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Chinese language chipmakers and know-how corporations are heading to Malaysia in droves, its economic 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 end in 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 instructed the Monetary Occasions in an interview. “These corporations at the moment are 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 big 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 an important participant in international 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 data 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 sales of superior chips by US corporations to China, posing a possible risk to their investments in Malaysia, the place most of the merchandise are manufactured, and opening the door for Chinese language rivals.
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 normally include their very own ecosystem,” he mentioned. “We can be seeing increasingly, particularly if we will safe the primary two or three anchor traders from China.”
He added that many corporations had been additionally in search of to extend publicity to the fast-growing south-east Asian market as China’s financial momentum slows and commerce with the US faces extra boundaries.
This week, Malaysia signed an settlement with Singapore to create an unlimited particular financial zone between the 2 international locations. Malaysia hopes the initiative will add $26bn a 12 months to its economic system by 2030, bringing in 20,000 expert jobs and 50 new tasks.
Between 2019 and 2023, Malaysia attracted $21bn of funding into its semiconductor business and $10bn into information centres — the storage amenities that allow fast-growing applied sciences equivalent to AI, cloud computing and cryptocurrency mining. Prior to now 12 months alone, US tech corporations Amazon, Nvidia, Google and Microsoft dedicated almost $16bn, principally for information centres in Johor.
TikTok proprietor ByteDance is the biggest Chinese language group to spend money on Johor, with a $2bn dedication final 12 months.
Rafizi mentioned that whereas traditionally, Malaysia had been pleased to simply accept any international funding, it was becoming more 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 international commerce, it may immediate Chinese language corporations to present Malaysia a much bigger position in chip design, quite 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 mainly 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.
