Malaysia's Investor-State Dispute Settlement Experience: A Lesson Never Learned?

INTRODUCTION Malaysia is key member of the Association of Southeast Asian Nations (ASEAN), being one of the key signatories of the Bangkok Declaration in 1976. Malaysia is the only federal country within ASEAN. The country is located in the middle of Southeast Asia, with land borders with Thailand (in the Peninsula Malaysia), Brunei and Indonesia (in Borneo), connected with a bridge and a causeway with Singapore and with sea borders with Singapore, Indonesia, Thailand and the Philippines. Malaysia has a total population of about 31,187,265 and is an uppermiddle income country with an estimated GDP per capita of USD 9,502. and the total GDP of USD 296.359 billion for the year 2016. In 2017, Malaysia's economy is expected to grow at the rate of more than 4.8 percent. Despite the earlier setback to its economic development caused by the Asian Financial Crisis in the late 1990s, Malaysia continues to attract foreign direct investment (FDI) and also invests abroad through Outward Direct Investment (ODI). Malaysia's ODI flows first exceeded inbound FDI flows in 2005 (USD 6.24 million FDI compared to USD 6.8 million ODI), although this trend changed at the end of 2017 when FDI in flows of USD 9.9 million exceeded ODI flows of 5.6 million. According to the World Bank, Malaysia could attract more vertical FDI due to its current commitments and involvement in higher-quality free trade agreements (FTAs), such as the Trans-Pacific Partnership (TPP), which has become the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with the exclusion of the United States, and the Regional Comprehensive Economic Partnership Agreement (RCEP), which is still being negotiated between the parties. Malaysia relies heavily on trade, with a total of 2016 trade as a percentage of GDP at about 128.1 percent, as is in the case with many ASEAN countries such as Cambodia (127 percent), Singapore (318.4 percent), Thailand (123.1 percent) and Vietnam (184.7 percent). 4 As trade and investment are linked, having a dependable trade and investment regime is key to sustainable economic development in Malaysia.