Chinese chipmakers and tech companies are flocking to Malaysia, according to Economy Minister Rafizi Ramli, as Beijing braces for more tariffs under the incoming US president. These Chinese companies are poised to inject billions of dollars into the Malaysian economy in the coming years, creating competition for US companies that have historically dominated the market. "Chinese [companies] are very keen to go outside and expand beyond their domestic market," Rafizi told the Financial Times in an interview. "Those companies are now looking at relocating or expanding into Malaysia." The potential imposition of 60 per cent tariffs on Chinese imports, a measure threatened by the former US president should he return to the White House, has rattled investors and prompted companies to restructure their supply chains. Malaysia has become a significant beneficiary of "China-plus-one" strategies, where companies invest in regional countries to diversify risk and lower costs alongside their Chinese operations. The country has also established itself as a key player in global supply chains for high-tech industries like artificial intelligence, with semiconductor manufacturing in Penang and a growing data centre hub in Johor. While US companies have traditionally led these sectors in Malaysia, Rafizi anticipates a surge of Chinese investment driven by government initiatives aimed at further developing these industries. US administration restrictions on advanced chip sales to China pose a potential threat to existing US investments in Malaysia, where many of these products are manufactured, thus creating an opportunity for Chinese competitors. In June, Rafizi undertook a 10-day trip to China, meeting with 100 AI, technology, and biomedical companies to gauge their interest in investing in Malaysia. This effort has resulted in two investment delegations from China in recent months. "Chinese investments usually come with their own ecosystem," he said. "We will be seeing more and more, especially if we can secure the first two or three anchor investors from China." Recently, Malaysia and Singapore signed an agreement to establish a large special economic zone between the two countries. Malaysia expects this initiative to add $26 billion to its economy by 2030, creating 20,000 skilled jobs and 50 new projects. Between 2019 and 2023, Malaysia attracted $21 billion in investment for its semiconductor industry and $10 billion for data centres, and critical infrastructure for technologies like AI, cloud computing, and cryptocurrency mining. Attribution: Financial Times Subediting: M. S. Salama
