy record and his administration’s support for Israel as reasons Malaysia should not host. For these groups, Trump’s presence in Kuala Lumpur is seen as incompatible with Malaysia’s solidarity with the Palestinian cause. Civil society voices, including BDS Malaysia and pro-Palestine activists, argue that rolling out the diplomatic red carpet risks sending the wrong signal about Malaysia’s values.
Yet the reaction has not been one-dimensional. Other Malaysians have argued in the media that refusing to host Trump would be a diplomatic misstep. For them, the issue is less about endorsing U.S. policy than about Malaysia fulfilling its responsibility as ASEAN chair to engage with all major partners, however controversial they may be. This reflects a wider tension in Malaysian foreign policy: balancing principled positions with pragmatic diplomacy.
Prime Minister Anwar Ibrahim has defended the invitation in clear terms. He has emphasized that as chair, Malaysia’s role is to uphold ASEAN centrality by ensuring that dialogue remains open and that the region is not reduced to a passive stage for great power rivalry. For him, hosting Trump is part of a broader strategy to keep ASEAN relevant and united at a time when external pressures are intensifying. He has also pointed to economic stakes, noting that U.S. tariff measures have disrupted regional supply chains and harmed Southeast Asian economies. Malaysia hopes to press for fairer trade treatment and greater economic cooperation by bringing Trump to the table.
At the same time, Anwar is aware of the political sensitivities at home. His government has framed the visit not as an endorsement of Trump’s policies but as an opportunity to engage, negotiate, and push back against actions that undermine regional stability. Inviting Trump is about protecting ASEAN’s diplomatic space and ensuring Malaysia is not sidelined in critical global discussions.
The protests and debates surrounding the visit reveal questions about how Malaysia defines sovereignty and leadership. For some, true independence means rejecting figures whose policies contradict national values. For others, it means having the confidence to engage difficult partners to protect national and regional interests. The ASEAN Summit will thus test not only Malaysia’s ability to manage international diplomacy, but also its capacity to reconcile domestic expectations with regional and global responsibilities. Trump’s visit may last only a few days, but its political and symbolic weight will linger. For Malaysia, the task is to show that engagement does not equal endorsement and that ASEAN’s relevance depends on its ability to convene even the most divisive of global leaders.
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.
Indonesia 🇮🇩
Prime the Pump
by Rayhan Prabu Kusumo, in Jakarta
For over a decade, Sri Mulyani Indrawati ran Indonesia's finances with strict budget discipline. Her cautious approach clashed with President Prabowo Subianto's costly plans. The appointment of Purbaya Yudhi Sadewa as her replacement marks a clear shift toward growth-focused fiscal policy.
The change is already visible as the new minister announced a plan to move Rp 200 trillion (US$ 12 billion) of unused funds from the central bank into five major banks.
The immediate target is Indonesia's chronic credit squeeze. Small and medium enterprises employ 97% of the workforce but struggle to get loans. The injection should expand bank lending capacity and improve financing for larger companies seeking expansion. With banks flush with cash, borrowing costs should fall.
But the policy assumes that lack of credit, not lack of demand, constrains Indonesian growth. Many companies are trimming their spending and waiting for clearer signals. If businesses don't want to borrow, excess funds will simply stay in bank accounts, indicating that Indonesia’s growth challenges extend beyond access to credit.
This action signals a broader shift toward expansionary fiscal policy under Purbaya's leadership. This represents more than just moving money but a fundamental change in how Indonesia approaches economic growth.
However, Prabowo's administration has so far favored high-profile projects with questionable economic returns. Fiscal expansion could easily fund populist programs that win votes but abandon the institutional reforms that ensure efficient resource use. The risk extends beyond individual projects to the overall approach toward government spending and economic intervention.
The macroeconomic risks multiply from there. Foreign investors may view aggressive fiscal intervention as reckless, putting pressure on the rupiah. Bank Indonesia's independence could erode as fiscal and monetary policy boundaries blur. If the growth strategy fails to deliver, debt sustainability questions will emerge. Meanwhile, pumping more money into the economy risks stoking inflation just as Indonesia has achieved price stability.
The liquidity injection alone won't solve Indonesia's growth puzzle if companies lack reasons to expand. Purbaya's strategy needs to go beyond credit supply. Businesses need genuine demand for their products, not just access to loans. This requires targeted tax incentives for productive investment, government spending that creates real demand, and budget shifts toward projects that actually reduce business costs.
Eventually, this growth-focused approach should build frameworks that allow productive, complex industries to develop naturally. This means creating conditions where high-productivity, high-value, and high-skill sectors can emerge organically rather than through government direction.
Indonesia's shortfall compared to regional competitors in attracting investment stems partly from missing fundamentals, such as inferior infrastructure provision and weaker human development policies. The current fiscal shift offers a chance to address these structural gaps, but only if resources target genuine productivity improvements rather than politically attractive but economically hollow programs.
The change from fiscal caution to growth promotion carries both promise and peril. Success depends on whether the new Finance Minister channels resources toward real productivity gains, while preserving the institutional credibility that his predecessor spent a decade building.
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 14/09/2025 11:59 PM (UTC +8)
