PERU: Malaysia's participation in two Asia-Pacific Economic Cooperation (Apec) summits in Peru and the G20 Conference in Brazil is set to strengthen the country's economic ties on the global stage.
Malaysian Institute of Economic Research executive director Professor Dr Anthony Dass said that Prime Minister Datuk Seri Anwar Ibrahim's presence at these high-profile summits holds significant potential, though it comes with some challenges.
He said Malaysia should view the Apec summit as a strategic platform to enhance trade with Asia-Pacific countries.
Data shows that about 82 per cent of Malaysia's total trade in 2022 involved Apec countries, with major exports like electronics, palm oil and petroleum valued at around USD250 billion (RM1.1 trillion).
"The Latin American market, particularly Brazil, a BRICS member, offers potential for Malaysia to diversify its export market.
"In 2022, Malaysia-Brazil trade was valued at around US$3 billion (RM13.2 billion), but sectors like palm oil, rubber and electrical products still have room for expansion," he added.
He said the summit also presents an opportunity for Malaysia to demonstrate its commitment to global issues, such as climate action.
Malaysia aims to achieve carbon neutrality by 2050 and targets 31 per cent of its energy mix to come from renewable sources by 2025.
Although Malaysia's attendance at the G20 summit is by invitation, Dass said it still enables the country to showcase its green economy efforts, potentially attracting investments estimated to reach US$15 billion (RM66 billion) by 2025.
The digital economy, which contributed about 23 per cent to the GDP in 2022, is also a key focus for Malaysia. Through the MyDigital framework, Malaysia plans to increase the digital economy's contribution to 25.5 per cent by 2025.
Participation in the summits opens up opportunities for Malaysia to establish partnerships with tech leaders that could strengthen digital infrastructure, potentially adding US$25 billion (RM110 billion) to the economy over the next five years.
In terms of investment, Malaysia is advancing its renewable energy sector, particularly solar energy, to reach the goal of 31 per cent electricity generation from renewable sources by 2025.
Dass said the G20 summit, attended by international investors, provides a chance for Malaysia to attract more foreign investments in this sector.
"In 2022, Malaysia attracted around US$30 billion (RM132 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 in the semiconductor and electronics sectors," he said.
A major challenge facing Malaysia is managing the global landscape's geopolitical tensions. The trade conflict between the United States and China, two of Malaysia's key trading partners, requires a cautious approach to maintaining trade networks without compromising the projected GDP growth rate of 4.5 per cent in the coming years.
The Russia-Ukraine conflict has impacted global energy prices, influencing Malaysia's inflation rate, which averaged 3.3 per cent in 2023. Rising energy costs could pressure national fiscal stability and social spending if the conflict continues.
Malaysia also faces challenges in aligning with the different agendas of Apec and the G20. Apec focuses on trade integration within the Asia-Pacific region, aligning with Malaysia's interests, while the G20 emphasises global economic issues and climate change.
Malaysia's ability to adapt its stance to each agenda is crucial for gaining direct and indirect benefits for long-term GDP growth, targeted between four and five per cent annually.
Furthermore, public expectations of immediate benefits from Malaysia's participation on the international stage may add to the challenges.