President Obama and Malaysian Prime Minister Razak were in attendance at the signing of a $1.5 billion deal between GE and AirAsia X. Image: Larry Downing/Reuters.

Deals Worth US$2 Billion Inked During Obama’s Visit to Malaysia

ASEAN

After visiting Tokyo and Seoul, Washington’s key allies in Northeast Asia, President Barack Obama dropped in for a two-day stay in Kuala Lumpur on Saturday 26 April, before flying off to Manila, the final stop of his East Asia trip.

This first visit by an American President to Malaysia since Lyndon B. Johnson dropped by in 1966 was momentous in itself, but its significance was further enhanced by the fact that Mr. Obama was also making up for the visit he cancelled last October due to the government shutdown in Washington DC. The same went for the Philippines as well.

While his meetings with leaders in Japan, South Korea and the Philippines were clearly marked by security concerns, the gist of the President’s itinerary in Malaysia had more to do with trade than anything else.

His advice to the Malaysian government that it would have to treat non-Malays fairly and as equals if the country is to develop successfully was undoubtedly welcomed by many, but it was nevertheless in the economic field that his short visit holds deeper significance.

As with Prime Minister Shinzo Abe in Tokyo, Mr. Obama failed to extract greater public commitment from Malaysia’s Premier Najib Razak to the Trans-Pacific Partnership Agreement (TPPA), the giant US initiative to overhaul trade with East Asia. Mr. Najib’s reluctance was to be expected, though, given how sceptical Malaysians across the political divide have been about the proposed accord, and how little popular support the premier had been enjoying.

Both the countries can, however, draw satisfaction from the commercial deals signed between Malaysian and American companies during Mr. Obama’s visit. These are in the fields of aviation, biotechnology and insurance, and are estimated to be worth US$2 billion.

After witnessing the event, the President stated: “Yesterday, we agreed (to a) new comprehensive partnership between Malaysia and the United States and (to) work to expand our economic touch. The US is already the largest foreign investor in Malaysia and Malaysia is the fastest growing investor in the United States.

The most significant memorandum of understanding was agreed to between GE Aviation and Malaysia’s AirAsia X, and involved the purchase of aircraft engines to power AirAsia X’s 25 new Airbus A330-300. The deal is worth over US$1.5 billion.

Secondly, the San Diego-based company, Verdezyne, sold a 30% stake in the company to the Malaysian GLC, Sime Darby, and both corporations agreed to develop new processes to convert palm-oil by-products into renewable petroleum substitutes for industrial use.

Finally, Metlife became the first US investor to go into Malaysia’s Islamic insurance market through a US$250 million deal with the local firm, Ambank.

Ooi Kee Beng is the Deputy Director of the Institute of Southeast Asian Studies (ISEAS) in Singapore.