Malaysia bans the export of sand, prompting a trade standoff with Singapore

Christian Patterson
2019-08-14
Underground Mall

Malaysia has banned the export of sand to their southern neighbor, Singapore. This hinders Singapore’s ability to expand the landmass of their micro island country.

Reuters writes:

Malaysia, Singapore’s biggest source for sea sand, has banned the export of the commodity, according to officials in Kuala Lumpur, a move that traders said could complicate the island-state’s ambitious expansion plans on reclaimed land.

Those plans include the development of the Tuas mega port, slated to be the world’s biggest container terminal. Singapore has increased its land area by a quarter since independence in 1965, mostly by using sand to reclaim coastal areas.

Singapore is geographically limited, due to being a small island nation-state. The Singapore government often has large-scale urban development. These two things combined demand reclaimed land.

Reuters continues:

Malaysian Prime Minister Mohamad Mahathir, who came to power in a shock election last year, imposed a ban on all sea sand exports on October 3, two senior government sources with direct knowledge of the decision told Reuters.

The government sources, asking not to be named due to the sensitivity of the matter, said Mahathir was upset that Malaysia’s land was being used to increase the size of its wealthier neighbor. He was also concerned corrupt Malaysian officials were benefiting from the secretive business.

The question is, why is Malaysia no longer shipping sand to Singapore? What difference does Singapore’s land reclamation make to Malaysia?

First, it’s worth looking into Malaysia’s new Prime Minister Mahathir Mohamad, and his position within politics. Mohathir is the oldest world leader at 94, and he was already Prime Minister from 1981 to 2003, making Mahathir both the 4th and 7th Prime Minister of Malaysia.

However, even though Mahathir is generally liked, his second Prime Minister victory was a surprise. Mahathir retired from politics in 2003, but returned to politics, first as a mentor, then as a critic, of 6th Prime Minister Najib Razak. Mahathir accused Najib of corruption, amidst reports that he was taking government money.

Najib and Mahathir were both members of the same right-wing coalition party, the National Front. Mahathir left the National Front for the opposition coalition, Alliance of Hope, to run against Najib. When Mahathir won, it was the first time the Malaysian government was not controlled by the National Front.

It’s important to delve into this, because Mahathir banned the sales of sand to Singapore right after being elected, and it gestures to a common political dynamic to a lot of global politics. On the most basic level, Mahathir is pro-capitalist, with authoritarian and ethnonationalist sympathies, while Najib is a typical, semi-secular western-style liberal.

Straits Times wrote in the article “1Malaysia plan among reasons Mahathir and I fell out: Najib”:

“[Mahathir] was not happy about certain things like 1Malaysia. He was not happy about the jet. The jet was bought by Pak Lah, but I notice until today he (Mahathir) is still using it,” [Najib] added.

1Malaysia was a programme designed by Najib in 2010 to promote ethnic harmony, national unity and efficient governance. It included aid for the needy under schemes like the 1Malaysia People’s Aid, 1Malaysia Housing Programme for Civil Servants, 1Malaysia People’s Housing Projects, 1Malaysia Clinics and 1Malaysia Student Discount Card.

We see Mahathir wasn’t happy about 1Malaysia, which is the same government program that Najib was supposedly laundering money through.

Mahathir has other issues with 1Malaysia. For one, Mahathir is, on some level, an ethnonationalist, and believes in Malaysia as a state for Bumiputera (the “Greater Malay race”, including Indonesians etc). He is also very pro-capitalist. However, Mahathir is pro-capitalist in the Lee Kuan Yew-style, favoring strong government-planning, and the state being involved in planning and benefiting from capitalist interest.

1Malaysia was a civic nationalist, pro-diversity, social welfare program. Whether it was being used to steal money or not, Mahathir was not a fan of it.

The article also continues: “Najib said in the interview that Dr Mahathir was also angry that the Internal Security Act was abolished and the Emergency Ordinance lifted.”

The Internal Security Act granted the Malaysian government the right to detain people without charge or scheduled trial. The Emergency Ordinance granted the government the ability to concentrate power during emergencies.

Finally, Straits Times writes:

According to Najib, Dr Mahathir was upset over the implementation of a minimum wage, and the treatment of Proton because the government later withdrew subsidies and taxes that protected the national car company formed during Dr Mahathir’s first tenure as premier.

Even though this post is about nuances of Malaysian politics that may be hard to grasp, being opposed to a minimum wage is pretty illuminating of someone’s worldview, no matter where they are.

Johor Strait

The Proton part shows the difference between Mahathir’s authoritarianism and Najib’s western liberalism. Proton is a Malaysian car company that had close ties and fundings to the government. Najib sold off a majority of shares in Proton to Chinese investors, which made pro-Malay Mahathir angry.

Before I get back to sand, I want to focus on the oddity of Malaysia’s political parties. Mahathir was the first Prime Minister that was not from the right-wing coalition, the National Front. However, he was Prime Minister with the National Front for decades.

The majority party of the National Front is the United Malays National Organization. There are also small conservative Chinese and Indian parties. But, two parties in the left-wing coalition are much more popular with these minorities: the progressive and multi-ethnic People’s Justice Party, and the social democratic Democratic Action Party.

All of this makes sense… except for the fact, Mahathir, who is a foundational politician for the National Front, is now the prime minister with the Alliance of Hope. He’s the leader of the coalition, and the leader of the party “Malaysian United Indigenous Party” (PPBM in Malay), even though it’s only the third largest political party in the coalition.

Chow Kit Monorail station

The PPBM is peculiar because its party platform is primarily about promoting Malaysian national cohesion, prioritizing ethnic Malays and Malay culture. Non-Bumiputera aren’t even allowed to join. They also sprinkle in some progressive language, and consider themselves as a truly “Center” party. So the left coalition is now represented by a right-wing strongman. The right coalition, on the other hand, has shifted towards a western neoliberal position.

This brings us back to banning sand trade to Singapore. With all that context, this was one of Mahathir’s first moves as Prime Minister.

I think the move is in line with my person characterization of Mahathir. The policy is a nationalist restriction on the trade of a specific commodity, when the neighboring nation has a much higher demand, and a much lower supply, of that commodity.

But if your goal is to siphon capitalist investment into Malaysia from Singapore, this is a good way of doing that.

Kuala Lumpur railway station

My immediate thought was China’s economic relationship with Hong Kong. In the 80s, China began developing Shenzhen on the border of Hong Kong. Shenzhen is now a huge tech and economic hub, and one of China’s largest cities.

At the same time, I watched a video on The B1M, a youtube channel about architecture, urban planning and construction. It was about an island smart city Malaysia is building across from Singapore. This helped connect all of these dots.

The B1M states:

In an effort to further boost its economy and leverage its unique position on the doorstep of Singapore, Malaysia are raising four artificial islands from the waters of the Johor Strait, and constructing a $100 billion smart city from scratch. […]

While Malaysia has capitalized on its natural resources […] to build a thriving economy, there’s a further source of growth it has tapped into: Singapore. […]

In 2006, Malaysia established Iskandar, Malaysia. A special 2,217 square meter economic zone bordering Singapore. In 2019, the economic area was more than doubled in size, and now stands at 4,749 square kilometers. The country’s government hopes to mirror the success of Shenzhen, a former fishing village, which became China’s first Special Economic Zone in 1980, and is now home to nearly 13 million people.

To conclude, we can see a couple things. For one, Malaysia’s government is following global trends of right-wing authoritarian strongmen with isolationist foreign policy and trade. Mahathir doesn’t seem as ideologically motivated as some right-wing world leaders, but he might be close.

Another trend we can see relates to Asia having several countries that are small, with large concentrations of capital. These countries are: South Korea, Taiwan, Hong Kong, and Singapore. As the Chinese economy grows, more and more national economies become tied to the larger orbit of the Chinese economy. All four of these countries are defined in some part based on their relationship to China.

More specifically, we could say that South Korea is primarily in the US’s economic and political orbit. They’re secondarily in China and Japan’s orbit, but those relations are shaky. Currently, South Korea is currently retaliating against trade hostility from Japan, and South Korea and China had shaky relations in 2017.

Hong Kong is certainly in China’s sphere of influence. And, Taiwan is a more complicated issue.

But that leaves Singapore, which has deep ties to Malaysia. In turn, Malaysia has deep ties to China. Even Mahathir, who’s opposed to major Chinese investment in Malaysia (because it will cause Chinese immigration to Malaysia), backs China in terms of geopolitics. For example, Mahathir supports China is the South China Sea disputes, and blames the US for sowing discord against China in the orbiting countries. Najib was even more pro-China economically.

By ending trade of sand to Singapore, it helps Malaysia in several indirect ways. It weakens Singapore’s goals of economic expansion, so some will spill over into Malaysia. Simultaneously, China has been investing more and more in Southeast Asia every year. For many years, Malaysia was China’s biggest trade partner (from 2008-2013 — I couldn’t find later than that). Malaysia is setting themselves in a prime position, for capital investment flowing from both the China side and the Singapore side.

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