How joining BRICS could give Thailand and Malaysia a new economic edge

Thailand and Malaysia are eyeing membership of the bloc of nations, including China and India, as a possible hedge against US economic dominance

When Goldman Sachs’ chief economist Jim O’Neill coined the term BRICS, many Western analysts doubted the economic bloc would live up to the name’s implied solidity.

They pointed to the numerous differences and disagreements within the group and predicted it would have a limited impact on world affairs.

Fifteen years on, however, the group, founded by Brazil, Russia, India, China, and later South Africa has proved its detractors wrong by developing a robustness they didn’t expect.

Ideological differences have been set aside, and the group has met every year.

The bloc has since expanded to include Iran, Egypt, Ethiopia, and the United Arab Emirates, with others queuing up to gain entry.

Among the latest hopefuls are Thailand and Malaysia. If their applications are successful—and they are widely expected to be—they will be the first countries in Southeast Asia to be members. But what do they stand to gain?

Both countries already belong to ASEAN, the regional bloc that aims to strengthen trade and political relations between its 10 members.

Joining BRICS would effectively allow them to play in a bigger league.

A foreign ministry spokesperson says joining BRICS will enable Thailand to “play more roles and promote Thai potential”.

Malaysia’s Prime Minister Anwar Ibrahim says it would give the country more economic and political freedom.

“We should be confident enough to determine our course of action, our priorities, our strategic interests defined on our terms,” he says, announcing his reason for wanting to join the bloc.

As one of the fastest-growing economies in the world, India has injected energy into BRICS.

From being dominated by China, India’s influence has resulted in the group experiencing “an acceleration in economic growth,” says Alicia Garcia-Herrero, a senior research fellow at the Brussels-based think tank Bruegel.

More countries in Asia and Africa view it as an important counterweight to the dominant global bodies led by Western powers

The Covid-19 pandemic, which saw vaccines hoarded by richer countries, left a bitter taste among developing nations, reinforcing the perception of an “us and them” divide.

They have also felt more united on other issues such as politics, human rights, and the environment. Many have grown tired of feeling lectured to by the West and feeling the burden of its conflicts.

BRICS would give Malaysia and Thailand a chance to flex their muscles on a bigger stage than ASEAN, says Norbert Witthinrich, CEO of real estate agency SEA Property.

“As middle powers in Southeast Asia, Thailand and Malaysia see BRICS membership as a way of enhancing their geopolitical influence on the global stage. Membership could also give them a platform to voice concerns and advocate for issues pertinent to developing countries and the Global South,” he says.

Joining the bloc would give them access to a broader network of emerging markets, reducing their reliance on traditional Western markets like the US and the EU, he believes.

Experts like Witthinrich reckon this would benefit most areas of the economy, including big real estate projects.

Entering BRICS would encourage trade between Thailand, Malaysia, and China, most likely in China’s Belt and Road initiatives.

As powers in Southeast Asia, both Thailand and Malaysia see BRICS membership as a way of enhancing their geopolitical influence on the global stage

Some of China’s biggest investments have been in infrastructure projects in the two countries, such as the East Coast Rail Link in Malaysia, which extends to the Thai border.

“The extension of the ECRL to the MalaysiaThailand border and its connection with Thailand’s rail network aims to promote economic linkages and integration between the two countries,” says Beijing-based property consultant James Woo. “This reflects the strategic importance of the Belt and Road Initiative in enhancing regional connectivity and economic cooperation. This could create more opportunities for real estate development, especially for industrial and logistic projects.”

He adds that China’s state-owned enterprises would also be keen to take advantage of the closer ties, having already invested in major factories in both countries making everything from semiconductors to car parts.

“Expanded trade and investment flows could drive demand for real estate, such as industrial, logistics, and commercial properties to support the increased economic activity,” he says.

Access to finance from the bloc’s New Development Bank will be one of the biggest advantages in Thailand and Malaysia joining BRICS, particularly now that Saudia Arabia, with its vast wealth, has joined.

Another plus is the ease of investing in BRICS bloc stock markets, says Clayton Wade, owner of Premier Homes Real Estate.

“Currently, BRICS members can use a single investment vehicle that includes stocks from each country, simplifying the process of trading exchange-traded funds. BRICS investors can purchase stocks across multiple sectors and regions in a single transaction.”

There is, of course, a potential trade-off in all of this, namely in a weakening of the unity and centrality of ASEAN, which has struggled to remain relevant and offer meaningful value to its member states amid shifts in the global order. Experts also concede it might harm relations with the US.

Malaysia is a major recipient of US trade and investment and, along with Thailand, has benefited from the US push to lessen its reliance on Chinese-dominated supply chains. Thailand, meanwhile, is formally a US treaty ally.

Yet rather than seeing US businesses shy away from the two countries, it could trigger a fight for influence.

“The intention to join BRICS could prompt Western countries to enhance their investments in Malaysia, or even encourage [Malaysia] to consider applying for membership in Western-aligned alliances, such as the OECD,” says Wen Chong Cheah, an Asia-Pacific analyst at the Economist Intelligence Unit.

For the two countries, the wars in Gaza and Ukraine and growing tensions around Taiwan and the South China Sea reflect a lurch towards an increasingly multipolar world in which US power has been eroded and China’s has been enriched. By attempting to join BRICs, they appear to be hedging their bets for the future.

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