Push ahead with BRICS, economists say, despite Trump's threat

New Straits Times

14 hours ago

KUALA LUMPUR: Malaysia is on the right track by embracing multilateralism and strengthening ties with rising economic powers like BRICS, as global trade tensions and geopolitical shifts continue to unfold, economists said.
They said Malaysia should deepen its engagement with the Global South and move quickly towards full BRICS membership, despite warnings from the United States of possible penalties for backing the bloc.
"Malaysia, for now, is doing the right thing, that is, to focus on multilateralism," said Universiti Utara Malaysia (UUM) Associate Professor Dr Irwan Shah Zainal Abidin.
"With the US, Malaysia should continue engaging with them through mutual respect and inclusivity without compromising our own interest," he told Business Times.
On Sunday, US President Donald Trump announced that any country supporting the "anti-American policies" of the BRICS alliance will face an additional 10 per cent tariff.
In a post on Truth Social, a platform owned by Trump Media and Technology Group, the former president said the policy would apply "without exception".
Irwan said Malaysia will likely be hit with the additional 10 per cent tariff, with the impact of the reciprocal tariffs remaining uncertain.
"Already, our exports fell 1.1 per cent on a yearly basis in May this year. An additional 10 per cent on top of the reciprocal tariffs will not be good for the development of the Malaysian economy.
"It might impact Malaysia's gross domestic product growth forecast this year, and I think a reduction of 25 basis points for the overnight policy rate in the near future is warranted," he added.
Irwan said that while global supply chains may face disruptions, no party has a genuine interest in dismantling them entirely.
"For Malaysia, it is actually a blessing in disguise, if we know how to manoeuvre it well. Malaysia must play its role as a middle power, not taking sides and stay neutral," he said.
Associate Professor Aimi Zulhazmi Abdul Rashid from Universiti Kuala Lumpur Business School said a 10 per cent tariff by a potential Trump administration would impact Malaysia's exports.
He said semiconductors, which make up about 60 per cent of Malaysia's exports to the US, would be the most affected.
"Other exports like gloves, furniture and machinery will be more expensive in the US. However, whether Malaysia's products will be less competitive than other countries will only be known when other countries also completed their trade negotiations with the US.
"The customers in the US eventually will have to pay more unless they find alternative sources of production," he said.
Aimi said that as a trading nation, Malaysia must remain highly adaptable and strike a careful balance between its political and economic interests on the global stage.
"Malaysia also needs to collaborate in a group like Asean in order to continue to be significant in multi lateral trades with all nations," he said.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the Malaysian government has carried out due diligence and scenario planning.
Afzanizam said since the Trump tariff is beyond its control, the government must take a pragmatic approach in addressing the issue.
"In essence, the government is still practicing non-partisan but at the same time, they are also exploring other opportunities. They need to be tactful as it is quite a fine line in respect to foreign and trade policy," he added.
On whether the tariff regime would impact investor confidence, Afzanizam said foreign investors evaluate countries based on various factors.
He said ultimately, they invest where they believe their capital will generate returns that exceed their initial investment.
"My take is that the Malaysian government would just need to be clear on their narratives and execute them accordingly.
"We have various policy documents such as Ekonomi Madani framework, New Industrial Master Plan 2030, National Energy Transition Roadmap, National Semiconductor Strategy and soon, the 13th Malaysian Plans to be tabled at the end of July," he added.
Malaysia's engagement with BRICS
Malaysia's involvement with BRICS, the economic bloc comprising Brazil, Russia, India, China and South Africa, has gradually evolved from informal alignment to formal participation.
In June 2024, Prime Minister Datuk Seri Anwar Ibrahim expressed Malaysia's interest in joining BRICS during a meeting with Brazilian President Luiz Inácio Lula da Silva.
This move marked a shift in Malaysia's foreign policy posture, positioning the country more actively within the Global South.
Anwar later reinforced this intent during a working visit to Russia in September, where he met with President Vladimir Putin and discussed Malaysia's aspirations to strengthen cooperation through BRICS.
Malaysia's momentum was acknowledged at the 16th BRICS Summit in Kazan, Russia, in October 2024.
In January 2025, the country was welcomed as one of 13 new "partner countries," a designation that allows for greater engagement in trade, investment, and policy dialogues within the bloc, though without full membership status.
In April 2025, Foreign Minister Datuk Seri Mohamad Hasan represented Malaysia at the BRICS Foreign Ministers' Meeting in Rio de Janeiro.
There, he called for stronger Asean–BRICS linkages and emphasised Malaysia's position as a regional bridge advocating for sustainable growth, resilient supply chains, and inclusive multilateralism.
Currently, Anwar is attending the 17th BRICS Summit in Rio de Janeiro from July 6-7, 2025, as part of his working visit to Brazil.
His presence underscores Malaysia's increasing involvement in BRICS, particularly as it seeks to advance Global South interests while maintaining pragmatic ties with traditional economic partners.