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Chinese language chipmakers and know-how corporations are heading to Malaysia in droves, its financial system minister Rafizi Ramli mentioned, as Beijing prepares to face extra tariffs when Donald Trump returns as US president this month.
The strikes by Chinese language corporations, that are anticipated to lead to billions of {dollars} of funding in Malaysia within the coming years, would rival the US corporations which have dominated the nation’s market, he mentioned.
“Chinese language [companies] are very eager to go exterior and increase past their home market,” Rafizi informed the Monetary Instances in an interview. “These corporations are actually taking a look at relocating or increasing 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 corporations on alert to restructure their provide chains.
Malaysia has been a giant beneficiary over the previous decade of such “China-plus-one” methods, the place multinational corporations complement their Chinese language operations with investments in regional international locations to diversify danger and decrease prices.
It has additionally positioned itself as a vital participant in world provide chains for high-tech industries equivalent 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 corporations have dominated these sectors in Malaysia, however Rafizi mentioned he anticipated a wave of Chinese language funding on the again of initiatives his authorities was putting in to develop the industries additional.
Joe Biden’s administration has restricted gross sales of superior chips by US corporations 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 mentioned he made a 10-day journey in June to China, the place he met 100 AI, tech and biomedical corporations to evaluate their urge for food for investing in Malaysia. He added that these efforts had resulted in two funding delegations from China previously few months.
“Chinese language investments often include their very own ecosystem,” he mentioned. “We shall be seeing increasingly, particularly if we will safe the primary two or three anchor traders from China.”
He added that many corporations have been additionally looking 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 obstacles.
This week, Malaysia signed an settlement with Singapore to create an enormous particular financial zone between the 2 international locations. Malaysia hopes the initiative will add $26bn a yr to its financial system by 2030, bringing in 20,000 expert jobs and 50 new initiatives.
Between 2019 and 2023, Malaysia attracted $21bn of funding into its semiconductor trade and $10bn into knowledge centres — the storage amenities that allow fast-growing applied sciences equivalent to AI, cloud computing and cryptocurrency mining. Prior to now yr alone, US tech corporations Amazon, Nvidia, Google and Microsoft dedicated almost $16bn, principally for knowledge centres in Johor.
TikTok proprietor ByteDance is the most important Chinese language group to spend money on Johor, with a $2bn dedication final yr.
Rafizi mentioned that whereas traditionally, Malaysia had been joyful to just accept any international funding, it was changing into extra selective because it sought to contribute extra worth to the services and products it produced.
He added that whereas growing US-China tensions would hurt world commerce, it may immediate Chinese language corporations to present Malaysia a much bigger function in chip design, moderately than simply manufacturing, which might generate extra earnings because the nation climbed the worth chain.
“The unintended consequence of some tariff measures focused at Chinese language corporations principally helps international locations like Malaysia to weed out the extra real and long-term investments from China in comparison with those that simply look to make use of Malaysia as a producing outpost,” he mentioned.
