LIMA, PERU: Malaysia's participation in the two Asia-Pacific Economic Cooperation (APEC) meetings in Peru and the G20 Summit in Brazil is expected to open up opportunities to strengthen Malaysia's economic ties on the global stage.
The presence of Prime Minister, Datuk Seri Anwar Ibrahim, at these two high-profile conferences holds significant potential but also comes with challenges, according to Executive Director of the Malaysian Institute of Economic Research (MIER), Prof Dr Anthony Dass.
Dass said Malaysia should view the APEC summit as a strategic platform to enhance trade with countries in the Asia-Pacific region.
Data shows that around 82 per cent of Malaysia's total trade in 2022 involved APEC member countries, with major exports such as electronics, palm oil, and petroleum worth approximately USD 250 billion (RM 1.1 trillion).
"The Latin American market, particularly Brazil, which is a member of BRICS, presents an opportunity for Malaysia to diversify its export markets. In 2022, Malaysia-Brazil trade was valued at about USD 3billion (RM 13.2 billion), but sectors such as palm oil, rubber, and electrical products still have significant potential for growth," he said.
He added that the summit also provides Malaysia an opportunity 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.
Meanwhile, Dass noted that although Malaysia's participation in the G20 was by invitation, it allows the country to highlight its efforts in the green economy, attracting green investments estimated to reach USD15 billion (RM 66 billion) by 2025.
Additionally, the digital economy, which contributed about 23 per cent to Malaysia's GDP in 2022, remains a key focus.
Through the MyDIGITAL framework, Malaysia plans to increase the digital economy's contribution to 25.5 per cent by 2025.
By participating in these summits, Malaysia has the opportunity to establish partnerships with technology leaders that can strengthen its digital infrastructure, contributing an additional USD 25 billion (RM 110 billion) to the economy over the next five years.
In terms of investment, Malaysia is focusing on expanding the renewable energy sector, particularly solar energy, to achieve its target of 31 per cent electricity generation from renewable sources by 2025.
The G20 summit, which was also attended by international investors, opens up opportunities for Malaysia to attract more foreign investments in this sector.
"By 2022, Malaysia successfully attracted approximately USD 30 billion (RM 132 billion) in Foreign Direct Investment (FDI), mainly in the manufacturing sector. The presence of Anwar at APEC and G20 will help strengthen Malaysia's position as a hub for semiconductor and electronics manufacturing," said Dass.
However, the main challenge facing Malaysia is managing the ongoing global geopolitical tensions. The trade conflict between the United States and China, two of Malaysia's main trading partners, requires a careful approach to ensure that Malaysia can maintain its trade networks without jeopardising the country's projected GDP growth rate of around 4.5 per cent in the coming years.
The Russia-Ukraine conflict has also affected global energy prices, which in turn has impacted inflation in Malaysia, with an average rate of 3.3 per cent in 2023.
If this conflict persists, rising energy costs could place pressure on the country's fiscal stability and social spending.
Malaysia also faces the challenge of aligning its priorities with the different agendas of APEC and the G20. APEC focuses more on regional trade integration within the Asia-Pacific, which aligns with Malaysia's interests, while the G20 is more focused on global economic issues and climate change.