Malaysia-Saudi Arabia Relations: Roots, Dimensions, and Prospects

By Asmady Idris | Associate Professor - International Relations Programme - School of Social Sciences - Universiti Malaysia Sabah | Jun 18, 2013

Malaysia’s relationship with Saudi Arabia has long been amicable and fruitful. Indeed, Malaysian-Saudi relations have deeper historical roots than are commonly recognized. During the contemporary period, the religio-cultural, economic, and other aspects of the bilateral relationship have expanded. In fact, Malaysian-Saudi relations are complex, multifaceted, and have significant potential for further development.

Historical Roots  

Before Malaysia and Saudi Arabia became modern states, they were known as “Malaya”[1] (or Tanah Melayu in Malay) and “Arabia,”[2] respectively. Relations between Malaya and Arabia flourished during the Malacca Sultanate era (1400–1511).[3] During that period, the Malacca Sultanate and Arabia were main centers of trading and religious activities. Their interactions with each other, therefore, were largely concentrated in the field of commerce and in conveying the message of Islam to the Malay Archipelago.[4]

Many Arab traders originating mainly from Oman, Aden, Jeddah, and al-Jar chose Malacca as one of their main commercial focal points. Based on the firsthand accounts of Tomé Pires,[5] Arab traders brought with them to Malacca various merchandise, including rosewater, madder, indigo, raisins, silver, and seed-pearls. This merchandise is believed to have been purchased in Gujarat or Cambay before transshipment to Malacca. Interesting to note here is that Malacca served as the main trading point as well as the religious center of Islam in the Southeast Asian region.

After the fall of the Malacca Sultanate in 1511, relations between the Malay Peninsula and traders as well as preachers from the Arabian Peninsula were disrupted by the Portuguese occupation. Furthermore, with the arrival of the Dutch and English in the 1600s, Arab traders lost their commercial monopoly in the Malay Archipelago to their Western counterparts. However, when the British government took control of Malacca in the 19th century, she removed customs duties, thereby attracting foreign traders — mainly Arabs and Chinese — to engage in commerce with the Malay Peninsula and Singapore. Relations between the Malay Peninsula and Arabia thus returned to normal.

Towards a Broader, Deeper Relationship

Since the early 1970s, Malaysian leaders have shown a keen interest in developing a strong relationship with Saudi Arabia. Successive Malaysian prime ministers have visited the Kingdom. The first Prime Minister of Malaysia, the late Tunku Abdul Rahman al-Hajj (whom some regard as having been one of King Faisal's closest friends) hosted the latter's historic visit (i.e., the first visit by a Saudi ruler) to Malaysia in 1970.[6] Coinciding with the King’s visit, Tunku was officially appointed as the first Secretary General of the Organization of the Islamic Conference (OIC). Tunku’s successors ― Tun Abdul Razak (the second Premier), and Tun Hussein Onn (the third Premier) ― managed to obtain financial assistance from the Kingdom as a result of their diplomatic visits in 1975 and 1976, respectively.

Saudi financial assistance has generally taken two forms: 1) assistance channeled through the Saudi Development Fund (SFD) and provided to help build religious institutions as well as to further support da’wah (conveying the message of Islam) activities in Malaysia; and 2) assistance aimed at supporting Malaysia’s economic development.

In fact, Saudi assistance to support religious activities and institutions has long been a core element of the bilateral relationship. This financial assistance has included capital donations to PERKIM (Pertubuhan Kebajikan Islam Malaysia, or Muslim Welfare Organization Malaysia) [7] and funds to support the establishment of The International Islamic University of Malaysia (IIUM) in 1983. Other, non-financial religious contributions by the Saudi government have included the distribution of hundred copies of Al-Qur’an, the book of Islamic Pillars, and the Friday speech (Khutbah Juma’at) to several religious institutions. Since 1985, the Saudi radio program “Nidah Ul-Islam” (the Voice of Islam) has been broadcast live from Mecca in the Malay language.

Saudi financial assistance began under the Third Malaysian Economic Plan (1976–1980). The first tranche of Saudi aid, furnished during the Tun Razak era, was a US$200 million loan to help finance several development projects, namely the University of Technology, the Medical Faculty of the National University of Malaysia, the Ulu Kelantan Land Settlement Project, and the Pahang Tenggara Land Settlement Project. From 1976 to 1983, Malaysia continued to receive Saudi aid (in the form of loans) for three development projects: the Lepar Utara Land Settlement (SR52.70 million), the construction of five Mara Junior Science Colleges (SR15.20 million), and the building of four new district hospitals (SR15.90 million). All these projects, with interest rates ranging from 3.5% to 4.0% per annum, and a grace period of 5 to 15 years, were completed by the Malaysian government. Over the years, Saudi Arabia has continued to support religious activities, higher educational institutions, and socio-economic projects in Malaysia.

However, the bilateral relationship has evolved. It has become more balanced and multifaceted. In fact, the pattern of the relationship began to change upon Tun Dr. Mahathir’s assumption of power as Malaysia’s fourth Prime Minister (1981–2003). Dr. Mahathir adopted a foreign policy of "active internatonalism," which included placing greater emphasis on engaging Islamic countries while deepening ties with Malaysia's ASEAN neighbors.[8] During the early years of Dr. Mahathir’s government, Malaysia continued to receive Saudi financial assistance, such as the  RM10.6 million loan to build five hospitals in the states of Kedah, Kelantan and Terengganu; and a loan of RM132.2 million for the second phase of the Port Project in Penang Island and Timur-Barat highway projects.

Towards the end of the 1980s, however, Malaysia’s relations with Saudi Arabia, especially in the economic sphere, gradually changed. To lessen Malaysia’s heavy imports of oil from the Kingdom and narrow the resulting trade deficit, Malaysia took a number of initiatives, including granting access to Malaysian ports in 1985 to the National Shipping Company of Saudi Arabia (NSCSA), and setting up the Joint Committee consisting of the National Trade and Commerce Council of Malaysia and the Middle East Trade, Industry and Agriculture Council. In other words, Dr. Mahathir attempted to change the pattern of relations with Saudi Arabia by reducing dependence on financial assistance from the Kingdom and by seeking a wider, more diverse range of bilateral economic activity. These efforts paved the way for Dr. Mahathir’s successors to further consolidate the economic and religious dimensions of Malaysia's relations with Saudi Arabia.

Under the leadership of the former fifth Premier, Tun Abdullah Badawi, and the current Prime Minister of Malaysia, Datuk Seri Mohd. Najib Tun Abdul Razak, Malaysia’s economic relationship with Saudi Arabia has continued to develop. Bilateral trade rose from US$260 million in 1990 to US$3.66 billion in 2012. Saudi Arabia has emerged as Malaysia’s 19th largest trading partner, 22nd largest export destination, and 16th largest source of imports. The May 2013 Malaysian trade mission to Saudi Arabia represents the most recent effort to boost bilateral trade.[9]

Since 1990, Saudi investment in Malaysia has totaled a whopping RM2.6 billion. Progress in the banking sector is a case in point. In 2006 (following the present King Abdullah Abdul Aziz’s visit to Malaysia), the Al-Rajhi Bank ― the world’s largest Islamic bank and one of the largest joint stock companies in the Kingdom ― was successfully launched in Malaysia. Since then, 24 branch offices have been established throughout Malaysia. Malaysia’s has also been successful in attracting Saudi tourists. Since 2001, Malaysia has received more than 20,000 Saudi tourists annually. (Since relatively few Malaysian foreign workers or expatriates reside in Saudi Arabia, remittances are not substantial. [11])

Malaysia's External Trade Development Corporation (MATRADE) has encouraged businesses to tap into the Saudi market through the Kingdom’s Ninth Five-Year Development Plan (2010 to 2014). In fact, Malaysian companies have actively pursued business opportunities in Saudi Arabia. They have, for example, undertaken major development projects, including the Shuaibah Independent Water & Power Project, Al-Faisal University in Riyadh and the King Abdullah University of Science & Technology in Thuwal, improving the Jamarat Bridge and surrounding area in Mina, construction of the Kingdom Tower in Riyadh, township development of Jazan Economic City, and the Jabal Omar development project in Makkah.

Accompanying the expansion of economic ties in recent years have been efforts to extend bilateral cooperation to the security realm. Premier Dato Seri Mohd. Najib’s visit's to the Kingdom in 2010 laid the groundwork for the April 19, 2011 signing of a Memorandum of Understanding (MOU) on security policy cooperation. The main purpose of this accord, according to former Home Minister Datuk Seri Hishammuddin Tun Hussein, is to join efforts to counter terrorism, drug trafficking, falsification of documents and transnational criminal activity.[12]

Flourishing economic ties and initial steps to cooperate in addressing transnational security problems notwithstanding, the religious dimension remains the bedrock of Malaysia-Saudi relations. Differences in the ways that Islam developed and in the prevailing doctrinal orientations in Malaysia and Saudi Arabia (especially the Kingdom’s Wahabi ideology) have not jeopardized or impeded the further development of the bilateral relationship. Nevertheless, it is worth discussing here, albeit briefly, Saudi Wahabism, the latter's possible influence over religious da’wah movements, and the Malaysian government’s stance in dealing with these issues.

Wahabism, which has been the main religious doctrinal backbone of the Kingdom since the 18th century, calls upon all Muslim communities to return to the original principles of Islam based on the Qur’an and Al-Hadith (with the strict interpretation of the Hanbalite School[13]), and to repudiate all innovations contrary to the practices of the Prophet Muhammad and the early generations of pious Muslims.

A few religious movements in Malaysia could be regarded as having been influenced by Wahabism: the Ahlus Sunnah of Perlis, the Sunnah Movement of Johore, the Orang Sunnah of Pahang, the Ittiba’ al-Sunnah of Negeri Sembilan, and the Islam Jamaah of Selangor. Nevertheless, the claim that these movements are “closely associated” with Wahabism is, at best, difficult to substantiate. For one thing, these movements generally do not subscribe strictly to any of the four Islamic legal schools. For another, they reject being labelled as “Wahabists.” Nonetheless, there are some clear resemblances between these movements and Wahabism, including their strong emphasis on incorporating classical Islam (salafiyyah) or “al-Sunnah” into their lives, and on eradicating all kinds of superstitions (khurafat) and innovations (bid’ah) among their Muslim counterparts, especially in the affairs of worship (ibadat).

Yet, regardless of the extent of the influence of Wahabism on the various Malaysian Islamic movements and the concerns it may have evoked, Malaysia has yet to classify Wahabism as “deviant teachings,” unlike religious movements such as Syi’ah, Qadiani, and Tariqat Naqsyabandiah Kadirun Yahya, which were officially declared as deviating from the true teaching of Islam. In taking this position, it is clear that the Malaysian government does not want to jeopardize its relationship with Saudi Arabia. Needless to say, in facing this challenge, Malaysia has applied a double-edged approach, namely one which seeks to curb the influence of the Wahabism ideology while at the same time safeguarding its diplomatic relations with Saudi Arabia.


Since independence, Malaysia has had a generally positive and productive relationship with Saudi Arabia that is rooted in a centuries-long history of commercial and religious interaction. In the contemporary period, proactive Malaysian diplomacy has paved the way for a more balanced and multidimensional partnership between the two countries, particularly in the economic sphere. Malaysia and Saudi Arabia differ in terms of how Islam is interpreted and practiced. Nevertheless, at no point have these differences seriously disrupted the relationship. Nor in recent years have they hampered its development or placed at risk its promising future.

[1] This term, however, does not include Singapore, Sabah and Sarawak as member states forming the Malaysian Federation in 1963.

[2] The word “Arabia” is generally referred to the Arab Peninsula which comprises several major cities including Hejaz, Nejd, and others.

[3] The Malacca Sultanate was a Malay Islamic empire that lasted from the 1400s until 1511. Its collapse was largely due to the Portuguese occupation in 1511. Now, its remnant is in Malacca (one of the states in Malaysia), and has become one of the major tourist attractions in Malaysia. 

[4] Syed Muhammad Naquib Al-Attas, Historical Fact and Fiction (Johor Bahru: Universiti Teknologi Malaysia Press, 2011).

[5] Armando Cortesao, The Suma Oriental of Tome Pires: An Account of the East, From the Red Sea to Japan, written in Malacca and India in 1512–1515. Vol. II, Series II (London: The Hakluyt Society, 1944).

[6] In fact, there is no other Saudi Kings that pay an official visit to Malaysia except King Faisal and the present King Abdullah Abdul Aziz.

[7] PERKIM, or The Muslim Welfare Organisation Malaysia, is a non-governmental (or voluntary) organization which focuses on spreading Islamic da’wah among Muslims as well as non-Muslim communities in Malaysia and other countries.

[8] This policy is to imitate the Japanese work ethics in developing their outstanding economic development.

[9] RM2.6 billion is roughly equivalent to US$0.87 billion. See Saleh Fareed, "Malaysia to Expand Trade Ties with Saudi Arabia," Saudi Gazette (May 22, 2013),; Rupa Damodaran, “Malaysia Attracts RM162.4b Investments” (April 29, 2013),

[11] In 2004, for instance, there are only about 942 Malaysian expatriates in Saudi Arabia, of which 80% were working as nurses, and the remaining 20% in a variety of private companies in the banking, hotel, telecommunications, and petroleum industries. In addition, there are about 300 to 500 Malaysian people residing permanently in cities such as Mecca, Madinah, Tabuk and Jeddah, without obtaining Saudi citizenship but holding Malaysian passports, who came to Saudi Arabia as early as the 1940s and 1960s. [This data was collected from the author’s personal interview with officials in the Malaysian Embassy in Riyadh, Saudi Arabia in 2004.]

[12] “Malaysia, Saudi Arabia in Security Pact,” The Star (January 8, 2010),, “Strong Saudi-Malaysian Ties Key to Growth,” Arab News (August 30, 2010),, “Malaysia, Saudi Arabia Cooperate in Security,” Vietnamplus (April 20, 2011),

[13] There are four major Islamic legal schools: Hanafite, Malikite, Shafiite, and Hanbalite.