KUALA LUMPUR: Malaysia should leverage on the trade and investment opportunities that are present in Asean to maintain growth in the longer term.
Maybank Investment Banking Group (IBG) head of equity research Anand Pathmakanthan said there have been "distractions" with Malaysia's association with BRICS and how Donald Trump's second presidency will affect the country.
"The biggest opportunity for Malaysia to maintain more than five per cent growth is to do more in our backyard. BRICS is nowhere as cohesive, as important a body to Malaysia, as Asean. The opportunities within Asean integration are massive.
"When you look at intra-asean foreign direct investment or intra-Asean trade, the ratios are half of what they are in the European Union (EU) or the North American Free Trade Union or now known as the United States-Mexico-Canada Agreement.
"So why is Asean not doing more to integrate with fellow neighbours and reap the benefits which the EU, United States, Mexico and Canada have done to elevate their economic potential?" he asked during a panel discussion at the ICAEW Malaysia Economic Insight 2024 here today.
Anand added that Malaysia should also focus on fixing the inefficiencies in the economy which he said has a lot to do with institutions and processes involved.
"If we fix those, we have a lot of quick wins and all of that is not dependent on who is in the White House," he added.
Bursa Malaysia chairman Tan Sri Abdul Wahid Omar seconded the notion that Malaysia's biggest potential lies in Asean.
However, he said Malaysia's involvement in trading blocs should not be "mutually exclusive".
"I am supportive of the move towards becoming a BRICS member. Malaysia can be a part of many trade agreements, but do so in a manner which does not alienate any other groupings.
"Diversifying the structure of the economy and export markets, diversifying the currencies that we trade with to reduce co-dependency on any particular currency is important and should continue.
"Our intra-Asean trade and investment is actually relatively low compared to the other trade blocs and the biggest potential that we have is here in Asean," he added.
Affin Bank Bhd president and group chief executive Datuk Wan Razly Abdullah said Malaysia is "getting everything right" compared to other countries in the region.
"Indonesia has trouble attracting foreign direct investment and Singapore has a capacity limit. Malaysia has all the passes for now so it's really up to us to harvest all those. We have the land, energy, water and we have a highly skilled workforce. So everything is there to be harvested. We need to capitalise on that," he said.
Malaysia was recognised as one of 13 nations officially added to BRICS as a partner country in October.
Apart from Malaysia, the other 12 nations were Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Nigeria, Thailand, Turkey, Uganda, Uzbekistan and Vietnam.
Earlier this month, Trump urged the BRICS nations (Brazil, Russia, India, China, and South Africa) not to create or support a new currency to replace the US dollar, threatening a 100 per cent tariff if they do.
This follows Trump's recent proposal to impose significant tariffs on China, Mexico and Canada - countries with which the US has large trade deficits.
However, economists said Malaysia should not be overly concerned about Trump's stern warning on BRICS and tariffs as it does not have a direct impact on the country.
Meanwhile, Maybank IBG expects Bank Negara Malaysia to maintain the overnight policy rate at 3.0 per cent until next year. The economy is expected to record 5.2 per cent growth this year and 4.9 per cent next year.
Inflation is expected to be 1.9 per cent this year and increase to 3.0 per cent in 2025 due to tax and subsidy removals.
"The subsidy removal will have an inflationary impact on the economy, which is reasonable but 3.0 per cent is still a reasonable level," said Anand.
The firm, however, expects headwinds for the ringgit next year as it is sensitive to the US Treasury yields. Maybank IBG forecasted for the ringgit to be RM4.35 against the US dollar in 2025.
Affin Bank expects the ringgit to stand at RM4.10 this year and RM4.20 in 2025.