Malaysia Voices Trust in South China Sea Pact

(Bloomberg) -- Malaysia is confident it can reach an agreement with China to settle tensions in the South China Sea after its neighbors warned that incidents in the disputed waters had “eroded trust.”

The country is “very hopeful” that a code of conduct for the area will be completed within the three-year deadline or earlier, Malaysia's Foreign Minister Saifuddin Abdullah said in an interview with Bloomberg Television's Haslinda Amin.

"We are very hopeful that within three years or perhaps even earlier we can come up with a better understanding of things," Saifuddin said in the interview in Bangkok after the Asean Foreign Ministers Meeting. "We are also hopeful that the U.S. and other superpowers will respect the CoC once its implemented."

Read more: Beijing's South China Sea Optimism at Odds With Regional Worries

Saifuddin said he had not seen an increased presence of Chinese navy vessels in the disputed region, which includes a waterway that carries more than $3 trillion in trade each year.

His comments come after a joint communique from Asean aired concerns on the same day that China's Foreign Minister Wang Yi touted a preliminary draft of the code of conduct to end the decades-long conflict over the area. Activities in the South China Sea, including land reclamation, “increased tensions and may undermine peace, security and stability in the region,” the 10-nation bloc of Southeast Asian countries said in the statement.

Read more: China Is Winning the Silent War to Dominate the South China Sea

Malaysia's Prime Minister Mahathir Mohamad's stance on China has warmed ever since he stepped into power last year and quickly put Chinese-backed projects on hold for review. He has since resumed some of the contracts and looked to Chinese companies from Huawei Technologies Co. to SenseTime Group Ltd. for cooperation in artificial intelligence and transport.

As trade tensions between the U.S. and China escalate, Saifuddin is concerned that possible U.S. sanctions against Malaysia could prevent it from trading with China. Vietnam is a cautionary tale, with the U.S. imposing duties on steel imports from the country in July.

“We are a small player and we would like to trade with both the U.S. and China,” Saifuddin said. If Malaysia were to be punished for its trade surplus with the U.S., then “we just have to tell the U.S. that you are just being very unfair and you are being a big bully,” he added.

To contact the reporters on this story: Anisah Shukry in Kuala Lumpur at ashukry2@bloomberg.net;Haslinda Amin in Singapore at hamin1@bloomberg.net

To contact the editors responsible for this story: Yudith Ho at yho35@bloomberg.net, Ruth Pollard

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