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Bid to join BRICS reflects country's aim to diversify options, say experts

Publish date: Tue, 18 Jun 2024, 05:30 PM

KUALA LUMPUR: Malaysia's potential accession to the intergovernmental organisation BRICS (Brazil, Russia, India, China, and South Africa) will have various impacts to the country across various sectors. 

Experts said potential benefits for Malaysia would include greater influence in terms of international relations, trade, investment and overall economic growth.

The Malaysian Institute of Economic Research (MIER) head of research and senior research fellow Dr Shankaran Nambiar said it would make sense for Malaysia to join BRICS, as what used to be a grouping of only Brazil, Russia, India and China, the alliance was now growing. 

"Malaysia's bid to join BRICS is reflective of the country's attempt to be 'fiercely independent' in terms of its foreign policy," he said when contacted. 

Nambiar said Prime Minister Datuk Seri Anwar Ibrahim previously had spoken of de-dollarisation and the need to set up an Asian Monetary Fund. 

"These are ideas that are close to the BRICS' philosophy and which address the notion of greater financial independence for developing economies. The prime minister does not see the need for international payments to be tied down to the US dollar and he has been taking some steps in that direction, including settling trade with India in its own currencies. 

"If some of these ideas are carried out, we will see developing countries being less tied to the vagaries of US economic policy. Besides, the new economic giants are going to be China and India. 

"China is keen to play a more important role in the developing world and Malaysia will want to act pragmatically, working to do what supports its own economic interest," he said.

Asked if joining BRICS would impact Malaysia's relationship with the US, Nambiar said; "I don't think it would. Malaysia is a mature friend to the US, as such Malaysia is entitled to its own views, without diminishing Malaysia's willingness to engage in closer cooperation, trade and investment." 

Economist Professor Dr Geoffrey Williams said it was important for Malaysia to have as wide a portfolio as possible for trade and investment and to have access to conventional and non-conventional trading blocks.

"So flexibility is important and BRICS offers that. However, geopolitical issues will always be important too, as some countries might not like alignment with Russia but Malaysia is non-aligned and independent which means it can choose for itself who and who not to do business with.

"The economic balance of power is shifting and so Malaysia as a small open economy must respond positively. Actually, recent foreign direct investment deals are not with the US government, they are with independent minded US companies. So this is what matters.

"There are trade and investment opportunities with BRICS and this will create demand for the ringgit and strengthen the currency over time," he said.

Economist and international relations expert Samirul Ariff Othman said that joining BRICS could open up new markets and new possibilities for Malaysia. 

"As a small open economy, we have to diversify our options and hedge against uncertainties. We cannot tilt too heavily on one side. 

"Services such as tourism and education are poised to see substantial growth, in which Malaysia can capitalise on," he said, adding that it was, however, not clear for certain sectors like construction, agriculture, and mining, including oil and gas and rare earth minerals. 

Asked on what the long-term strategic goals could Malaysia pursue within BRICS and how it might align with its broader economic and foreign policy objectives, the former senior researcher at MIER said; "Non-alignment and neutrality. Malaysia strives to maintain peaceful relations with all countries, regardless of their political system. This principle is evident in their membership in the Non-Aligned Movement. 

"An observer gave a good view by saying that it's best to remain neutral, just like the Gulf Cooperation Council (GCC) countries. GCC trades with everybody and is doing well. While maintaining an American base, Qatar negotiates with Hamas leaders simultaneously," he said, adding that Malaysia had a high trade-to-gross domestic product GDP ratio, which is double of global average and fully integrated into the global economy. 

Asked if joining BRICS would impact Malaysia's relationship with the US, Samirul said; "I don't think so. It is because it would take some time for BRICS to become a powerful configuration. 

"Even the European Union (EU) which was almost on equal terms with the US in 2000 is far behind now. BRICS sounds like a great idea, maybe it can be achieved in 50 years from now. But, as of now the US is still in charge.  \

"Everybody uses the US dollar and they love it, although they hate US politics. Even China keeps its reserves in US dollars, the same goes with exports, international trade and commodities sold in US dollars." 

Earlier today, it was reported that Malaysia is preparing to join the intergovernmental organisation BRICS coalition soon. 

Anwar said that Malaysia would be starting the formal procedures soon and he was working closely with President Lula (Brazilian President Luiz Inácio Lula da Silva) on expanding the membership.  

"We are now awaiting the final result and response from the South African government," he said in an interview with the Shanghai-based publication Guancha. 

The interview was conducted by Li Shimo, chairman of the Advisory Committee of the China Research Institute of Fudan University. 

Since its inception in 2006, the BRICS group has undergone two phases of expansion. 

In 2011, South Africa joined the original members: Brazil, Russia, India, and China. 

In August 2023, the group extended invitations to six new members, including Argentina. However, the country reversed its decision in late December of the same year. 

In January this year, four new members - Egypt, Ethiopia, Iran and the United Arab Emirates - formally became part of the group.

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