Malaysia aspires to be E&E hub despite escalating US-China tech war

Minister of International Trade and Industry Datuk Darell Leiking has assured that Malaysia will remain neutral and continue to aspire to be the hub for E&E. — Bernama file pic
Minister of International Trade and Industry Datuk Darell Leiking has assured that Malaysia will remain neutral and continue to aspire to be the hub for E&E. — Bernama file pic

KUALA LUMPUR, June 15 — With the escalating technology war between the United States and China, giant tech companies have had to slash their future revenue forecast due to looming concerns over the tensions between the two economic superpowers.

On the other side of the world, Malaysia has been known as a hub for the electrical and electronics (E&E) industry, with major players worldwide having entered the country as it acts as a key gateway to service the growing Southeast Asia region.

Minister of International Trade and Industry (MITI) Datuk Darell Leiking has assured that despite the ongoing tech and trade war between the two countries, Malaysia will remain neutral and continue to aspire to be the hub for E&E as well as other businesses.

“Despite the tensions in the global economic environment, we remain optimistic that Malaysia has its strengths to overcome the negativity. We are still in a positive trend as proven by the increase in investments in the manufacturing, services and primary sectors.

“This was mainly driven by the robust performance of the manufacturing sector, which is a good sign that Malaysia remains as an attractive location for future investors,” he said.

The minister explained that investment data for the first quarter of 2019 (Q1 2019) by the Malaysian Investment Development Authority (MIDA) shows an increase of 3.1 per cent to RM53.9 billion from RM52.3 billion recorded in the same period last year.

“This was backed by an increase in investments from the manufacturing, services and primary sectors which was mainly driven by the robust performance of the manufacturing sector, which soared 126.8 per cent compared with Q1 2018,” he said.

According to MIDA’s data, foreign investments increased by 73.4 per cent to RM29.3 billion from RM16.9 billion in Q1 2018, while domestic investments approved in Q1 2019 amounted to RM24.6 billion, contributing 45.6 per cent to the total.

In response to the tech war that has started to affect the E&E sector, he said local players need to step up to fill the void left by foreign players, as Malaysia has undergone technology transfer besides having a skilled workforce.

On Friday, Broadcom Inc, an American multinational corporation, reportedly announced that it would make US$2 billion less in annual sales than expected due to the trade spat between the US and China’s telecom giant Huawei.

The tech giant is the first company to quantify the financial impact of Washington’s escalating trade dispute with China.

Broadcom Inc, which is involved in designing, developing, manufacturing and supplying a broad range of semiconductor and infrastructure software solutions as well as providing components for 5G, has a global distribution warehouse in Penang.

Meanwhile, the Penang state government has urged local E&E players to explore the opportunities arising from the ongoing trade dispute.

Special investment adviser to the Chief Minister of Penang Datuk Seri Lee Kah Choon said local companies should see it as an opportunity for them to fill the vacuum, citing the US$2 billion void left by Broadcom Inc due to the US ban on exports to Huawei.

“It is in our best interest that the tech war stays at bay and does not affect the local E&E sector. However on the brighter side, the local E&E sector would have the chance to fill the demand for chips needed by Huawei,” he said.

In terms of foreign direct investment (FDI), Lee, who is also InvestPenang director, said despite stiff competition from neighbouring countries such as Thailand, Cambodia and Vietnam, Malaysia in general has not only the environment needed but also the global supply chain connection, infrastructure and human resources that suit the needs of multinational corporations.

Citing the synergy Broadcom Inc has in Malaysia, he said with the ongoing trade dispute between the US and China, there could be a migration of western companies out from China with Malaysia as a point of interest for relocation.

“We need to position ourselves clearly as a destination of business if we aim to fill the void left by Western companies that were hit by the trade war effects, and I believe we can do that,” he said. — Bernama

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