This report analyzes U.S.-Malaysia relations as well as Malaysia's domestic politics, economy, environment, external relations, and geopolitical context within Southeast Asia. Congress has expressed interest in a variety of issues with regard to Malaysia which are explored below. The report also provides background information on current events and policy debates related to Malaysia to assist Congressional decision-makers. The relationship between the United States and Malaysia is a complex one. Bilateral ties are considerably closer than they may appear to some observers, but political sensitivities in Malaysia as well as concerns related to allegations of corruption and mistrust lingering from less amicable periods constrain the establishment of a deeper strategic relationship. Malaysia, a majority Muslim nation of 31 million people, is a partner in numerous U.S. security and economic initiatives in Southeast Asia. It is a major U.S. trading partner and a site of substantial U.S. investment. Malaysia, for many years one of the leading voices behind building "Asia-only" regional institutions, more recently has been an advocate of a strong U.S. presence in the Asia-Pacific region. Some experts believe that Malaysian concerns about China's assertiveness in the South China Sea have been a primary driver behind closer U.S.-Malaysia strategic ties. Yet, some issues have proven contentious over recent years—particularly Malaysia's human rights record and U.S. counter-terrorism strategy and policy in the Middle East—and many observers still perceive a ceiling on the degree to which the two countries can deepen their relationship. Like many Southeast Asian nations, Malaysia has long maintained a foreign policy that hedges between the United States, China, and other powers—a policy that continues under Prime Minister Najib Razak. The former Obama Administration's strategic "rebalancing" of foreign policy priorities to Asia placed increased attention on the nations of Southeast Asia, including Malaysia. Although the rebalancing did not feature high-profile bilateral initiatives with Malaysia, some observers say U.S.-Malaysia relations warmed considerably. Malaysia is one of the 12 nations that signed the proposed Trans-Pacific Partnership (TPP) from which the Trump administration decided to withdraw. Malaysia had placed high priority on being part of the U.S.-led initiative. The United States and Malaysia also conduct numerous military exchanges, training exercises, and port visits and cooperate in counter-terrorism and maritime domain awareness. Malaysia harbors a strong self-image as a moderate leader within the Islamic world, and plays an active role in the Organization of Islamic Cooperation (OIC). Malaysia has criticized U.S. military interventions in the Middle East and U.S. support for Israel, maintaining that these policies created a perception that the United States is "anti-Islam," and that U.S. rhetoric generated broader support for Islamic militancy. Malaysian statements along these lines have moderated in recent years, especially under Prime Minister Najib. Some observers, however, point to stronger voices among some conservative Islamist Malaysians as a sign of rising tension among some of Malaysia's Muslim leaders. The United States' withdrawal from the TPP agreement, and other actions taken by the Trump Administration, such as seeking to block arrivals to the United States from select Muslim nations, has created uncertainty in Malaysia about the United States' approach and commitment to the region, and has contributed to perceptions that the U.S. may turn inward or may become anti-Islamic. Such ambiguity and uncertainty regarding U.S. policy shifts towards the region may influence how states in the region calibrate their relationships with both the United States and China. The Asia rebalance was welcomed by many in Asia, including Malaysia, as a reassuring sign of the United States' commitment to the region. Questions about whether that commitment may wane under the new administration are emerging. For most of its early history, the territory that comprises the modern state of Malaysia was a collection of small, separate kingdoms or sultanates. After Islam was introduced to Southeast Asia by Muslim traders in the 14 th century, most of the indigenous population adopted the religion. Chinese Admiral Cheng Ho, who reached Malacca in 1405, was followed by the Portuguese in 1511. The Portuguese in Malaya were followed by the Dutch in 1641. In the late 18 th through mid-19 th centuries various principalities on the Malaysian Peninsula and northern Borneo fell under the British sphere of influence. Britain administered these resource-rich states through local leaders and eventually knit together these territories into the Federated Malay States in 1895. Japan briefly ousted the European powers from Southeast Asia during World War II, but Britain restored its governance of the Malaysian territories after 1945, inaugurating the Federation of Malaya in 1948. While indigenous political groups, including the United Malays National Organization (UMNO), agitated for independence during the postwar period, the Malayan Communist Party waged a prolonged guerrilla campaign against British rule. The British and their anti-Communist allies in Malaysia defeated the Communist campaign, sometimes employing brutal tactics; this period is known as "the Emergency." Peninsular Malaya gained its independence as a constitutional monarchy in 1957, and the colonies of Singapore, Sabah, and Sarawak were relinquished by Britain in 1963 into the new Federation of Malaysia. Indonesian ruler Sukarno opposed this union and instigated low-level military conflict (known as konfrontasi ) with newly enlarged Malaysia until 1965. Singapore was forced out of the federation and became independent in 1965 amid a series of political disagreements between Malaysian and Singaporean leaders. Race riots between Malays and Chinese that erupted in May 1969 in Kuala Lumpur shook the social foundations of Malaysia and catalyzed reform of the political system. A major consequence of the race riots was the New Economic Policy (NEP), which sought to remedy socioeconomic disparities by favoring bumiputra —ethnic Malays and other indigenous groups—over minority groups, including the economically preeminent ethnic Chinese minority. The Malaysian government promoted agricultural improvements, natural resource exploitation, and export-oriented industrialization (reserving opportunities for bumiputra ) that led to consistent economic growth through the 1970s and 1980s. In the political sphere, the UMNO-led Barisan National (BN) coalition of ethnically-based parties (including parties representing Malaysia's Chinese and Indian minorities) has maintained its preeminence since independence and delivered a measure of stability to Malaysia despite internal diversity and a volatile external security environment. A central figure in Malaysian politics is Mahathir Mohamad, who was Prime Minister from 1981 until 2003 and remains politically active. Mahathir helped to shape a more secular Malaysia by limiting the political strength of religious leaders and curtailing the privileges of Malaysia's royalty. He also aggressively sought to rein in critical voices in the political arena, the media, and civil society. Many aspects of Malaysia's current political landscape were shaped by the Mahathir era, as both prime ministers who followed him, as well as opposition leader Anwar Ibrahim, were at one time his protégés within UMNO. Mahathir remains a significant political voice in Malaysia, and has at times expressed his opposition to Najib and his policies. Malaysia faces numerous internal and external challenges as it seeks to attain its goal of becoming a prosperous, developed country that is influential in Southeast Asia and around the world. Chief among Malaysia's domestic challenges are ethnic and religious sensitivities and tensions, a volatile political climate marked by dissention within the ruling coalition and between the coalition and an active political opposition. Compared to its Southeast Asian neighbors, Malaysia has a relatively high average income, but its economy has not yet made a full transition toward high technology, high value-added industries. Malaysia has been successful at developing manufacturing and service industries, but its economy continues to rely heavily on its natural resources, particularly oil, natural gas, and timber. Many economic reform proposals confront opposition from rural, Malay-centric interest groups. As one of the founders and most active voices in the Association of Southeast Asian Nations (ASEAN), Malaysia faces the diplomatic challenges of promoting regional trade integration, maintaining security and stability, and creating an attractive climate for foreign investment. The rise of China brings many opportunities to East Asian countries, as well as concern about Beijing's increasing assertiveness in regional affairs. This is most evident through China's militarization of disputes over islands in the South China Sea. The Federation of Malaysia is a federated constitutional monarchy. The current Head of State, the Yang di-Pertuan Agong (king or supreme sovereign) of Malaysia, is Sultan Muhammad V who took his oath of office on December 13, 2016. The post of Yang di-Pertuan Agong rotates among Malaysia's nine Sultans. The nine Sultans elect one of their own to be Yang di-Pertuan Agong every five years. The Constitution includes special safeguards for Sabah and Sarawak in East Malaysia. The federal parliament has two houses. The Dewan Negara , or Senate, has 70 members of which 26 are elected from the state legislatures and 44 appointed by the Yang di-Pertuan Agong . The Dewan Rakyat , or House of Representatives, consists of 222 directly elected Members. Appointments to the Senate are for three years and the House must stand for election at least every five years. The Yang di-Pertuan Agong may dissolve parliament on the advice of government. Prime Minister Najib's United Malays National Party is the main political party in the Barisan National Coalition which is a 13 party coalition. BN holds 134 of 222 seats in parliament. While this gives BN a majority, it is short of the two thirds required to amend the constitution. Other key parties in the BN include the Malaysian Chinese Association (MCA) and the Malaysian Indian Congress (MIC).