Malaysia well-positioned to weather geopolitical tensions
It has long positioned itself as a neutral country.
KUALA LUMPUR - Malaysia is well-positioned to navigate rising geopolitical tensions and shifting global dynamics due to its diversified foreign policy, long-standing neutrality and strong economic foundations, according to economists.
This has allowed the country to remain flexible amid increasing global fragmentation.
MARC Ratings Bhd chief economist Adjunct Professor Dr Ray Choy said Malaysia’s economic structure, which includes strategic government intervention in key industries, has also strengthened resilience against external shocks and geopolitical uncertainty.
"Malaysia is actually going to handle the present situation because it has long positioned itself as a neutral country.
"We are seeing so many geopolitical shifts and so much geopolitical mistrust towards certain governments," he said in a virtual panel discussion "War, Power and Markets: Global Conflicts and the Asean Economic Outlook” on Monday.
Choy noted that Malaysia’s banking and capital market system is among the more advanced in the region, supported by policies that maintain local control over essential financial infrastructure.
He added that the global shift away from hyper-globalisation towards greater economic diversification, driven by strategic and defence considerations, is expected to benefit Malaysia due to its geopolitical flexibility and strong regional and global integration.
Meanwhile, Permodalan Nasional Bhd head of geopolitics Dr Muhamad Nadzri Mohamed Noor said the global financial system is increasingly viewed as a geopolitical tool amid rising tensions and rivalries, raising concerns over financial volatility and the use of the US dollar and international payment systems for strategic purposes.
He said sanctions imposed on countries such as Russia and Iran, as well as the development of alternative payment systems by major economies, including China, reflect a broader shift towards de-dollarisation.
"De-dollarisation is not just a macroeconomic tool involving trade and finance, but also part of geo-economic strategy because the financial system can be weaponised against others,” Nadzri said.
Choy also pointed out rising gold prices, increased institutional demand for gold, growing interest in cryptocurrencies, and local currency settlement initiatives among BRICS countries as signs of this shift.
He said many countries are exploring direct local currency trade settlements, which could gradually expand the use of currencies such as China’s renminbi in global trade alongside the US dollar. - BERNAMA
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