KUALA LUMPUR: BRICS' plans to expand its membership could greatly benefit Malaysia in the oil and gas (O&G) and renewable energy (RE) industries.
MIDF Research said BRICS opens the opportunity for Malaysia to trade natural gas to new markets in China and India, in turn, diversifying its export destination.
"BRICS member countries might be attracted to investment opportunities as well, including joint ventures and technology transfers, boosting its position in the global energy market and ensuring a stable economy amid global economic uncertainties," it said.
However, downside risks include geopolitical tensions from member countries, exposure to currency volatility, regulatory uncertainties, increased regional competitiveness and increased scrutiny from traditional allies and trading partners.
Nevertheless, MIDF Research believes that investing in technology and innovation, strengthening regulatory frameworks and developing strategic reserves could effectively mitigate the risks from BRICS in the long run.
BRICS recently announced the addition of 13 new partner countries, including Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Uzbekistan, and Vietnam.
These countries are not full members yet but have the potential for future full membership.
As of 2023, the international trade suze with BRICS amounted RM376.4 billion or 14.3 per cent of Malaysia's total trade.
Together with BRICS partners, Malaysia's trade with BRICS+ economies accounted 35.7 per cent of total trade in 2023.
China and India are already among Malaysia's top 10 major export markets.
"Being part of BRICS+, Malaysia can tap the growing demand from BRICS+, home to 57.1 per cent of the world's population and accounted for 30.5 per cent of world GDP.
"Malaysia has advantages and capabilities in terms of halal industry, Islamic finance and energy transition," it said.
It added tgat the inclusion of Malaysia and Indonesia as additional members of BRICS would significantly strengthen the bloc's position in the global vegetable oil market, where they currently dominate palm oil production.
Together, Malaysia (23 per cent) and Indonesia (59 per cent) account for about 82 per cent of the world's palm oil production, contributing 66.9 million tonne annually.
MIDF Research said the addition would enhance BRICS's collective vegetable oil output, given that the bloc already produces around 60-80 million tonne various vegetable oils.
"By incorporating these two nations, we foresee BRICS could increase its share of global vegetable oil production to nearly 48-50 per cent, elevating its influence in global agricultural markets.
"On top of that, collaboration in sustainable palm oil practices could address environmental concerns, positioning BRICS as a leader in promoting ESG practices while enhancing food security for member countries," it added.
The BRICS grain exchange would help reduce reliance on westerns commodity exchange such as Chicago Board of Trade (CBOT) and mitigate the impact of geopolitical issues on pricing and trade.
"By agreeing on new pricing indicators that reflect market realities rather than external political shocks, BRICS exchange can optimise production efficiencies, share best practices, and improve trade relationships."
The firm viewed that Petronas Gas Bhd (Buy, TP: RM19.23) will be at an advantage, due to its international footprint in gas processing and distribution.
Its Bintulu LNG Complex serves as a strategic hub for LNG exports, which could be utilised for trading within BRICS.
As for the plantation sector, SD Guthrie (Neutral, TP: RM4.80) will be at an advantage, due to its international downstream operations that produce and market oils and fats, oleochemicals and other derivatives products.