Russia has been actively promoting trade and investment opportunities with Malaysia, highlighting its strategic importance amid evolving geopolitical dynamics. Recent months have seen a flurry of activity, with Russian ministers and business delegations visiting Malaysia to solidify economic ties. These efforts follow Malaysian Prime Minister Anwar Ibrahim’s visit to Russia in September for the Eastern Economic Forum (EEF) in Vladivostok.
Prime Minister Anwar’s attendance at the EEF, an annual gathering of business leaders aimed at advancing the economic development of Russia’s Far East, marked a pivotal moment. During his visit, he emphasized Russia’s role as a “key partner” for Malaysia and proposed the establishment of a “special relationship” between the two nations.
This sentiment reflects Malaysia’s strategic vision to diversify its global partnerships. In an era where global trade faces increasing fragmentation due to geopolitical conflicts, the fostering of ties with Russia signals Malaysia’s intent to leverage opportunities in non-traditional markets.
The growing economic collaboration between Malaysia and Russia comes at a time when Moscow faces widespread sanctions following its invasion of Ukraine in February 2022. These sanctions have forced Russia to pivot towards countries in Asia, including Malaysia, as alternative trading and investment partners.
Despite the challenging global environment, bilateral trade between Malaysia and Russia has shown resilience and growth. Malaysian exports to Russia grew by 13% in 2022, reaching USD 619.3 million. Meanwhile, Russia’s exports to Malaysia saw a 10.8% increase, amounting to USD 2.49 billion. These figures highlight the robust potential for economic cooperation between the two nations.
“There are a lot of opportunities that we can explore with our Russian counterparts and Russian companies,” said Mr. Abu Bakar Yusof, Deputy CEO of the Malaysia External Trade Development Corporation (MATRADE).
At the Russia-ASEAN International Business Forum held in Kuala Lumpur last week, Russian officials and industry leaders highlighted untapped opportunities for collaboration. These opportunities span various sectors, including cybersecurity, software development, and telecommunications. Currently, trade between Russia and ASEAN countries, including Malaysia, is concentrated in traditional sectors such as oil and gas, energy, and agriculture.
“The potential is there. It is underestimated right now, so we need to be courageous enough to excavate all the potential and bring the businesses together,” said Russian Deputy Minister of Industry and Trade Alexey Gruzdev during a plenary session at the forum. The event, organized by the RosCongress Foundation, aimed to enhance Russia’s economic potential and global image.
While the prospects for economic collaboration are promising, several industry players have expressed concerns about the challenges of doing business with Russia under the current geopolitical landscape. Key issues include the impact of international sanctions and the complexities of standardizing currencies for bilateral trade.
“The United States’ latest sanctions aim to further curtail Russia’s use of the international financial system, which could create significant trade obstacles,” noted William Ng, Chairman of the Small and Medium Enterprises Association of Malaysia.
Ng added that while Russia has developed advanced software and IT solutions, these may face resistance in Southeast Asian markets due to long-standing reliance on American and European vendors.
“To now shift the reliance to Russia as an option will take a bit of learning,” Ng remarked. He further emphasized that the ongoing conflict in Ukraine remains the “elephant in the room,” deterring some companies from engaging with Russian counterparts.
As Malaysia prepares to take on the ASEAN chairmanship in 2024, its engagement with Russia aligns with the bloc’s broader economic and geopolitical strategy. ASEAN, which has a combined GDP of nearly USD 4 trillion, is the fifth-largest economy globally and represents a crucial market for Russia amid its pivot to Asia.
In 2023, trade between Russia and ASEAN grew by 15%, underscoring the deepening economic relationship. The region’s role as a trading partner is likely to expand further as ASEAN nations, including Malaysia, Vietnam, Indonesia, and Thailand, join the BRICS group, which aims to provide an alternative to Western-dominated global institutions.
The BRICS grouping, originally comprising Brazil, Russia, India, China, and South Africa, added 13 new partner countries in October, including ASEAN members. This expansion signals a concerted effort by emerging economies to strengthen their collective bargaining power on the global stage. Malaysia’s inclusion in this grouping aligns with its goals to diversify trade and investment partners while balancing relations between major global powers.
Malaysia’s proactive engagement with Russia reflects a broader strategy to strengthen economic resilience amid superpower rivalries. By deepening ties with Russia and other BRICS nations, Malaysia aims to reduce dependence on traditional Western markets and navigate the complex dynamics of the current global order.
