Last week, Prime Minister Datuk Seri Anwar Ibrahim confirmed Malaysia’s intention to seek accession with the BRICS economic grouping. The announcement brought excitement and consternation concurrently to Malaysians. Let’s dissect why the news brought the feeling of excitement and dread simultaneously to Malaysia.
Hot in the news last week was Prime Minister Datuk Seri Anwar Ibrahim’s announcement that Malaysia is seeking to join the BRICS+ economic group, the expanded version of the international market of BRICS. The announcement generated excitement in Malaysia, long devoid of economic good news. The excitement, and depredation is now sinking in, as Malaysians look at the announcement either as an economic opportunity, or a strategic risk.
What is BRICS+?
The BRICS consist of Brazil, Russia, India, China, and South Africa, built upon the idea formulated by Jim O’Neill, Goldman Sach’s Chief Economist in 2001, into an economic group that harnesses the principles of non-interference, equality, and mutual benefits.
The grouping is an indirect challenge to the G7 economic grouping, which consists of the world’s largest economy, thus challenging the current unipolar world that came about post-collapse of the Soviet Union in the 1990s.
The group first consisted only of Brazil, Russia, India, and China, with South Africa added in 2010. In 2023, the grouping has invited several new members, i.e. Saudi Arabia, Iran, Ethiopia, the UAE, Egypt, and Argentina.
The most important year in BRICS history is 2014. Russian-backed separatists in Eastern Ukraine received military assistance from the Kremlin to oust the Ukrainian military in what is a thinly-veiled Russian invasion. The invasion got Russia the boot from the G8 economic grouping, returning the group to its original G7 size.
Why is the BRICS Move Good for Malaysia?
Malaysia gains to benefit from the move from the following perspectives:
Economic Opportunity
In 2023, just over 40% of the world’s population live within the BRICS nations (Statistica, 2024). While Malaysia has accessed India’s and China’s markets, we have not entered Brazil and South Africa. The move to enter BRICS would also boost Petronas; they opened the first Petronas-branded retail fuel station in Brazil last week.
Cheaper Global Trade
A major plus factor for BRICS is that member countries are countries that are seeking to gain economic independence from the US-dominated international market. These countries prefer to trade in currencies other than the dominant USD.
The problem with trading in the USD is that it indirectly enriches the middle party, the United States. The dominant nature of the USD also saw the US weaponising their currency and economy. USD gets strengthened, and other global currencies become cheaper to the greenback when the relative value of the trade does not change much.
Bilateral trade with these countries can be in their respective currency or our Ringgit. This approach would remove the US (or any other currency) as the intermediary currency and strengthen the respective currencies, which is in line with the ASEAN+3 Macroeconomic Research Office proposal to prioritise local currencies.
Diplomatic and Economic Independence
The country stands to benefit also from an unspoken economic benefit. Participation in the international market demands compliance with the G7 nations’ economic agenda. Their economic agenda ranges from certain gender affirmation policies to human rights issues, and sanctions regimes. Some of these agendas are contrary to Malaysia’s stance on the global stage, particularly on human rights.
In the past, I had written that we should be wary of jumping onto the BRICS currency bandwagon. That call still applies. However, all that changed post 7 October world. While the West listed Hamas as a terrorist group that sought to destroy Israel and sanctions the group, to Malaysia, the group represents the Palestinians in their seven-decade-long struggle for independence and freedom from colonial occupation and understood why the Palestinians had to take the direct action route. Therefore, being part of the group could be a very valuable counter-weight against the Western-dominated pressure.
Potential Technological Advancement
BRICS member nations have also been innovators in science and technology. Russia and China found themselves on the other side of the Cold War, needing to develop their technology independently from the G7-dominated West. South Africa developed many technologies independent from either side of the Cold War after finding themselves boycotted for its then-Apartheid policies. These technologies now benefited post-Apartheid South Africa.
Associate Professor Azam Abdullah of the Department of Mechanical and Aerospace Engineering at the International Islamic University of Malaysia wrote in his New Straits Times column that Malaysia can tap on Brazil’s experience with its Embraer as the world’s third largest plane manufacturer.
Brazil is also a major arms manufacturer, with a Brazilian firm, Avibras, a significant player in the defence sector. During the 1990 Gulf War, both the Saudi Army, then part of the Coalition forces, and the Iraqi Army fielded the Avibras-manufactured ASTROS II Multiple Launcher Rocket System against each other. The system proved its mettle when the Saudi Army’s Astros II took part in the opening salvos to soften the Iraqi Army.
Poison Chalice
Not all things are hunky dory with the BRICS economic grouping. Any analysis without providing an overview of the threats that emanated from a proposed move is just an anal attempt to shove the idea down the wind-pipe, or otherwise. One can’t throw caution to the wind and expect things to fall in line.
The New Cold War
Unfortunately, the BRICS economic grouping may become the very stone which the new multipolar world is drawn upon. On the one hand, we have the G7 nations which follow the US and the Western-denominated narrative. Issues ranging from the Russo-Ukraine war to China’s threat over Taiwan, and even the Israeli purportedly existential threat marked how G7 nations see global issues. Joining the BRICS may see us on the other side of the fence, though BRICS have so far professed non-interference in local politics.
Sanctions Regime
As mentioned earlier, today’s international market sees the US trying to dictate the world with whom a country can trade. The US imposes sanctions control regime via its Office of Foreign Assets Comptroller (OFAC). Even the Belgium-based SWIFT system complies with the OFAC sanctions.
It would be a risk that the government needs to address.
The Stability of the BRICS Economic Grouping
Perhaps, the biggest bull in the china shop is the long-term viability of the BRICS. In another previous analysis, I highlighted several issues that potentially may lead to the BRICS disintegrating. Three member states, China, Russia, and India have overlapping border disputes.
We too face a similar risk, with Malaysia having overlapping maritime border claims with China. Prime Minister Anwar has addressed this issue, but the answer is a tad too similar to past Prime Ministers, being recycled every other year.
Opportunity or Entrapment?
BRICS, like any other international grouping, offers both opportunity and risk to the country. While Anwar may have made the first step to accession, whether the decision is the right move is still too early to be seen.
As long as the benefits outweigh the risks, the move to participate in the BRICS should receive the necessary support for it to succeed, and have inbuilt escape clauses for the country should the situation be no longer favourable. – NMH
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Danny Liew is a freelance writer with extensive experience in defence, geopolitics, and economics for about 20 years. He contributes to the Perajurit defence portal, Malaysia Military Power (MMP), amongst others.
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