This chapter reveals the double-edged effects of the Indonesia–Malaysia special relationship. By the mid-1980s, a solid foundation had been established in Indonesia's and Malaysia's domestic politics as well as in their regional affairs. The unmistakable political supremacy of the indigenous people over the Chinese in Indonesia and Malaysia, as well as ASEAN's proven ability to function as a shield for its member states, revealed that the Malay world had taken root in archipelagic Southeast Asia. In other words, the strategic cooperation of Indonesia and Malaysia — forming the Malay world — was well established. Indonesia's and Malaysia's respective nationhoods too had become entrenched. Consequently, the two states each began to venture into a new stage of economic development that would transform their respective economy and national identity.

By the late 1980s, the transformation of Indonesia's and Malaysia's economies had ushered in an era of high economic growth in the two states. With their new found economic might, Indonesia and Malaysia were looking beyond ASEAN, striving to expand the space for their respective survival. Indonesia and Malaysia competed with each other amidst their endeavours to expand their respective influence abroad. The competition was enhanced by the mismatch of expectation between them; and mutually reinforced with their respective assertion of their superiority over the culturally similar counterpart.

The intertwined three sources of conflicts were also embedded in the territorial disputes between Indonesia and Malaysia and the issue of Indonesian migrant workers in Malaysia. The three sources of conflicts reinforced one another. Anti-Malaysia sentiments emerged in Indonesian society as a result — which were the substantial conflicts between Indonesia and Malaysia.

Because of the war avoidance norms that existed in the Indonesia– Malaysia special relationship, the substantial conflicts between them had not been able to turn into violent ones. The absence of power imbalance in the Indonesia–Malaysia special relationship means that the relationship remains as a security regime, not a security community. Indonesia–Malaysia relations are fundamentally competitive. The two states continue to understand each other in egoistic terms. War between them is unlikely, yet it remains possible.

THE SOLID PRESENCE OF THE MALAY WORLD AND THE NEW STAGE OF ECONOMIC DEVELOPMENT

By the mid-1980s, it was evident that a solid foundation had been established in Indonesia's and Malaysia's domestic politics as well as in the regional affairs of ASEAN.