KUALA LUMPUR: As an open economy and ranked the top 25 exporting nations in the world, Malaysia stands to reap the benefits from China's Belt and Road Initiative (BRI), as it provides tremendous opportunities to access a new market, diversify local products and services and attract foreign direct investment.

According to the Economic Report 2017/18 released in conjunction with Budget 2018 announcement, Malaysia's annual trade with countries along the Belt and Road exceeded RM850 billion in 2016, and with BRI, it is expected to increase further in the next decade.

BRI is a multidimensional infrastructure network featuring land-sea-air transportation routes and supported by major railways, ports and pipelines projects.

Being a huge plurilateral arrangement covering 65 countries, the BRI will bring about mutual benefits for all participating countries.

The report said the initiative will also benefit the region as it will enhance ASEAN's own integration and connectivity strategies and simultaneously strengthen ASEAN-China bilateral ties further.

"Malaysia also stands to reap benefits through the ASEAN-China Free Trade Agreement to explore mutual business benefits. In addition, the Regional Comprehensive Economic Partnership (RCEP) will provide an exponential economic boost to Malaysia as it involves 10 ASEAN countries and six dialogue partners" the report said.

Collectively, RCEP represents almost 50 percent of the world's population, with a combined Gross Domestic Product of some US$23.5 trillion and accounting for about 28 percent of global trade.

The report said the BRI is also expected to create opportunities for Malaysian businesses in various forms such as joint-ventures, technology transfers and direct investment.

"Malaysia has huge potential to collaborate with companies from China in key segments of the manufacturing sector such as electronics and electrical, chemicals, iron and steel, medical devices, aerospace and automotive as well as halal products and tropical fruits" the report said.

China has made commitments to import US$2 trillion worth of products from countries participating in the BRI in the next five years.

"Innovative Chinese companies are aggressively moving towards smart manufacturing in line with the rising technology transformation premised on the application of information and communications technology.

"In this regard, Malaysia is well positioned to leverage the Industrial Revolution 4.0 which will prepare local businesses to automate and instil smart manufacturing in their production process" the report said.

BRI augurs well for Malaysia as the country is small and has a highly integrated economy, it added.