ASEAN, explained.

Indonesian President Prabowo Subianto, left, and Malaysian Prime Minister Anwar Ibrahim meeting in Kuala Lumpur in January this year (Hasnoor Hussain via Getty Images)

The Ambalat dispute is a chance for Indonesia and Malaysia to lead by example in Asia-Pacific diplomacy

Against a backdrop of wider regional tensions, finding a solution to this longstanding dispute would be model behaviour.

Akhmad Hanan

18 August 20254 min read

The maritime dispute between Indonesia and Malaysia has resurfaced, an unresolved boundary issue that has lingered for more than four decades. The dispute stems from Malaysia’s 1979 map of its maritime boundaries, which included parts of the Sulawesi Sea, known in Indonesia as the Ambalat Block, an oil-and-gas-rich area within the Indonesian continental shelf. Indonesia has consistently rejected the map, arguing it has no legal basis under the United Nations Convention on the Law of the Sea (UNCLOS). Although the International Court of Justice (ICJ) awarded the islands of Sipadan and Ligitan to Malaysia in 2002, that ruling did not settle the delimitation of the surrounding waters, leaving Ambalat as a persistent flashpoint.

The area is believed to hold hundreds of millions of barrels of recoverable reserves of crude oil as well as substantial natural gas potential, making it one of the most valuable offshore prospects in eastern Indonesia. According to Indonesia’s Ministry of Energy and Mineral Resources, these reserves could sustain national production for years, while the gas deposits could bolster domestic energy supply and feed lucrative LNG export markets. The deepwater location of Ambalat also makes it an important hub for offshore logistics.

Tensions between Indonesia and Malaysia have flared in the past, including incidents involving patrol vessels and drilling operations backed by competing concessions. Indonesia has granted licenses to companies such as ENI in the Ambalat Block and Unocal in East Ambalat, while Malaysia has issued rights to Petronas for what it calls the ND-6 and ND-7 blocks. The dispute had largely receded from headlines until recently, when Malaysian officials rejected the use of the term “Ambalat” and insisted on calling it part of the “Sulawesi Sea” – a move seen in Jakarta as more than semantics, but rather a symbolic diplomatic manoeuvre over sovereignty.

Ambalat area of dispute (Map via ANU Open Research Repository and WikiMedia Commons)

Jakarta’s response has been firm but measured. President Prabowo Subianto has reaffirmed Indonesia’s claim while stressing that the matter should be resolved peacefully, avoiding recourse to international litigation. This approach is pragmatic, given the deep economic and political ties between the two countries and their shared role as founding members of ASEAN. Crucially, the personal rapport between Malaysian Prime Minister Anwar Ibrahim and Indonesian leaders, particularly Prabowo, could provide the political capital needed to steer both bureaucracies toward constructive engagement. Anwar’s longstanding ties to Indonesia, dating back to the reform era, and his warm exchanges with Prabowo in recent years, signal a readiness to manage differences without jeopardising the broader relationship.

Indonesia and Malaysia must recognise that they face far greater challenges in the Asia-Pacific that demand unity.

The urgency of diplomacy becomes clearer when viewed through the lens of the recent Thailand–Cambodia border conflict. Fighting near the Preah Vihear temple in recent months has escalated into deadly artillery exchanges, with thousands of people displaced. A fragile truce negotiated last month is holding – barely – underscoring that agreements on paper require robust monitoring mechanisms and mutual trust-building.

Indonesia and Malaysia must recognise that they face far greater challenges in the Asia-Pacific that demand unity. Against a backdrop of renewed tensions in the South China Sea, a fractured Indonesia–Malaysia relationship would only weaken ASEAN’s collective stance. Solidarity and dispute resolution would enhance the region’s capacity to manage competition and safeguard stability.

Handled correctly, Ambalat could become a model for peaceful dispute resolution in Southeast Asia. One promising option, hinted at by Malaysia, is a joint development arrangement allowing both countries to exploit the area’s resources while deferring final boundary delimitation. Similar schemes have worked before, such as the 1979 Malaysia–Thailand agreement in the Gulf of Thailand, which enabled shared oil exploration while avoiding military confrontation.

Yet domestic pressures – whether nationalist sentiment or short-term political calculations – can easily tempt leaders into hardline posturing. Here, smart public communication is essential: affirming sovereignty while leaving the door open for pragmatic compromise. If political will can be sustained, resolving Ambalat peacefully would send a strong signal that ASEAN can maintain internal stability even amid overlapping territorial claims.

The Thailand–Cambodia conflict is a sobering reminder of how quickly border disputes can escalate into humanitarian crises, with loss of life, mass displacement, and regional instability. In contrast, a diplomatic settlement of Ambalat – supported by the personal rapport of its leaders – could set a new precedent for maritime dispute resolution, one that prioritises dialogue, respects international law, and prevents military escalation. If Jakarta and Kuala Lumpur can turn a decades-old flashpoint into a symbol of reconciliation and cooperation, they will not only safeguard their own economic and sovereign interests but also enhance ASEAN’s credibility on the world stage. In the high-stakes environment of the Asia-Pacific, such an achievement would demonstrate that intra-ASEAN solidarity is not just a slogan but a way to navigate an uncertain future.

About the author

Akhmad Hanan

Akhmad Hanan is an independent Indonesian researcher specialising in geopolitics and energy.

Topics

ASEAN Indonesia Malaysia Defence & security