Malaysia’s Shift to BRICS: From Hedging to Bandwagoning

Malaysia’s aspirations to join the BRICS economic bloc signal a significant shift in its international economic approach. Traditionally navigating the complex US-China rivalry through a hedging strategy, Malaysia now appears to be aligning itself more closely with the non-Western economic grouping of BRICS.

The Rise of BRICS and Malaysia’s Motivations

BRICS, comprising Brazil, Russia, India, China, South Africa, Iran, Egypt, the United Arab Emirates, and Ethiopia, has positioned itself as an alternative to the Group of Seven (G7). This appeal resonates with Malaysia, particularly amidst concerns regarding Western economic hegemony and disagreements with the West’s stance on the Israeli-Palestinian conflict.

Malaysian Prime Minister Anwar Ibrahim has heralded the end of the unipolar world order and sees China, the leading force in BRICS, as a potential counterbalance to Western dominance. Minister of Economic Affairs Rafizi Ramli stresses the marginalization of the Global South in existing economic structures and highlights BRICS as a vital counterforce.

BRICS: Opportunities for Economic Influence

Malaysia’s leadership perceives joining BRICS as a chance to shape the future of regional economic governance, similar to the impact of the Bretton Woods system. Anwar’s efforts to revive the Asian Monetary Fund, though unsuccessful, demonstrate Malaysia’s desire for a more prominent role in regional financial affairs.

BRICS offers several advantages. It provides access to institutions like the New Development Bank, the Contingent Reserve Arrangement, and BRICS Bridge, all of which offer alternatives to existing Western-dominated financial systems. Moreover, BRICS offers access to vast emerging markets and aims to reform global economic governance to include the voices of emerging economies.

Decoupling from the US Dollar

Malaysia seeks to reduce its reliance on the US dollar in international trade and investment. While the US’s share in Malaysia’s trade has decreased, the dollar still dominates trade settlements. This dependence raises concerns about increased business costs and vulnerability to US dollar volatility.

Malaysia’s central bank has implemented measures to increase flexibility in its foreign exchange policy, allowing trade and investments to be settled in Malaysian ringgit. As a result, the use of local currencies in trade with China, Thailand, and Indonesia has significantly increased, saving Malaysia billions of dollars.

Toward Military Cooperation?

Minister Tengku Zafrul Aziz acknowledges that BRICS expansion will help balance Western influence in global trade and finance. He even raised the possibility of future military cooperation within BRICS. This move, coupled with Malaysia’s clear ambition to join the bloc, suggests a significant shift from hedging to bandwagoning with BRICS.

Looking Ahead: BRICS on the Horizon

While it’s too early to declare a complete shift in Malaysia’s security policy, the significance of BRICS in Malaysia’s future strategy is undeniable. The country is likely to prioritize its relationship with BRICS members in the coming years.

Want to learn more about Malaysia’s evolving role in the global economic landscape? Stay tuned for future updates on this dynamic situation.