Najib urges joint development to calm troubled waters

KUALA LUMPUR - Malaysian Prime Minister Najib Razak has called for claimants in the South China Sea to jointly develop resources to avoid conflict and prevent "extra-regional states" from becoming involved.

Datuk Seri Najib cited a joint development zone in waters claimed by Thailand and Malaysia as a precedent that could be applied in the South China Sea.

Vietnam and the Philippines reject China's map as a basis for joint development in the waters, parts of which are also claimed by Malaysia, Brunei and Taiwan.

"Agreeing to share prosperity, rather than let it divide us, is infinitely preferable to the alternative," Mr Najib said in a speech on Monday in Kuala Lumpur.

Competition for oil, gas and fish threatens to disrupt the estimated two-thirds of global trade that passes through the waters. China favours joint development of resources, while the US, Japan and the Philippines advocate international arbitration.

Mr Najib said a code of conduct for operating in the waters would be a "good start" to prevent tensions from escalating.

He warned that involving "extra-regional states" - which he did not specify - may "add yet another layer of complexity to the dispute".

"For Asian nations, this problem is ours to solve," Mr Najib said. "Should we stray from the path of dialogue and cooperation, we may pave the way for other parties to take remedial action to protect the freedom of navigation and safe passage."

Malaysia and Thailand in 1979 agreed to jointly develop oil and gas in a region of disputed waters slightly bigger than Johor state.

Natural gas from the area now makes up about 20 per cent of Thailand's domestic production, Energy Ministry statistics show.

"Instead of passing on choppy waters to the next generation, we should endeavour to leave them a calmer sea," Mr Najib said.

"We should seek the common ground needed for an amicable understanding among the claimants."

Malaysia has maintained cordial ties with China despite the potential tensions in the South China Sea.

Chinese navy ships visited James Shoal off Malaysia in March, near where Royal Dutch Shell and Petroliam Nasional have oil and gas operations.

The shoal located off Borneo is claimed by China as its southernmost geographical feature and is sometimes grouped as part of the Spratly islands whose sovereignty is disputed by multiple nations.

BLOOMBERG