Malaysia is a significant Southeast Asian producer of oil and natural gas, although proven oil reserves have declined in recent years. Malaysia’s western coast runs alongside the Strait of Malacca, an important route for seaborne energy trade that links the Indian and Pacific Oceans (for more information, see the World Oil Transit Chokepoints Brief). Malaysia’s gross domestic product (GDP) grew at an estimated rate of 5.9 percent in 2006, with average growth at 5.4 percent since the 1997-98 Asian Financial Crisis. Sustained economic growth has helped make the country a growing energy consumer in its own right.

Malaysia contests ownership of the Spratly Islands and other seabed portions of the South China Sea with Brunei, China, the Philippines, Taiwan, and Vietnam. Several of Malaysia’s natural gas fields in offshore Sarawak and Sabah fall under Chinese claims, although China has not specifically objected to the development of the fields (see the South China Sea Regional Analysis Brief for more information). Malaysia and Brunei have also disputed the maritime borders of their respective exclusive economic zones (EEZ), where there have been significant hydrocarbon finds in recent years (see the Brunei Country Analysis Brief for more information).