On Sunday, Prime Minister Datuk Seri Anwar Ibrahim confirmed that a formal application had been sent to Russia, the current BRICS chair.
Russia’s top diplomat Sergei Lavrov, who called on him as part of a two-day working visit, welcomed Malaysia’s interest in the group and pledged he would support the aspiration.
BRICS, an acronym, is derived from the original members – Brazil, Russia, India and China – which formed the bloc in 2006, and South Africa, which joined in 2010.
As of now, more than 40 countries have expressed interest in joining BRICS, the latest being Malaysia, after Thailand which applied last month.
At the 2023 BRICS Summit, six countries were invited to become members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates. All except for Argentina joined the union in January 2024.
BRICS now accounts for about 45% of the global population and 30% of the world’s land area, giving it significant political and economic influence.
The combined members’ economies are worth more than US$28.5 trillion (RM132.3 trillion), or about 28% of the global economy.
While Malaysia and Thailand might hope for quick accession, including as early as during the next summit in Kazan, the capital of Tatarstan, Russia, in October, the inclusion of new emerging economies is likely to be postponed to at least until next year.
Based on a recent statement by Lavrov, the majority of the member countries prefer to put further expansion on hold for full integration of the newly acceded nations.
The likely immediate status for Malaysia and Thailand may be strategic partnerships in the form of participation in BRICS Plus meetings and inclusion into the group’s “circle of friends” – an initiative to be introduced at the next summit.
There is no doubt that BRICS has emerged as a force that is changing the balance of power towards a more multipolar world.
Just last week, the bloc announced plans for its own financial messaging system to rival SWIFT (Society for Worldwide Interbank Financial Telecommunication) in a groundbreaking move to lessen reliance on the US dollar and restructure international trade.
Most cross-border transactions are now settled using SWIFT, so by leaving the system, BRICSs could get fairer leverage and avoid sanctions.
We understand that local currencies would be used for trade settlements under BRICS’ new scheme, eliminating reliance on US dollars within the bloc.
Deputy chairman of the Russian State Duma Alexander Babakov said the alternative to SWIFT was necessary for BRICS to push its de-dollarisation agenda ahead.
“It is necessary to create a new system of financial institutions. The new system must be technically compatible with the existing infrastructure of participating countries, which includes integration with national payment systems, banks and other financial institutions.
“At the same time, the system must ensure a high level of security and data protection to prevent cyberattacks and unauthorised access to information,” he said.
Sanctions, other existing challenges and aggressive US foreign policies have also prompted the BRICS countries to explore the possibility of a new reserve currency to challenge the US dollar, which currently plays an overriding role in cross-border trade and finance.
Understandably, BRICS sees this as the only way to serve its own economic interests and reduce global dependence on the US dollar, which now accounts for about 90% of all currency trading.
In any case, the rise of the BRICS nations has already led to an expanding counterbalance to the long-held prepotency of the G7 countries – Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
Almost 100% of trading in oil was conducted in US dollars until recently, but things have changed. Last year, the usage of US dollars dropped by 20%, with transactions for oil using non-dollar currencies taking up one-fifth of contracts.
The eventual BRICS currency would ensure that these nations would be able to assert their economic independence while competing with the existing international financial system.
Aside from the “weaponisation” of US currency, there is no logical nor valid reason for bilateral trade that does not involve the United States to go through the dollar, especially for balanced trades between countries with reasonably stable economies.
Also, the situation is more political rather than based on any economic sense.
By 2018, the BRICS countries had overtaken the G7’s share of the world’s total gross domestic product in terms of purchasing power parity.
According to Statista, the difference has increased even further with BRICS now holding 35% of the world’s GDP compared with 30% held by G7 countries.
As a trading nation, Malaysia must hedge its strategies and expand its financial network beyond existing trade partners and also aim to benefit from relationships with all major economic and political powers.
By aligning with the emerging economies under BRICS, Malaysia can not only have access to new markets and investment opportunities but also secure stable growth and surmount unfair Western dominance.
As analysts have highlighted, joining BRICS would effectively shield the country and the region from the domination and vicissitudes of American financial policy and currency volatilities, effectively ensuring predictability and reducing costs for importers and exporters.
Malaysia also stands to benefit as a member of the Asian Infrastructure Investment Bank (AIIB), which is closely linked to BRICS’ New Development Bank (NDB) that is aimed at funding infrastructure projects, sustainable development and economic cooperation.
BRICS set up NDB 10 years ago largely as a response to the US-controlled and funded World Bank and the UN’s International Monetary Fund (IMF).
The voting rights of these institutions are determined by the size of economies rather than populations. This is grossly unfair for BRICS’ nations, which collectively carry a population exceeding three billion people.
Media consultant M. Veera Pandiyan likes this quote from Albert Einstein: ‘Knowledge is realising that the street is one way; wisdom is looking in both directions anyway.’ The views expressed here are entirely the writer’s own.
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