BRICS membership: Malaysia’s potential benefits and challenges

PETALING JAYA: Prime Minister Anwar Ibrahim’s announcement last month that Malaysia is seeking admission into the BRICS economic bloc has generated much discussion about its potential impact on the country.

However, Malaysia’s interest is not the sole reason for the current buzz around the grouping. In recent years, BRICS has garnered significant attention as the global economy looks to pivot away from a US-led international order.

But what does joining the BRICS coalition mean for Malaysia?

FMT takes a brief look at its significance, the benefits Malaysia may derive from signing on, and the challenges the country may face.

What is BRICS?

Formed in 2009 in Yekaterinburg, Russia, BRICS began as an international organisation comprising Brazil, Russia, India and China, with South Africa joining a year later.

Its membership expanded at the beginning of this year to include Iran, Egypt, Ethiopia, and the UAE.

Together, the nine member states account for about 45% of the global population and 30% of the world’s land area, giving the grouping considerable political and economic influence.

On Jul 1, Forbes published a list of the top economies in the world today as ranked according to their gross domestic product (GDP).

With a GDP of US$18.5 trillion, China was ranked second in the list behind the US, followed by India (fifth, US$3.9 trillion), Brazil (eighth, US$2.3 trillion) and Russia (11th, US$2.1 trillion).

The strength of these economies puts BRICS in a formidable position to reduce dependency on the greenback and advocate the use of a more multipolar currency system in world trade.

Security and strategy analyst Collins Chong says BRICS’s objectives align well with Malaysia’s own stance, especially since the country has been reinforcing its non-partisanship and neutrality in the face of ever-growing US-China tensions.

“Malaysia has been consistent in its non-alignment stance, and has been vocal in denouncing the hypocrisy and double standards of the Western-led global economic and political order,” Chong, of Universiti Malaya, told FMT.

He said the rising influence of the Global South has spurred many countries to pool their resources and form new partnerships, with particular emphasis on shifting to currency multipolarity.

“The argument is that the US-led unipolar dominance has effectively ended, necessitating a new emphasis on the rights and voices of other powers,” Chong said.

How would joining BRICS benefit Malaysia?

Chong says that by joining BRICS Malaysia would enhance its market access, allowing it to participate in a credible platform for trade, supply chains and technology collaboration among emerging non-Western powers.

“As the dollar’s strength has affected our ringgit, joining BRICS aims to provide stronger fallback options and bolster Malaysia’s middle power status, independent of Western influence,” he said.

Bank Muamalat Malaysia Bhd’s chief economist, Afzanizam Abdul Rashid, said BRICS membership would enhance currency diversification in trade settlements.

“Joining BRICS is a pragmatic step given the bloc’s substantial economic size and growth potential, supported by its large population,” he told FMT.

Wariness from the West

However, Chong warned that participation in the bloc may see Malaysia come under greater scrutiny and wariness from the West as regards the country’s future long-term policy alignment and leaning.

“Joining might make it harder for the country to transition to alliances and platforms initiated by the West and future defence friend-shoring platforms,” he said.

Chong also noted that BRICS has yet to pose a significant challenge to the dollar-led international trade system.

“The move to include additional members such as Saudi Arabia, UAE, Egypt, Iran and Ethiopia has failed to present a credible force in challenging the dollar-led international system.”

Internal divisions fuelled by the Iran-Saudi discord over regional influence also threaten the grouping’s ability to achieve anything substantive, he said.

Meanwhile, Afzanizam said Malaysia must ensure that its participation in BRICS will not lead to the imposition of tariff and non-tariff measures by G7 nations.

“The geopolitical landscape has been particularly volatile since Russia’s invasion of Ukraine in February 2022 and the Hamas-Israel conflict that ignited on October 7, 2023.

“Protectionist policies are increasingly prevalent, suggesting that de-globalisation is becoming a deeper trend in the global economy. The government would need to think about the appropriate steps to weather this situation delicately,” he said.