Malaysia gears up for BRICS membership / Yaroslav Lissovolik
After the recent declarations made by Thailand about its intention to join BRICS, a similar move was unveiled recently by Malaysia, another key ASEAN economy. According to the statements of Malaysia’s Prime Minister Anwar Ibrahim, “we have made a decision, we will be placing the formal procedures soon… we are just waiting for the final results from the government in South Africa”[1]. These statements come ahead of the visit by Chinese Premier Li Qiang that is to mark the 50th anniversary of Malaysia-China diplomatic relations. With Malaysia voicing its intention to join BRICS, it appears that the majority of ASEAN economies have either expressed their plans to become BRICS members or have participated in the BRICS+ meetings ever since the expanded format was launched in 2017. If the string of BRICS applications from ASEAN members continues to grow, it could be the case that after last year’s wave of BRICS expansion that was mainly concentrated in the MENA/Middle East region, the next expansion wave could be dominated by new entrants from Southeast Asia.
Malaysia is one of the regional leaders in terms of the level of development and well-being – in 2022 it was 4th in ASEAN in terms of its overall GDP (while it slipped in ranking later, it is still broadly on par with Vietnam and the Philippines that are in the 4-5 positions), while being 3rd in the regional bloc in terms of GDP per capita after Singapore and Brunei. The economy was in acceleration mode in the first quarter of 2024, growing by 4.2% after 2.9% in Q4 2023 and above the market consensus of 3.9%. According to the authorities, one of the key drivers of growth acceleration was export performance, with the government being “optimistic that Malaysia’s gross domestic product (GDP) is well placed to expand within the official forecast range of 4% to 5%”[2].
Malaysia’s trade relations are well diversified with active development of ties with the US and China. According to Malaysia’s authorities, in 2023, China continued to be Malaysia’s largest trading partner for 15 consecutive years since 2009, accounting for 17.1% of Malaysia’s total trade. In 2022 trade with China reached its all-time high, with the contraction in 2023 partly reversed in Q1 2024 with an increase of 3% YoY[3]. Malaysia is making use of its export potential via a highly diverse network of trade alliances – the country signed and implemented 16 FTAs (7 bilateral FTAs and 9 regional FTAs). Importantly, in 2022, Malaysia implemented two mega-FTAs namely Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). [4] Further geographical diversification of Malaysia’s trade would greatly benefit from the development of ties with BRICS+ economies, including in such regional blocs (whose members are not covered by the Malaysia’s FTA network) as MERCOSUR and the African Continental FTA (AfCFTA).
If both Thailand and Malaysia do join the BRICS core or the soon to be created “partnership belt” then the largest regional economy in ASEAN – Indonesia – may also opt to strengthen its ties with the BRICS bloc. The same “domino effect” may play out with respect to another key regional economy such as Vietnam that along with Indonesia has participated in the BRICS+ meetings in recent years. Such a cumulative build-up in the cooperation between BRICS and ASEAN members could result in the next wave of BRICS expansion (if it happens) being concentrated to a significant degree in the region of Southeast Asia.
Another implication of the closer link-up with ASEAN for BRICS could be an important regional role played by the Regional Comprehensive Economic Partnership (RCEP) that brings together China with ASEAN economies as well as developed economies such as Japan, South Korea and Australia. In fact, apart from serving as one of the key components in the possible horizontal platform of regional integration blocs within the BRICS+ circle, RCEP could also serve as platform for outreach to those advanced economies that are focused on developing constructive economic ties with the Global South within an expanded BRICS++ format. We note in this respect the constructive development of China-Australia trade relations in recent periods, with bilateral trade reaching an all-time high in 2023[5].
In order for the closer partnership between BRICS and ASEAN to evolve the former needs to focus its development agenda on creating new venues for BRICS+ economic cooperation. This was the main message of Vietnam’s representatives in the expanded BRICS+ meetings held earlier this year[6], with trade liberalization being singled out as one of the main gateways for the future cooperation among developing economies. For ASEAN it seems combining trade liberalization with the advancement of cooperation in the sphere of digital economy and e-commerce may be of particular interest, which is why BRICS may need a roadmap of how alliances such as DEAs (digital economic agreements – actively led by ASEAN and Singapore in particular) may be developed within the BRICS+ platform.
[1] https://www.reuters.com/world/asia-pacific/malaysia-preparing-join-brics-economic-group-media-report-says-2024-06-18/
[2] https://www.mof.gov.my/portal/en/news/press-release/economic-growth-surpasses-expectations-in-first-quarter
[3] https://www.matrade.gov.my
[4] https://fta.miti.gov.my/index.php/pages/view/4
[5] https://www.ft.com/content/cbdb6a02-6391-4a18-8d32-60fd9e988644
[6] https://en.vietnamplus.vn/vietnam-attends-brics-dialogue-with-developing-countries-post288441.vnp
Image by Pexels via Pixabay
Yaroslav Lissovolik, Founder, BRICS+ Analytics
Origin: https://brics-plus-analytics.org/malaysia-gears-up-for-brics-membership/