One growing trend in 2024 has been increase in the number of nations, including several from Southeast Asia, finding greater value in deepening relations with other groups or blocks of nations such as BRICS (Brazil, Russia, India, China, and South Africa). The governments of Malaysia, Indonesia, Thailand, and Vietnam have taken different approaches in aligning with BRICS, either applying for full membership or partnering status. This development comes at a moment of growing uncertainty about global trade policies and their impacts on trade and investment in ASEAN, resulting from the incoming Trump Administration’s potential changes in US trade policy.
Recent Developments
In July 2024, the Government of Malaysia filed its application to formally join BRICS, alongside Indonesia and Thailand, which also announced their intent to join. The Government of Vietnam has sought to be designated as a BRICS partner. At the October 2024 BRICS summit in Kazan all four ASEAN nations were officially recognized as BRICS partners, alongside nine other countries, signaling a growing interest by ASEAN nations in BRICS.
The motivation for joining BRICS varies. For Malaysia, a Muslim-majority state critical of U.S. policies in Palestine, joining BRICS offers a platform to voice its international aspirations. Thailand views BRICS as a vehicle to protect its interests as a developing country without signaling a full pivot to China, reflecting its historical position balancing between the U.S. and China. Indonesia’s approach under President-elect Prabowo Subianto emphasizes economic diversification and leadership within the Global South.
Strategic Implications for Southeast Asia
The bloc, now expanded to include Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE, represents 45% of the global population, 25% of global trade, 40% of global oil production, and 28% of global GDP. Beyond economic gains, it offers a hedging mechanism against Western economic dominance.
BRICS' appeal in Southeast Asia is rooted in its ability to accommodate diversity and affirm sovereignty, aligning with ASEAN principles. As a result, countries such as Laos, Cambodia, and Myanmar have also expressed interest, spurred by Indonesia’s initial application in late 2023. Malaysia and Thailand are exploring BRICS membership as a way to mitigate economic vulnerabilities, enhance market access, and navigate shifting geopolitical dynamics.
Malaysia
Prime Minister Anwar Ibrahim has highlighted BRICS' inclusivity as being consistent with Malaysia’s approach to international relations. Malaysia’s engagement with China, including meetings with the Chinese Prime Minister following its BRICS application, underscores its intent to balance U.S. and Chinese influence. While Malaysia participates actively in U.S.-led Indo-Pacific initiatives, it values BRICS as a means of preservation of its autonomy and economic resilience via economic diversification. On the economic front, Malaysia’s engagement with the New Development Bank (NDB) at the BRICS summit underscores a need for financing development priorities. While the NDB’s modest investment of US$33 billion to date requires scaling, Malaysia views this as a pathway to broader economic opportunities.
Thailand
A longstanding U.S. ally, Thailand’s decision to engage with BRICS reflects its focus on South-South cooperation. Thailand’s economic ties with China, its largest trade partner, and its participation in Western alliances like the OECD illustrate its balancing act. Joining BRICS serves as part of Thailand’s broader grand strategy to assert itself as a regional leader among developing nations. With BRICS countries accounting for nearly 23% of Thailand’s total trade, membership offers new market access and economic security.
Indonesia
Indonesia’s intent to join BRICS aligns with President-elect Prabowo’s ambition for Indonesia to be a leading nation in the Global South. Indonesia’s participation in multiple international blocs, including its recent acceleration for its bid to OECD membership, highlights a pragmatic approach to economic health. Prabowo’s emphasis on finding diverse economic opportunities reflects Indonesia’s desire to hedge against uncertainties in U.S. trade policies and strengthen its geopolitical influence.
Economic Considerations and Trump’s Presidency
The re-election of Donald Trump has raised significant uncertainty about future U.S. economic policies, particularly the potential for increased tariffs and a return to protectionist measures reminiscent of his first term. During his previous administration, tariffs on Chinese goods exceeded 60%, and Trump's proposals for blanket tariffs, including a 10% levy on all imports, pose a serious risk of disrupting supply chains across Southeast Asia. For export-driven economies such as Vietnam, Thailand, and Malaysia, these measures could lead to reduced market access, rising costs for businesses, and a potential slowdown in economic growth.
A U.S. absence from key regional trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), has already impacted its role as a trade policy leader in the Indo-Pacific region. BRICS can provide additional alternatives for Southeast Asia nations to hedge against the volatility and unpredictability of U.S. trade policies by securing stable partnerships, diversifying trade channels, and reducing dependence on a Western-centric economic order.
The incoming Trump Administration’s protectionist stance could severely impact Southeast Asian economies that rely heavily on exports to the U.S. For instance, Vietnam’s trade surplus with the U.S. is substantial, making it particularly vulnerable to any disruption in trade relations. Similarly, Thailand, which has extensive trade links with the U.S., faces risks related to supply chain shifts and increased tariffs on its exports. To mitigate these risks, Southeast Asian nations see increased value in participating in alternative economic alignments.
One potential economic benefit for BRICS-aligned Southeast Asian nations is the establishment of the BRICS Grain Exchange, proposed by Russia. This initiative offers a new platform for agricultural producers to access diversified and stable markets. Countries like Malaysia, a major palm oil exporter, and Thailand, a leading rice producer, stand to gain from more predictable market access and reduced exposure to currency fluctuations tied to the U.S. dollar. This would allow nations to achieve greater price stability, mitigate the impact of Western-driven market forces, and create new revenue opportunities.
Access to BRICS’ New Development Bank (NDB) also presents a financial advantage for countries like Malaysia and Indonesia. The NDB offers additional access to noncommercial lending facilities at internationally competitive rates with fewer conditionalities compared to traditional Western-led Bretton Woods institutions like the International Monetary Fund (IMF) and the World Bank. This diversifies nations’ sources of fiscal liquidity and infrastructure development funding.
Potential Benefits for the U.S.
Joining BRICS does not mean that ASEAN nations are anti-U.S. -- BRICS’ expansion does not necessarily represent a loss for the U.S. As more Southeast Asian countries join BRICS, consensus-based decision-making within the bloc may dilute the influence of Moscow and Beijing. ASEAN norms of strict sovereignty and non-alignment will continue to shape member states’ foreign policies, preventing explicit alignment with Russia or China.
Moreover, Southeast Asian nations have shown a mixed response to Russian actions in Ukraine, with countries like Thailand and Malaysia voting with the U.S. at the United Nations General Assembly in March 2022. This suggests that BRICS membership may not lead to a fundamental shift in alignment but rather reflects a strategic hedge against global uncertainties.
For U.S. firms, this means that ASEAN’s engagement with BRICS should be seen as an enhancement of its global economic role, rather than a pivot away from established economic partnerships. The stability and diversification that ASEAN brings to BRICS stemming from its proven track record in developing regional frameworks post-1997 Asian Financial Crisis, are likely to bolster the group’s effectiveness. This participation could create a more stable investment climate for US companies operating in or considering entering these markets.
Conclusion
In a sense, BRICS could potentially need ASEAN more than it needs the other. Understanding that this move is not about replacing the US dollar-dominated economy but rather expanding the global economic frameworks can position US firms to explore new financial instruments or markets that might emerge from these initiatives. They could leverage ASEAN’s influential position within BRICS to foster connections and collaborations that benefit from both ASEAN’s regional strength and BRICS’ global aspirations. These dynamics could involve engaging in trade negotiations or developing joint ventures that capitalize on ASEAN’s strategic initiatives and BRICS’ resources. Understanding and engaging with these dynamics can lead to significant business opportunities in both new and existing markets.
