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Malaysian Economy Minister Rafizi Ramli said Chinese chipmakers and technology companies are flocking to Malaysia as Beijing prepares to face more tariffs when Donald Trump becomes U.S. president again this month.
He said the move by Chinese companies was expected to bring billions of dollars in investment to Malaysia in the coming years, rivaling that of U.S. companies that dominate the country’s market.
“Chinese [companies] “They are very keen to go out and expand into the domestic market,” Rafizi told the Financial Times. “These companies are now looking at relocating or expanding into Malaysia.”
Trump’s threat to impose 60% tariffs on Chinese imports when he returns to the White House on January 20 has unnerved investors and made companies wary of restructuring supply chains.
Over the past decade, Malaysia has been a huge beneficiary of this “China plus one” strategy, in which multinational companies complement their operations in China with investments in regional countries to spread risks and reduce costs.
It has also positioned itself as a key player in global supply chains for high-tech industries such as artificial intelligence, with a long-standing semiconductor manufacturing operation in Penang in the north and an emerging data center hub in the southern state of Johor.
U.S. companies dominate these sectors in Malaysia, but Rafizi said he expected a wave of Chinese investment, supported by initiatives by the Malaysian government to further develop these industries.
Joe Biden’s administration has restricted U.S. companies from selling advanced chips to China, posing a potential threat to U.S. companies’ investments in Malaysia and opening the door to Chinese competitors.
Rafizi said he made a 10-day visit to China in June, where he met with 100 artificial intelligence, technology and biomedical companies to gauge their interest in investing in Malaysia. He added that these efforts had resulted in the arrival of two Chinese investment delegations in the past few months.
“Chinese investments usually have their own ecosystem,” he said. “We will see more and more investors, especially if we can get the first two or three major investors from China.”
He added that many companies are also looking to increase investment in fast-growing Southeast Asian markets as China’s economic growth slows and trade with the United States faces more barriers.
This week, Malaysia and Singapore signed an agreement to create a vast special economic zone between the two countries. Malaysia hopes the initiative will add $26 billion a year to its economy by 2030, bring 20,000 technology jobs and 50 new projects.
Between 2019 and 2023, Malaysia attracted US$21 billion in investment in its semiconductor industry and US$10 billion in data centers – storage facilities that support fast-growing technologies such as artificial intelligence, cloud computing and cryptocurrency mining. . Last year alone, American technology companies Amazon, Nvidia, Google and Microsoft invested nearly US$16 billion, mainly in data centers in Johor.
TikTok parent company ByteDance is the largest Chinese group investing in Johor, committing US$2 billion last year.
Rafizi said that while historically Malaysia has been receptive to any foreign investment, it has become more selective as it seeks to contribute more value to the products and services it produces.
He added that while rising U.S.-China tensions would hurt global trade, it could prompt Chinese companies to give Malaysia a greater role in chip design rather than just manufacturing, which would produce more as the country climbs the value chain. More income.
“The unintended consequences of some of the tariffs targeting Chinese companies have basically helped countries like Malaysia weed out more genuine and long-term investment from China, as opposed to countries that just want to use Malaysia as a manufacturing outpost,” he said.
