On January 12, 2025, Malaysian economy minister Rafizi Ramli announced expectations of a significant influx of Chinese investment into Malaysia, potentially reaching billions of dollars. This anticipated surge comes as Chinese companies look to diversify their operations in response to looming US tariff threats. Ramli's insights followed a 10-day trip to China in June 2023, where he engaged with 100 Chinese companies in the AI, technology, and biomedical sectors to assess their interest in investing in Malaysia. This strategic move aims to rival the historical dominance of US companies in the Malaysian market.
However, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz expressed concerns regarding the potential impact of US trade policies under President-elect Donald Trump. He warned that tariffs of up to 60% on Chinese imports could weaken demand for Malaysian chips, which are integral to the country's ambitions to become a key player in the global chip supply chain. Zafrul highlighted that Malaysia had approved RM254.7 billion in foreign investments in the first nine months of 2024, marking a 10.7% increase year-on-year, but he remains cautious about the implications of US tariffs on the Malaysian chip market. [a9e03046]
The backdrop to this investment surge includes the potential for Trump to impose these tariffs starting January 20, 2025, alongside President Biden's restrictions on advanced chip sales to China. These developments may significantly impact US investments in Malaysia, prompting a shift towards Chinese capital as a more favorable option for Malaysian economic growth. Consul General Amir Farid Abu Hasan had previously highlighted Malaysia's strategic position as a gateway to Southeast Asia and the importance of strengthening economic ties with both the US and China.
In addition to the anticipated Chinese investments, Malaysia is also poised to benefit from increased investment in its semiconductor sector. Companies are diversifying production away from China due to ongoing US-China tech tensions. Notably, Micron Technology Inc. announced a US$7 billion investment in Singapore, while Nvidia plans a RM20 billion investment in collaboration with YTL Group. Malaysia's semiconductor industry reported chip sales reaching US$57.8 billion in November 2024, marking a 21% increase year-on-year. Minister Rafizi Ramli aims for Malaysia to produce its own GPU chips within the next 5-10 years, emphasizing the need for more local chip manufacturers to address skill-related underemployment, as highlighted by the Khazanah Research Institute. As Malaysia celebrates the 10th anniversary of the Malaysia-US Comprehensive Partnership, the evolving dynamics with both China and the US could reshape the investment landscape in the region. [23abd3a9][d2abdbc7][43fd8fce][ea0b422d][78275ffc][f06d0252][d09689f7][2706d00a]