At the conclusion of the BRICS Summit in Russia last week, Malaysia and 12 other countries were recognised as “partner countries”.
No timeline was given on when these countries would be admitted as members, and this has disappointed some quarters.
However, Sunway University economics professor Yeah Kim Leng said this should not be seen as a setback for Malaysia.
“Being a partner (country), Malaysia along with 12 other newly accepted partners will be first in the queue to become full-fledged members in the near future.
“The benefits include being apprised of latest developments in the group with higher likelihood of inclusion in the development programmes being planned to accelerate growth in the Global South countries that comprise mainly emerging and developing economies,” he told FMT.
The other partner countries are Algeria, Belarus, Bolivia, Cuba, Kazakhstan, Nigeria, Turkey, Uganda, Uzbekistan, and Asean states Indonesia, Thailand and Vietnam.
Economist Niaz Asadullah said given the current geopolitical climate, opinions are divided on the net benefits of BRICS membership. For that reason, the “interim status” of partner country has certain advantages, he said.
“The waiting period allows Malaysia to carefully weigh the trade-offs (that is, the benefits versus obligations) of full membership against its national interests. Malaysia can also maintain flexibility in its foreign policy as it engages with BRICS nations without full commitment,” he told FMT.
“Another advantage is the opportunity to make necessary economic adjustments to meet BRICS standards in anticipation of full membership, facilitating a smoother integration process,” said Niaz, who is the Global Labor Organization’s Southeast Asia lead.
Risks of joining BRICS
On whether joining the grouping may jeopardise Malaysia’s trade with the US, Niaz opined that there are some risks with full BRICS membership.
“While it can help reduce dependence on Western financial systems, it may also risk straining bilateral trade and investment relationships with the US and its close allies in the West,” he said.
However, Yeah pointed out that many BRICS members and partner countries, including Malaysia, have strong economic ties with the US and its allies.
“Hence, there is little basis to argue that joining BRICs will jeopardise trade relations with the US,” he said.
He believed that Malaysia along with BRICS members and partner countries with good relations with the US could play a constructive role in “de-escalating the tension and rivalry between the superpowers”.
“These neutral countries seeking economic opportunities could build bridges and moderate the risks of great power rivalry between the US and China,” said Yeah, the president of the Malaysian Economic Association.
On why four of Asean ’s major economies are seeking membership in BRICS, Niaz said as a group, major Asean countries stand to gain strategically from BRICS membership.
“Collectively, they could strengthen their bargaining power with Western powers to protect against potential penalties, while simultaneously negotiating Asean-wide infrastructure development and connectivity initiatives,” he said.
A new global financial order
BRICS is currently putting in place the building blocks for an alternative to the Bretton Woods global financial system dominated by the US, with the greenback as the world’s premier reserve currency.
Niaz concurs that many Global South countries are supportive of this process by BRICS and the push towards de-dollarisation. This is reflected in over 30 countries indicating they want to join BRICS.
“In the Global South, including Malaysia, there is growing support for multilateral alternatives to the Bretton Woods system. Asean nations, for instance, had a difficult experience with the International Monetary Fund (IMF) during the 1997 Asian financial crisis,” he said.
He noted that countries in the region are wary of future reliance on Western-led multilateral institutions such as the IMF. “Reduced reliance on the US dollar is seen as a step towards greater economic independence and sovereignty.”
Yeah said de-dollarisation has taken on a greater urgency due to both political and economic factors.
“Politically, the international currency has been weaponised by the US against numerous countries through use of sanctions and confiscation of assets.
“Economically, there are concerns the US economy is on an unsustainable path with its twin deficits and burgeoning government debts,” he said.
He said the “exorbitant privilege” paid by the rest of the world has enabled the US’s spending profligacy reaching a point where countries are seeking to shield themselves should a dollar currency crisis materialise.
BRICS, originally comprising Brazil, Russia, India and China, was established in 2009 as a cooperation platform for emerging economies, with South Africa joining in 2010. The bloc expanded in January this year to include Iran, Egypt, Ethiopia and the United Arab Emirates.