LIMA, Peru: Malaysia's participation in two major international summits, the Asia-Pacific Economic Cooperation (Apec) in Peru and the G20 Summit in Brazil, is expected to strengthen the country's economic ties on the global stage.
Prime Minister Datuk Seri Anwar Ibrahim's attendance at these high-profile conferences brings significant potential, but Malaysia also faces several challenges, according to the Malaysian Institute of Economic Research executive director Professor Dr. Anthony Dass.
Dass said Malaysia should view the Apec summit as a platform to enhance trade with countries in the Asia Pacific region.
Data shows that about 82 per cent of Malaysia's total trade in 2022 was with Apec member countries, with major exports such as electronics, palm oil and petroleum amounting to around US$250 billion (RM1.1 trillion).
"The Latin American market, especially Brazil, a member of BRICS, offers potential for Malaysia to diversify its export markets. In 2022, Malaysia-Brazil trade stood at around US$3 billion (RM13.2 billion), but sectors like palm oil, rubber and electrical products still have room for expansion," he said.
He added that the summit also provides Malaysia an opportunity to highlight its commitment to global issues like climate action.
Malaysia aims to be carbon neutral by 2050 and has set a target of 31 per cent for its energy mix to come from renewable sources by 2025.
Dass said although Malaysia's participation in the G20 summit is by invitation, it provided an opportunity for Malaysia to highlight its efforts in the green economy, attracting green investments that are projected to reach US$15 billion (RM 66 billion) next year.
In addition, the digital economy, which contributed about 23 per cent to Malaysia's GDP in 2022, is another area of focus.
Through the MyDigital framework, Malaysia plans to increase contribution from the digital economy to 25.5 per cent by 2025.
By participating in these summits, Malaysia has the opportunity to partner with technology leaders, which in return can strengthen digital infrastructure, contributing an additional US$25 billion (RM110 billion) to the economy over the next five years.
In terms of investment, Malaysia is enhancing its renewable energy sector, particularly solar energy, to achieve its goal of 31 per cent of electricity generation from renewable sources by 2025.
The G20 summit, attended by international investors, provides Malaysia the opportunity to attract more foreign investments in this sector.
"In 2022, Malaysia succeeded in attracting around US$30 billion (RM 132 billion) in foreign direct investment (FDI), primarily in the manufacturing sector. Anwar's presence at Apec and the G20 can strengthen Malaysia's position as a manufacturing hub for semiconductors and electronics," Dass added.
However, Malaysia faces significant challenges, notably addressing the geopolitical tensions affecting the world.
The trade conflict between the United States and China, two of Malaysia's major trading partners, requires a cautious approach to ensure that Malaysia can maintain its trade networks without compromising its projected GDP growth of around 4.5 per cent in the coming years.
The Russia-Ukraine conflict has also impacted global energy prices, affecting inflation in Malaysia, which is projected to average 3.3 per cent in 2023.
If the conflict persists, rising energy costs may put pressure on the country's fiscal stability and social spending.
Malaysia also faces the challenge of adapting to the different agendas of Apec and the G20.
Apec focuses more on regional trade integration in Asia Pacific, which aligns with Malaysia's interests, while the G20 emphasises global economic issues and climate change.
Malaysia's ability to adjust its stance to align with each agenda is key to driving both direct and indirect benefits for long-term GDP growth, which is targeted at four to five per cent per year.
Public expectations for immediate results from Malaysia's participation on the global stage may present another challenge.
Malaysia's economic forecast for 2024 is expected to slow slightly to around 4.0 to 4.5 per cent, compared to 5.9 per cent in 2022, due to global uncertainties, making the management of public expectations a critical factor in ensuring domestic support stability.