DEFENCE WHITE PAPER STRATEGIC OUTLOOK 1. Malaysia’s present and future interests are tied to an uncertain and ever-changing security environment. This chapter first describes Malaysia’s strategic outlook for the next ten years. It then lays out the Government’s long-term strategy, charting the direction to protect the national interests, particularly to defend the sovereignty and territorial integrity, in line with the shifting regional and global security environment. 2. As a result of the uncertainties at the regional and global levels, the international strategic landscape is becoming more complex and unpredictable in the coming years. Although Malaysia is not beset by military threats or conflicts at the present moment, the nation still faces three main security challenges. They are: (1) uncertain big power relations; (2) complex Southeast Asian neighbourhood; and (3) increasing non-traditional security threats. A Changing Security Environment 3. The increasingly volatile external environment has caused a wide range of uncertainties, posing growing risks towards Malaysia’s national interests. This development has the potential to undermine regional stability and global peace in the long run. 4. Globally, there has been a shift in economic and military power. This shift is highlighted by intensifying power competition and potential polarisation, increasing xenophobia, more prevalent non-state actors, more lethal trans-boundary threats, inevitable globalisation processes, uneven access to technology and fragile ecological systems. 5. Regionally, the intensifying power competition is concentrated more in Southeast Asia. This rivalry is not only heightening the longstanding tension in the region but also has extended to other sectors from trade and technology, to resource management and functional exchanges to infrastructure and connectivity development. 6. While this big power competition and their attempts to increase influence may present opportunities for Malaysia and other regional countries, at the same time, it may complicate regional cooperation. The attempts may cast shadows over Southeast Asia’s stability and prosperity, potentially challenging ASEAN centrality. These developments have led to a more complicated, unpredictable outlook with the potential to disrupt the regional security environment. Malaysia may face challenges on a more serious scale and scope never experienced before. 7. Three challenges that will shape Malaysia’s strategic outlook for the next ten years are identified as follows: i. Uncertain big power relations. This refers to the US- China interactions and their relations with other powers. These two big power relations are the most important bilateral relations in the contemporary world and also the most important external factor for Malaysia. The bilateral ties have always been marked by a mix of cooperation and competition, with implications for regional stability, security and prosperity. Their interactions affect other countries’ policies and actions. ii. Southeast Asian neighbourhood. While big power politics affect Malaysia as consequences of power, the Southeast Asian neighbourhood impacts Malaysia because of its proximity. Due to geographical proximity, Malaysia’s national security and interests are affected by its immediate neighbours’ actions, policies and spillovers of their internal developments as well as bilateral relations among the 20