KUALA LUMPUR - Economists believe that joining the BRICS group will help Malaysia further diversify its trade and investment, as well as enhance the nation’s access to broader markets.
Founded in 2009 as a cooperative platform for emerging economies, BRICS originally comprised Brazil, Russia, India, and China.
South Africa joined in 2010, and Iran, Egypt, Ethiopia, and the United Arab Emirates joined in January this year.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid opined that being a BRICS member country would help to reduce overreliance on the US dollar for trade settlements.
"It will effectively insulate the country and the region from the changes in the United States’ monetary policy and currency volatility, potentially improving predictability in the currency market and lowering transaction costs for exporters and importers," he told Bernama.
Nonetheless, the government would need to perform a cost and benefit analysis (CBA) as the prevailing condition is quite fluid, especially in areas relating to geopolitics among the bigger nations.
In an interview with Chinese media outlet Guancha published on Monday, Prime Minister Datuk Seri Anwar Ibrahim said that Malaysia has set its sights on joining the BRICS group and will begin the joining process soon.
This announcement comes just weeks after Thailand expressed its interest in joining the bloc.
Mohd Sedek Jantan, a fellow of the Asian Financial Cooperation Association Think Tank, sees Malaysia's decision as a positive move that would enhance its global economic and political influence.
According to the Johannesburg Declaration, joining BRICS would promote collaboration, solidarity, and strategic partnerships within the "Global South," fostering a commitment to inclusive multilateralism, he said.
"Joining BRICS will enable member countries to align their positions on issues such as infrastructure development (following the Belt and Road Initiative model), economic policies as well as climate policies.
"The inclusion of new members has given BRICS+ greater legitimacy and elevated its standing within the Group of 20 (G20), despite the limited economic integration, divergent economic interests, and lack of geopolitical unity among its members," said Mohd Sedek.
He explained that based on the current BRICS+ composition, the group carries significant demographic and economic weight, representing nearly half the world’s population compared to just under 10 per cent for the Group of Seven (G7).
Rather than creating a common currency, BRICS+ aimed to reduce its dependence on the US dollar by increasing the use of local currencies in trade invoicing and financial flows.
On another note, renowned economist Prof Geoffrey Williams highlighted the strategic importance of Malaysia in maintaining a diverse portfolio in trade and investment.
He also emphasised the flexibility BRICS provides, enabling Malaysia to navigate geopolitical issues while maintaining its non-aligned and independent stance.
"The economic balance of power is shifting, hence Malaysia, as a small open economy, must respond positively.
"There are trade and investment opportunities with BRICS and this will create demand for the ringgit and strengthen the currency over time," he added. - BERNAMA