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Chinese language chipmakers and expertise firms are heading to Malaysia in droves, its economic system minister Rafizi Ramli stated, as Beijing prepares to face extra tariffs when Donald Trump returns as US president this month.
The strikes by Chinese language firms, that are anticipated to end in billions of {dollars} of funding in Malaysia within the coming years, would rival the US firms which have dominated the nation’s market, he stated.
“Chinese [companies] are very keen to go outside and expand beyond their domestic market,” Rafizi informed the Monetary Occasions in an interview. “Those companies are now looking at relocating or expanding into Malaysia.”
Trump has threatened to impose 60 per cent tariffs on Chinese language imports when he re-enters the White Home on January 20, rattling traders and placing firms on alert to restructure their provide chains.
Malaysia has been a large beneficiary over the previous decade of such “China-plus-one” methods, the place multinational firms complement their Chinese language operations with investments in regional nations to diversify threat and decrease prices.
It has additionally positioned itself as an important participant in international provide chains for high-tech industries similar to synthetic intelligence, with long-standing semiconductor manufacturing operations in Penang within the north and a burgeoning hub for knowledge centres within the southern state of Johor.
US firms have dominated these sectors in Malaysia, however Rafizi stated he anticipated a wave of Chinese language funding on the again of initiatives his authorities was setting up to develop the industries additional.
Joe Biden’s administration has restricted gross sales of superior chips by US firms to China, posing a possible menace to their investments in Malaysia, the place most of the merchandise are manufactured, and opening the door for Chinese language opponents.
Rafizi stated he made a 10-day journey in June to China, the place he met 100 AI, tech and biomedical firms to evaluate their urge for food for investing in Malaysia. He added that these efforts had resulted in two funding delegations from China prior to now few months.
“Chinese investments usually come with their own ecosystem,” he stated. “We will be seeing more and more, especially if we can secure the first two or three anchor investors from China.”
He added that many firms have been additionally searching for to extend publicity to the fast-growing south-east Asian market as China’s financial momentum slows and commerce with the US faces further boundaries.
This week, Malaysia signed an settlement with Singapore to create an unlimited particular financial zone between the 2 nations. Malaysia hopes the initiative will add $26bn a 12 months to its economic system by 2030, bringing in 20,000 expert jobs and 50 new tasks.
Between 2019 and 2023, Malaysia attracted $21bn of funding into its semiconductor business and $10bn into knowledge centres — the storage amenities that allow fast-growing applied sciences similar to AI, cloud computing and cryptocurrency mining. Previously 12 months alone, US tech firms Amazon, Nvidia, Google and Microsoft dedicated almost $16bn, principally for knowledge centres in Johor.
TikTok proprietor ByteDance is the biggest Chinese language group to put money into Johor, with a $2bn dedication final 12 months.
Rafizi stated that whereas traditionally, Malaysia had been comfortable to just accept any international funding, it was changing into extra selective because it sought to contribute extra worth to the services it produced.
He added that whereas growing US-China tensions would hurt international commerce, it might immediate Chinese language firms to provide Malaysia a much bigger position in chip design, somewhat than simply manufacturing, which might generate extra revenue because the nation climbed the worth chain.
“The unintended consequence of some tariff measures targeted at Chinese companies basically helps countries like Malaysia to weed out the more genuine and long-term investments from China compared to the ones that just look to use Malaysia as a manufacturing outpost,” he stated.
