Israeli foreign minister Moshe Sharett visited Kuala Lumpur in 1956, the year prior to the independence of the Federation of Malaya. He described the reception of his proposal to appoint an Israeli consul as "favorable without hesitation" on the part of his tengku host. When Malaya's bid for membership in the United Nations came up in 1957, Israel voted in support of Malaya's acceptance. By the early 1960s the Malayans had declined numerous Israeli attempts to formalize low-level relations, explaining that domestic radical-Islamic opposition and foreign Arab pressures had put Malaya in a sensitive position vis-a-vis Israel.
As negotiations between Israel and the Palestinians gained momentum in the early 1990s, Malaysian prime minister Mahathir Mohamad considered establishing actual diplomatic relations with Israel. Chua Jui Meng, then Deputy Minister of International Trade and Industry, suggested in 1994 that Israel's market could eventually become a destination for Malaysian investments.
Mahathir Mohamed, Malaysia's prime minister in 1981-2003, has accused his critics of being agents of Zionism and has accused Zionists of undermining Malaysia's integrity and trying to destroy Islam.:45–47 Mahathir had sent letters to Israeli prime ministers Yitzhak Rabin, Benjamin Netanyahu and Ehud Barak in the years 1993, 1997 and 1999, respectively. In 2012 the contents of these letters were made public in order to dispel allegations that Mahathir's government had moved in the direction of recognizing the State of Israel.
In 1971 Malaysian imports from Israel exceeded M$11 million while exports to Israel totaled more than M$2 million. Malaysia imposed a ban on trade with Israel in 1974.:23 According to the Israel–Asia Center, trade between Israel and Malaysia is conducted through intermediate countries such as Singapore and Thailand rather than directly.
A 2002 report on Israel's trade relations with Indonesia and Malaysia from Israel's Ministry of Industry, Trade and Labor advised Israelis interested in conducting business with Malaysian companies that "there is no opposition to trade and commercial relations as long as a low profile is kept." The same report stated that Israel's Intel factory accounted for some 98% of Israel's exports to Malaysia between 1999 and 2002. Thus in 1999 Israeli exports to Malaysia were worth $107 million – $5.3 million excluding Intel. That year Israeli imports from Malaysia were worth $23.6 million. In 2000 Israeli exports to Malaysia were worth $732 million – $4.7 million excluding Intel. Israeli imports from Malaysia were worth $25.9 million. In 2001 Israeli exports to Malaysia were worth $615.5 million – $4.7 million excluding Intel. Israeli imports from Malaysia were worth $26.3 million.
Figures released by Israel's Central Bureau of Statistics showed that trade between Israel and Malaysia in 2008–2011 fluctuated considerably. In 2008, Israeli exports to Malaysia came to $30.2 million while Israel imported goods worth $100.6 million. In 2009, Israel exported $116.8 million-worth of goods to Malaysia and imported goods worth $68.5 million. In 2010, Israel's exports to Malaysia grew to $798 million and imports grew to $85 million. 2011 saw Israel export goods to Malaysia worth $716.4 million and import goods worth $93.6 million. A report compiled by the European Commission indicated that in 2010 Malaysia ranked 15th among Israel's major trade partners, accounting for 0.8% (€667.6 million) of Israel's trade in that year.
In 2010, Israeli boxer Ilya Grad received special permission from the country's Muslim authorities to participate in a national TV reality show on boxing. Grad is a former Israeli Muay Thai champion, the 2010 Asia champion and the second runner-up in the world championship. Grad was allowed to enter the country and received a special visa.
In October 2012, the Malaysian government lifted the quota on pilgrimage tourism to Israel and allowed stays to be extended from 10 to 21 days.
- Yegar, Moshe (Fall 2006). "Malaysia: Anti-Semitism without Jews". Jewish Political Studies Review (Jerusalem Center for Public Affairs) 18 (3-4). Retrieved 5 March 2012.
- Nair, Shanty (1997). "Chapter 7: Malaysia and the Palestinian issue in the 1990s". Islam in Malaysian Foreign Policy. London: Routledge. p. 252. ISBN 0-203-42538-3. Retrieved 5 March 2012.
- Von der Mehden, Fred R. (1993). "Chapter 3: Political interaction". Two Worlds of Islam: Interaction Between Southeast Asia and the Middle East. Gainsville, Florida: University Press of Florida. ISBN 0-8130-1208-2. Retrieved 5 March 2012.
- "DPM: Release of letters proves our stand on Israel". The Star (Kuala Terengganu). 2 March 2012. Retrieved 5 March 2012.
- "Quick Facts & Figures: Malaysia & Israel-Malaysia Relations". Israel–Asia Center. Retrieved 16 March 2012.
- Gonen, Ehud. "Israel Trade With Indonesia And Malaysia" (in Hebrew). Ministry of Industry, Trade and Labor (Israel). Retrieved 16 March 2012. "נציגים רשמיים משתי המדינות אמרו לנו מספר פעמים כי אין התנגדות לסחר ולקשרים עסקיים כל עוד אלו נעשים בפרופיל נמוך."
- "Table D 1.–Trade Countries–Imports and Exports". Israel Central Bureau of Statistics. 2012. Retrieved 15 March 2012.
- "Israel's Trade With Main Partners (2010)". European Commission. Retrieved 14 March 2012.
- Israeli boxer a reality star in Malaysia
- Malaysia relaxes rules on Israel tours