MALAYSIA has announced its intent to join BRICS, a bloc of emerging economies led by Russia and China, signalling a strategic shift in its international alliances.

The decision was welcomed by Malaysian Institute of Economic Research head of research Shankaran Nambiar, who highlighted the potential for Malaysia to help shape global economic narratives over the next half-century.

Prime Minister Datuk Seri Anwar Ibrahim confirmed the decision, marking Malaysia’s alignment with BRICS’ founding members-Brazil, Russia, India, China, and South Africa-and the new entrants including Iran, Saudi Arabia, the UAE, Egypt, and Ethiopia, who joined in January 2024.

Several other nations, such as Thailand and Indonesia, have also expressed interest in joining the bloc.

“Malaysia has decided that it wants to be on the side of other fast developing economies. It wants to be a part of the group that will set the narrative for the next 50 years,”  FMT Business quoted Nambiar as saying.

BRICS, representing over 40% of the world population and a quarter of the global economy, now surpasses the G7 group of leading industrialised economies led by the US.

Nambiar noted that while managing relations with Western allies particularly the US will be challenging.

“The global economy has for long been a part of the dominant narrative, and Anwar clearly thinks it is time to review alternative models.

“Managing the balancing act is the tricky part (if Malaysia joins BRICS). But I think it can be negotiated. Malaysia has always had extremely good relations with the US, and this can be expected to continue in various areas including defence,” said Nambiar.

In an interview with Chinese media outlet Guancha, Anwar confirmed that Malaysia would soon begin the formal process of joining BRICS.

He emphasised Malaysia’s policy shift and the exploration of alternatives to the US dollar in international trade, echoing Brazilian President Luiz Inacio Lula da Silva’s criticism of dollar dominance.

“We have made our policy clear, and will start the formal process soon.”

Moreover, Nambiar suggested that Malaysia’s move reflects a broader trend among ASEAN nations to “de-dollarise” amidst increasing unilateral sanctions by Washington.

In the interview with Guancha, Anwar backed comments by Brazilian president Luiz Inacio Lula da Silva criticising the dominance of the US dollar in international trade.

“Last year Malaysia had the highest investment ever, but the currency was still attacked. Well, it has eased in the past few weeks. But it doesn’t make sense, it goes against basic economic principles,” he said.

Anwar’s support for an Asian Monetary Fund and local currency settlements in trade indicates a strategic pivot.

“It is time that these ideas are pursued more fully. Both China and India, too, have expressed a willingness to take up local currency settlement when it comes to trade,” added Nambiar.

The 42nd ASEAN Summit in May last year saw members agree to promote local currency transactions, reducing reliance on the US dollar and euro. This initiative aims to mitigate risks associated with potential US sanctions, evidenced by the freezing of US$300 bil of Russia’s foreign reserves following the Ukraine conflict.

However, not all experts are in favour of these de-dollarisation initiatives.

Pacific Research Centre of Malaysia principal adviser Oh Ei Sun expressed skepticism, describing Malaysia’s BRICS membership as a “desperate decision” aimed at attracting investments from larger BRICS economies.

“I tend to hope that most major Asean economies are smarter than to jump on the de-dollarisation bandwagon,” he stated.

“Malaysia sorely needs investments. So, if joining BRICS is one way to please those bigger BRICS economies so that they could be even more willing to invest here, then so be it. Only time can tell what tangible benefits could be derived from joining BRICS.”

Meanwhile, Nambiar disagreed with the notion that Malaysia’s BRICS membership is solely investment-driven, arguing that countries like China, India, and Turkey would continue investing regardless of Malaysia’s BRICS status due to existing good relations.

“I don’t agree with that argument. I think China would be willing to invest whether or not Malaysia joined BRICS. Same with India. Same with Turkey, because Anwar has good relations with them.” - June 19, 2024

https://focusmalaysia.my/msia-set-to-join-brics-aligns-with-emerging-economies/