‘Malaysia can be middle power in global supply chain amid US-China tensions’
13 Aug 2024
Malaysia, as a middle power, can play its role in global supply chain security amid the United States-China tensions, particularly via its electrical and electronics and renewable energy (RE) sectors.
Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz said globally, investors in industries such as electric vehicles (EV) and solar power are focused on securing sensitive trade goods.
“The emergence of competing supply chains, and both countries’ (the United States and China) efforts to decouple from each other’s economies, has reshaped the dynamics of both international trade and investments,” he said in his keynote address at the Isis Praxis 2024 Conference today.
On Malaysia navigating this turbulent terrain, Tengku Zafrul said understanding the clear division within the global tech ecosystem has been crucial in positioning Malaysia as a preferred investment destination, particularly for semiconductors.
“China’s ‘Made in China 2025’ initiative seeks to establish dominance in crucial technologies such as artificial intelligence (AI), robotics, RE, EV, aerospace and biotechnology. In response, the US has restricted critical exports and domestic innovation investments through initiatives such as the CHIPs Act.
“As a result, many investors are seeking diversification across regions and sectors, as a risk-mitigation measure. Security concerns and over-reliance have led both economies and their regional partners to invest more in separate, rival tech supply chains,” he said.
Tengku Zafrul said at the heart of today’s Tech Cold War lies a battle over the semiconductor supply chain, and Malaysia’s 50-year-old semiconductor sector places the country in an excellent position to reap such opportunities.
“This is why we introduced the National Semiconductor Strategy (NSS) to move our semiconductor producers up the global value chain to export more higher-value products.
“We have already welcomed global investors such as Infineon, Intel and Texas Instruments who have increased their investments in Malaysia, due to our agile tech supply chains. Indeed, as technology continues to evolve, investors are also considering the transformative potential of emerging technologies such as generative AI,” he said.
To that end, Tengku Zafrul said, Malaysia is courting investments in related assets such as robotics, AI-powered logistics suppliers and industrial real estate — in short, hardware, software and applications across the AI ecosystem — to help global investors mitigate risks.
“Indeed, the semiconductor industry is the backbone of today’s biggest technologies, including AI, electric vehicles and factory automation. It is also pivotal in securing economic prosperity and national security for tech superpowers such as China and the US, especially as Taiwan still dominates semiconductor manufacturing worldwide,” he said.
According to the minister, analysts have estimated that government initiatives, such as the CHIPS Act, may inject roughly US$100 billion (RM444.9 billion) into the semiconductor industry across the US, Europe and Asia, of which Malaysia has the industrial capacity, the track record and the rule of law to successfully reap that opportunity.
“Malaysia can truly become a ‘middle-power broker’ to support the security of the global tech supply chain. This is why the NSS has earmarked over RM25 billion over the next decade to strengthen and upscale Malaysia’s semiconductor sector through talent development, targeted initiatives for local companies, and incentives to promote investment in high value-added front-end activities.
“Aside from our efforts on skilled talent development, Malaysia must also apply data-driven solutions. Hence, the continued need for strategic, deliberate and conscious action by policymakers like the Investment, Trade and Industry Ministry,” he said.
Source: Bernama
