News

Malaysia has decided to apply for BRICS membership and will start filing the official paperwork soon, Malaysian Prime Minister Anwar Ibrahim has said. Existing BRICS member South Africa has agreed to accept a request. Anwar said “We have made our policy clear and we have made our decision. We will start the formal process to join BRICS soon. We are waiting for the final result and the feedback from the South African government.”

Kuala Lumpur’s potential membership in the organization would be of strategic significance, as one of the world’s most important shipping lanes — the Malacca Strait, connecting the Pacific and the Indian Ocean — is located between Malaysia and the Indonesian island of Sumatra.

According to Anwar, Malaysia is “relieved” that the world is no longer unipolar, and that the rise of BRICS and China in particular has offered “a glimmer of hope that there are checks and balances in the world.”

The West wants to “control the discourse” in the world, but “we can no longer accept it because they are no longer a colonial power and independent countries should be free to express themselves,” Anwar said.

Earlier this month, Russian Ambassador to China Igor Morgulov said that about 30 countries have voiced a desire to join BRICS. In South Asia, Thailand, Sri Lanka and Vietnam have already made requests to join. Russian President Putin has visited Vietnam in June 19. 

Malaysia has a population of 34 million and a GDP (PPP) of US$1.3 trillion. It is a liberal Muslim country, and has a significant tourist industry. Its main exports are petroleum along with other natural and agricultural resources, including rubber and palm oil. It has significant manufacturing and service industries.

Russia Malaysia 2024 Trade & Development

Total Russia-Malaysia trade reached about US$3.2 billion in 2023, with about US$2.1 billion of this being Russian exports. Malaysia remains a key importer of Russian agricultural products, bringing in grains, oilseeds, meat, and dairy products. In return, Russia receives palm oil, rice, and fruits from Malaysia. Energy resources, primarily oil and gas, along with metals and chemical products, form the crux of exports from Russia to Malaysia.

Malaysia reciprocates with exports of cars, electronics, rubber, and palm oil. Russia is also interested in exporting Malaysian high-tech equipment.

Malaysia is also one of Asia’s largest semiconductor exporters with an annual volume of US$8.7 billion. The electronics sector contributes almost 6% of Malaysia’s GDP. Russia is also interested in medical products, and medical equipment, in particular in the field of dentistry. Around 31-32% of Malaysian exports to Russia are electronic goods. Malaysia has a developed auto industry, in particular the Proton and Perodua brands. In 2022, the country produced more than 700,000 cars — more than Russia.

Given the flight of Western companies from the Russian market the latter is now more open to the influx of Malaysian cars. This fits into the overall shift that is taking place in Russia since early 2022 — Asian car brands are becoming increasingly attractive to Russian customers.

Russian and Malaysian companies have now increasingly been switching to payments in Chinese RMB Yuan, UAE Dirhams, and other currencies. Yet for this mechanism to work, there must be common elements between participating states. Among the most important elements is the issue of determining the volume of trade and investment, which should be significant for payments in non-dollar currencies to be effective.

Another strategic move by the two countries to boost trade and investment is the finalization of a new Double Tax Agreement (DTA) between the two nations. This treaty aims to streamline and simplify the tax regime for businesses operating in both countries, fostering a more conducive environment for mutual investments. This treaty will set a standard 15% withholding tax rate on dividends. A 10% concessional rate will apply to recipients who hold a minimum of 25% of the capital in the dividend-distributing company. This follows an agreement signed in 2019 which covers mutual cooperation and the development of relations between Russia and Malaysia.

In a noteworthy event in May 2023, the “Russia — Islamic World: Kazan Forum” provided an avenue for detailed discussions on trade. Within this forum, the “Russia-Malaysia” segment facilitated by the Trade Mission of the Russian Federation in Malaysia and the Ministry of Economic Development of the Russian Federation explored ways to further amplify the trading relationship.

Both countries recognize the need for deeper bilateral and EAEU-ASEAN cooperation. In this regard, there are still notable challenges to address, particularly relating to standards and adherence. ASEAN remains predominantly driven by trade motivations, not geopolitics. While there are administrative hurdles to overcome and trade discussions to finalize, the potential trade alliance between ASEAN and EAEU is a development that is emerging and will benefit both sides. Initiatives are being set in motion for the creation of fresh supply chains.

Malaysia’s 2023 GDP growth was 3.8%.

Russian Deputy Prime Minister Marat Khusnullin has stated that Russia’s trade turnover with the member countries of the Organization of Islamic Cooperation (OIC) in 2023 increased by 30% in 2023. He was speaking at the 2024 KazanForum “Russia & the Islamic World.”

“Thanks to this event, we have become even closer with our colleagues – Muslim countries. Our trade turnover is increasing. I can say that over the past year our trade turnover with the countries of OIC increased by 30%.” Khusnullin told reporters.

The OIC includes 57 member states, 48 of which are Muslim-majority. The organisation claims to be “the collective voice of the Muslim world” and works to “safeguard and protect the interests of the Muslim world in the spirit of promoting international peace and harmony”. Russia has observer status.

Knusnullin said there have been more tourist exchanges between Russia and OIC states, and that the volume of exports and imports of products between Russia and OIC members have increased.

The OIC has a combined population of about 2 billion and a collective GDP (PPP) of US$27.949 trillion. It is headquartered in Jeddah, Saudi Arabia.

KazanForum is a platform for strengthening trade, economic, scientific, technical, social and cultural ties between Russia and OIC countries. The forum received federal status by a presidential decree in 2023.  The event took place in Kazan, the capital of Russia’s Tatarstan region, often referred to as a third capital of the country. Kazan will also be the venue for the 2024 BRICS summit. 

Rustam Minnikhanov, the head of Russia’s Tatarstan Republic and Chairman of the forum said that Islamic countries will make an important contribution to the safe development in the multi-polar world order. “When it comes to key spiritual and moral values, Orthodox Christianity and Islam are similar and close,” Minnikhanov told the conference. “This applies, in particular, to human rights and family fundamentals. I am sure that positive interaction and partnership between Russia and the Islamic world will make an important contribution to secure development in a fair multipolar world order.”

The Russia-Islamic World group includes former high-level leaders, representatives of science and the public, business circles and religious figures representing both Islam and Orthodox Christianity.

The heads of state of the Eurasian Economic Union (EAEU) countries met in Moscow in May 2024 to discuss the ten-year progress since the bloc was formed and make plans for future development. The event was attended by the five heads of state from Armenia, (Prime Minister Nikolai Pashinyan) Belarus (President Alexander Lukashenko), Kazakhstan, (President Kassym-Zhomart Tokayev), Kyrgyzstan (President Sadyr Zhaparov) and Russia, (Vladimir Putin) while Cuban President Miguel Mario Diaz-Kanel Bermudez and the President of Uzbekistan, Shavkat Mirziyoev were in attendance as observers.

The Presidents of Tajikistan (Emomali Rahmon) and Turkmenistan (Serdar Berdimuhamedow) attended a later EAEU dinner.

Russian President Putin applauded the bloc’s development, stating the EAEU has performed well over the past decade and established itself “as an independent and self-sufficient center of the emerging multipolar world.” The EAEU strongly adheres to its “main principles of integration cooperation,” namely “equality, mutual benefit, respect for and consideration of each other’s interests,” Putin noted.

“The economic indicators speak for themselves: according to available estimates, over the ten years the joint GDP of the EAEU countries went from US$1.6 trillion to US$2.5 trillion. Trade with third countries grew by 60% from US$579 billion to US$923 billion, while the volume of mutual trade almost doubled: from US$45 billion to US$89 billion, with over 90% of transactions already made in national currencies,” Putin stated, noting that positive macroeconomic trends have been observed within the EAEU this year as well. These figures suggest an annual, sustained EAEU growth rate of about 6-7% over the past ten years. 

The EAEU has proven to be beneficial not only to its member states, but to the broader Eurasian region, the president stated. The union “helps ensure stable and sustainable development both of the five member countries and the Eurasian region as a whole, and results in improving the quality of life and wellbeing of our people,” he said.

The EAEU is effectively a successor to the Eurasian Economic Community, a now-defunct group that existed between 2000 and 2014 but was dissolved soon after the EAEU treaty was signed. It fills a geographic space between Eastern Europe and Western China.

Russian Deputy Prime Minister Aleksey Overchuk said that trade turnover within the EAEU could exceed US$100 billion during 2024. “This, in fact, is evident from the statistics. Last year, we reached a record turnover at US$84 billion, this year we also have good growth. The year, of course, is not over yet, but there are some forecasts that we will exceed US$100 billion.”

According to Overchuk, the trade growth stems from the fact that EAEU members have succeeded in creating favorable conditions for businesses to interact within the bloc so that “business representatives within our five countries believe that it is most convenient for them to work with each other.”

A great deal of Russian consumer products, including fruits and vegetables that it previously bought from European producers are now sourced from EAEU members. The EAEU itself has achieved food security and is not dependent upon external suppliers.

Russia has stepped up efforts to expand trade and other facets of economic cooperation with allied nations as it faces Western sanctions. The country has also been actively switching trade from dollars and euros to national currencies. According to recent estimates, the share of national and other ‘friendly’ currencies in Moscow’s trade with EAEU reached 76% in 2022 and is expected to grow to 90% this year.

Concerning Cuba, Putin said that he expected that Cuba’s participation in the EAEU will be useful for all parties. At a meeting with Cuban President Miguel Diaz-Canel, Putin drew attention to the participation of the Cuban leader in the EAEU summit in Moscow on May 8, noting that this association is “one of the most efficient in the post-Soviet space. Cuba is taking part in it as an observer, and I hope that it will have results.” Putin said. Cuba-EAEU trade has been targeted for growth although it is apparently too early for a Free Trade Agreement to be put into place.

There is to be an EAEU-Mongolia FTA however, with the EAEU bloc voting to support such an agreement. In addition, the participants adopted a draft protocol on electronic exchange of information between the EAEU and Vietnam under the electronic system for certification and verification of origin of goods, within the context of the EAEU-Vietnam FTA.

Belarussian President Alexander Lukashenko meanwhile talked up the possibility of further trade development and especially between the EAEU and Africa. He said that “It is important to systematize the process of establishing partner relations between the EAEU and third countries, and in our view, this needs to be systematized. In current geo-economic conditions, it should be clearly determined with what countries in what sequence and within what kind of timeframe a free trade zone will be formed, and with what potential partners there may only be interaction within the framework of appropriate memorandums.”

This indicates Lukashenko envisages a ‘two-tier’ trade agreement approach, with Tier One being full FTA, and Tier Two trade agreements on a G2G memorandum basis.

Lukashenko went on to recall the signing of a full-scale trade agreement with Iran. The process of strengthening mutually beneficial cooperation in the format of the Five with much-promising and friendly Asian nations, including India, Indonesia, and the UAE is also underway, he said.

The Belarusian president also noted that the EAEU has by now paid little attention to dialogue at the EAEU level with the African Continent. “Africa needs a broad list of our products, works, services and technologies. Africa, as well as Latin America, is fed up with colonialism from certain leading nations. And this is the point when we should come to Africa.”

Parallel participation by EAEU countries and their partners within the CIS in the Shanghai Cooperation Organization and BRICS also opens up huge benefits, he said.

The information agency "AK&M" summed up the results of the past year on the Russian mergers and acquisitions market. Here are a number of the most interesting indicators from the statistics of purchases and sales of ready-made businesses in Russia:

• the total value of transactions reached 50.5 billion US dollars (an increase of 18.7% by 2022);
• average transaction cost — 94.4 million US dollars;
• the number of transactions exceeding USD 1 million reached 536 (an increase of 4.3% by 2022);
• state-owned companies play a leading role in the M&A market and have bought almost a quarter of businesses in this market (23.8% of the total value);
• 8 transactions on the market exceeded the value of 1 billion US dollars.

The Russian Ministry of Finance, together with the Central Bank and BRICS partners, will prepare a number of initiatives to create an independent international monetary and financial system. The result of this work may be, among other things, the creation of a digital settlement and payment platform BRICS Bridge. This is stated in a message on the website of the Ministry of Finance.

A meeting of finance ministers and central bank governors of the BRICS countries took place in Sao Paulo. Russian Finance Minister Anton Siluanov and First Deputy Chairman of the Bank of Russia Vladimir Chistyukhin presented the main directions of work in this area.

"The current system, based on the existing Western financial infrastructure and the use of reserve currencies, has a number of fundamental shortcomings. Such infrastructure must be accessible to everyone," — Siluanov said.

The Russian side is positioning the improvement of the international monetary and financial system as the main theme of its BRICS chairmanship. Based on the results of 2024, the Russian Ministry of Finance and the Bank of Russia, together with the association partners, will prepare a report to the leaders of the BRICS countries on this issue.