MALAYSIA WAS THE first Southeast Asian country to normalize relations with China in 1974. Since that time, Sino-Malaysian tensions have revolved mainly around maritime boundary delimitation of the continental shelf and the proper allocation of SCS resources. The Malaysian government is actively exploiting its oil resources on its own even while trying to enhance its claim over the area through occupation. To date, Malaysia has demonstrated a clear reluctance to develop the Spratly islands jointly with any other party, with the exception of Brunei, with which it has signed a joint agreement.

Since 1983, Malaysia has claimed a number of the southernmost Spratlys, and has occupied a number of them, because they are located within the self-proclaimed Malaysian Continental Shelf: Swallow Reef (1983) or Layang-Layang; Mariveles Reef (1986) or Mantanani; Ardasier Reef (1986) or Ubi; Erica Reef (1999) or Siput; and Investigator Shoal (1999) or Peninjau. Malaysia also claims James Shoal (called Beting Serupai in Malay, and Zengmu in Chinese), which is normally 20 meters under the water. The problem with Malaysia's case is that the legal justification for claiming territory just because it lies within a country's continental shelf reverses the normal method for creating maritime zones. According to international law, an island's title generates rights to surrounding waters and not vice versa.

During 2009, Malaysia and Vietnam made a joint continental shelf submission to the UN CLCS. This submission challenged China's nine-dashed map claiming ownership of the entire SCS (see Map 8 below). But Sino-Malaysian economic relations have recently improved. During late November 2016, Prime Minister Najib Razak signed 14 economic agreements totaling $34.4 billion with China. As part of this new deal, Najib reportedly promised to negotiate all SCS disputes bilaterally with Beijing.

THE MALAYSIAN CLAIM

Unlike the PRC, ROC, and Vietnam, the Malaysian government does not claim all of the Spratlys, but does control a number of the southernmost islands and currently occupies five of them. In December 1979, the Malaysian government adopted a map showing demarcation lines for its continental shelf based on Malaysia's Continental Shelf Act of 1966. This defined the continental shelf as the seabed and subsoil of submarine areas beyond its territorial waters but adjacent to the coast of Malaysia, but no greater than 200 meters below the ocean surface.