Amidst intensifying US-China trade disputes, Malaysia is strategizing to become an appealing supply chain base and data center hub by attracting technology behemoths Microsoft Corp and Alphabet Inc’s Google. This initiative was disclosed by Trade Minister Zafrul Abdul Aziz.
Aiming to solidify its standing as a significant data center, Malaysia has been steadily enticing prominent tech corporations, according to Aziz in an interview with Bloomberg Television. The nation’s significant investment triumphs this year include drawing in companies like Tesla Inc and Amazon Web Services.
Tesla has set plans to import its electric vehicles to Malaysia and establish a supercharger network, contributing to the nation’s investment growth. Amazon Web Services is also expected to make a substantial investment of RM25.5 billion (US$6 billion) into cloud computing infrastructure by 2037.
As US-China tensions simmer, multinational businesses are increasingly exploring options outside of China. Malaysia, competing with Southeast Asian nations like Vietnam and Thailand, is aggressively seeking investments aimed at constructing new supply chains.
The escalating global alignment of supply chains has led to increased regional investment, focusing on resiliency and security. In Q1 of this year, Malaysia saw a 67% increase in approved investments compared to last year, as per the Malaysian Investment Development Authority. This inflow comprised more than 52% of Foreign Direct Investment.
Due to Malaysia’s ecosystem, built over half a century, Tesla selected it as a preferred location. Capitalizing on its status as a semiconductor hub, the minister emphasized the need to be opportunistic in these uncertain geopolitical times.
Minister Aziz underlined Malaysia’s neutral position and significant role in the critical supply chain, resulting in the nation becoming a net beneficiary. The nation accounts for about 13% of global chip testing and packaging demand and around 25% of US chip-testing and assembly needs.
Despite the challenges stemming from trade tensions, monetary policy tightening, and the continuing impact of Russia’s war in Ukraine, Malaysia’s GDP expanded a faster-than-expected 5.6% in the first quarter from a year ago, projecting a growth rate of 4.5% for 2023.
This article is based on a news story originally published on thestar.com.my.