Malaysia's Action and the Future of ASEAN

Malaysia has declared its intention to become a member of the BRICS, which is yet another substantial advancement in the bloc's expansion. Prime Minister Anwar Ibrahim indicated that "we have made a decision, we will be placing the formal procedures soon… we are just waiting for the final results from the government in South Africa." This decision is consistent with Thailand's declaration and is indicative of a more extensive trend among ASEAN economies to engage more closely with BRICS.

Numerous ASEAN members have expressed interest in attending or participating in BRICS+ meetings since the format's introduction in 2017. It is possible that Southeast Asian countries will dominate the next phase of BRICS expansion, following the initial concentration on the MENA/Middle East region, if this trend persists.

Malaysia's trade relations are diverse, with substantial connections to both the United States and China. For the fifteenth consecutive year in 2023, China was Malaysia's largest trading partner, representing 17.1% of Malaysia's total commerce. The first quarter of 2024 witnessed a 3% year-over-year increase, despite a contraction in trade in 2023. In 2022, Malaysia implemented 16 free trade agreements (FTAs), including the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and has capitalized on its export potential through a diverse network of trade alliances.

Malaysia's trade could be further diversified by establishing connections with BRICS+ economies, such as those in MERCOSUR and the African Continental Free Trade Area (AfCFTA), which are not currently included in Malaysia's FTA network.

Indonesia, the largest economy in ASEAN, may strengthen its relationship with the bloc if Malaysia and Thailand become members of BRICS. This "domino effect" has the potential to extend to Vietnam, which has also participated in BRICS+ meetings. The next phase of BRICS expansion could be substantially focused on Southeast Asia as a result of the cumulative build-up in cooperation between BRICS and ASEAN members.

New forums for BRICS+ economic cooperation must be established by BRICS in order to facilitate the development of closer partnerships between ASEAN and BRICS. Vietnam has prioritized trade liberalization as a critical component of future trade cooperation among developing economies. The BRICS+ platform should establish a roadmap for digital economic agreements (DEAs) in light of ASEAN's interest in integrating trade liberalization with advancements in the digital economy and e-commerce.

Please refer to our most recent publication, Malaysia Prepares for BRICS Membership, for additional information regarding the ramifications of Malaysia's decision to join BRICS.

Convergence Criteria and Regional Economic Policy in the Global South

Despite advancements in policy frameworks designed to promote macroeconomic stability, the Global South continues to experience fiscal pressures and elevated debt levels. There is potential to enhance macroeconomic policy frameworks at both national and regional levels in order to confront these challenges. Many regional integration arrangements, including the Gulf Cooperation Council (GCC), the Eurasian Economic Union (EAEU), the Eastern Caribbean Currency Union (ECCU), and regional organizations in Africa such as the East Africa Community (EAC) and the Southern African Development Community (SADC), have implemented convergence criteria that are comparable to those of the EU.

Although these regional convergence criteria are not always as influential as those in the EU, they have the potential to improve economic policy regulations, particularly in the fiscal sector. They could also provide assistance to global and regional development institutions in their coordinated efforts to monitor and stabilize developing economies. The criteria could be customized to emphasize fiscal and debt indicators, with the potential to enhance the EU's model, which is currently in the process of incorporating country-specific debt-sustainability analysis (DSA).

The Global South could derive greater advantages from its regional integration arrangements and development institutions, including the enhancement of frameworks for macroeconomic stability and economic policy regulations and the expansion of intra-regional trade. Empirical studies indicate that the quality of economic policies in regional integration arrangements is positively impacted by regional rules-based frameworks, despite the EU's systemic imperfections.

Please refer to our most recent publication, "Convergence Criteria Across the Regions of the Global South," for additional information regarding convergence criteria in the Global South.

The emphasis on the development of robust economic policies and frameworks will be essential for the maintenance of growth and stability among the diverse member states of BRICS as it continues to expand and gain new members. The potential for ASEAN economies to become members of BRICS represents a substantial paradigm shift toward enhanced regional cooperation and economic integration in the developing world.