Malaysia’s 5G Network: A Strategic Decision Amid Geopolitical Tensions

KUALA LUMPUR, Oct 19 — Malaysia is on the verge of a significant decision that could reshape its telecommunications landscape and economic future. The government is expected to select Huawei, in partnership with Maxis Communications, as a key player in building its second 5G network. This move has sparked a mix of economic optimism and geopolitical challenges, particularly as Western nations voice concerns over potential cybersecurity risks associated with Huawei’s involvement.

The Current Landscape of 5G in Malaysia

Malaysia’s existing 5G infrastructure, primarily developed by Ericsson through the state-owned Digital Nasional Berhad (DNB), currently provides 80% coverage in populated areas. However, the demand for broadband services is rising, necessitating the establishment of a new network to cater to this growing need. The government aims to attract further investments and position Malaysia as a competitive player in the digital economy.

Prime Minister Anwar Ibrahim has defended the government’s approach, emphasizing the importance of leveraging technology from both the East and the West. At a Huawei event in Kuala Lumpur last year, he stated, “While we get the best from the West, we also should benefit [from] the best from the East.” This sentiment reflects Malaysia’s desire to maintain a balanced technological landscape while fostering economic growth.

The Tender Process and Key Players

The tender process for the new 5G network, launched in August, has attracted bids from several major players, including Maxis, CelcomDigi, Telekom Malaysia, and U-Mobile. Communications Minister Fahmi Fadzil has indicated that the government will finalize its decision within a few weeks. The choice of Huawei as a partner has raised eyebrows among Western diplomats, who worry that this could disrupt the existing network managed by Ericsson and potentially tarnish Malaysia’s reputation among international investors.

An unnamed Western diplomat expressed concerns, stating, “If it goes to Maxis, as some people say, then it is likely that Huawei will benefit from it as their infrastructure partner. In the end, it could look like Malaysia is helping Chinese interests.” This sentiment underscores the delicate balance Malaysia must strike between economic benefits and diplomatic relations.

Economic Opportunities vs. Security Concerns

The potential Huawei deal is not just about technology; it represents a broader economic opportunity for Malaysia. S. Rajaratnam School of International Studies senior fellow Alan Chong noted that the Huawei deal, if it materializes, is part of a series of infrastructure projects that China is expected to support in Malaysia. “In the long term, China will not let these projects fail, and it is to Malaysia’s benefit,” he added.

However, the geopolitical implications cannot be ignored. Former US Ambassador Brian McFeeters highlighted the risks associated with allowing untrusted suppliers into Malaysia’s network, warning that it could expose the country’s infrastructure to national security threats. This concern is echoed by many in the West, who argue that Malaysia’s decision could have far-reaching consequences for its international standing.

Local Perspectives on the Issue

Despite the geopolitical concerns, many Malaysians are focused on the practical benefits of improved telecommunications infrastructure. E-commerce entrepreneur Dwayne Tan emphasized the importance of reliable internet for business operations, stating, “I just focus on keeping my business running.” This perspective reflects a growing sentiment among local businesses that prioritize technological advancements over geopolitical tensions.

Huawei has responded to these concerns by asserting its compliance with local regulations and commitment to cybersecurity. The company has been expanding its presence in Malaysia since 2001, establishing itself as a major provider of 3G and 4G infrastructure. Analysts suggest that while cybersecurity concerns are valid, the onus is on Malaysia to implement robust protective measures.

The Broader Geopolitical Context

As Malaysia navigates this complex landscape, it must also consider the potential impact of future US policies, particularly in light of the upcoming presidential election. Analysts warn that a return of Donald Trump to office could lead to stricter sanctions and increased pressure on countries engaging with Chinese technology firms.

Nevertheless, Malaysia’s deep ties with Huawei and China’s broader infrastructure investments make it unlikely that the tech giant will be sidelined. The Institute of Strategic and International Studies Malaysia’s senior analyst Farlina Said emphasized the need for the government to weigh both economic opportunities and security concerns carefully. “Companies planning to scale up activities concerning intellectual property would have to assess security measures and ensure vulnerabilities are plugged,” she advised.

Conclusion: A Strategic Balancing Act

As Malaysia moves forward with its decision on the second 5G network, it finds itself at a crossroads. The choice to partner with Huawei represents not only a technological advancement but also a strategic balancing act between economic growth and geopolitical considerations. With investments from both Chinese and Western companies, Malaysia aims to position itself as a strategic hub for semiconductor and cloud technology amid ongoing US-China tensions.

In this rapidly evolving digital landscape, Malaysia’s ability to navigate these challenges will be crucial in determining its future as a competitive player in the global economy. The coming weeks will be pivotal as the government finalizes its decision, setting the stage for the next chapter in Malaysia’s digital transformation.