In 1977 another summit was held in Kuala Lumpur. This time the JANZ leaders were there. The ASEAN leaders had an informal meeting with the Prime Ministers of Australia, Japan, and New Zealand on 6 August and then separate meetings with the Prime Ministers of each country. “There had been some argument beforehand about the form these meetings should take”, the British High Commissioner (Eric Norris) reported. “The Malaysians with their eye over their shoulder at Vietnam were anxious not to make it appear that the eight countries were forming a bloc.” They therefore proposed that each Prime Minister should meet the Heads separately. Fraser, however, persuaded the five to sit down with the three for an informal session, though it had “little substance”. Pre-summit most attention had been given to Fukuda Takeo. He confirmed Japan's readiness to grant a loan of one billion dollars for the five ASEAN projects when feasibility studies had been completed satisfactorily. ASEAN leaders had hoped to persuade Japan to lower its tariff and non-tariff barriers and make a commitment to a Stabex-type scheme for ASEAN primary commodities. Fukuda, however, “committed himself to very little indeed”. ASEAN had also criticized Australia's protectionism. Fraser promised more aid, and Lee and Marcos told him that “though they welcomed the aid they would prefer trade”. Muldoon's visit “probably went off best”. In his opening speech “he pre-empted any requests by offering greater access to New Zealand markets and increased technical assistance”.

The 1977 summit, Norris thought, was “the most important meeting ever held in Malaysia”, and the Hilton was like a fortress. But, though there was much ceremony, there was some substance. At the outset Lee had declared “surely we can do better than this” and he did not conceal his disappointment in his closing speech. But the initial scepticism about the summit had been confounded at the opening session when Marcos, “in a well-timed coup de théâtre”, announced his intention “to take steps to remove the Philippines’ claim to Sabah”, which had been “a running sore in Malaysian/Philippines relations, and consequently a block on ASEAN progress”.