Malaysia’s government aims to position itself as an energy and chip manufacturing hub this year, leveraging its geographical location and experience in these fields, the country’s prime minister said yesterday.
Addressing an economic forum in Kuala Lumpur, Anwar Ibrahim, who also serves as finance minister, said that the Malaysian economy had experienced robust growth in 2024, fortified by a list of significant foreign investments in the high-tech sector, including artificial intelligence (AI) infrastructure.
“In 2024, Malaysia successfully tamed inflation, reduced unemployment and stabilized our currency,” he told the Malaysia Economic Forum 2025, according to the Star newspaper. “We have had record highs in job creation but also the best performing stock market in ASEAN.”
Anwar said Malaysia will now aim to “refine our expertise” in oil and gas, semiconductors production and Islamic finance to become a “global market leader” in each field.
“In 2025,” he added, “we want to double down on our geographical centrality, as a conduit for electricity, talent, and supply chain diversification.”
As well as having considerable experience in oil and gas production, which dates back to the early decades of the twentieth century, Malaysia is a longtime regional leader in electrical and electronics manufacturing, including in semiconductors. Most of its semiconductor production is based around the sprawling industrial parks around Penang, which were established in the 1970s, and in the nearby Kulim Hi-Tech Park, which was set up in the 1990s.
Despite a degree of stagnation since the Asian financial crisis of 1997-1998, which has seen the manufacturing sector’s share of GDP decline from 31 percent in 1999 to 23 percent in 2010, Malaysia last year notched an impressive number of significant foreign investments in artificial intelligence, cloud computing, and chip manufacturing. In May, the U.S. search giant Google announced that it would invest $2 billion to develop its first data center and Google Cloud region in Malaysia, in an industrial park in Selangor state. This was followed by the announcement in September that the Malaysian tech firm Dagang NeXchange Berhad and Google Cloud had signed a multi-year deal to provide sovereign cloud services in the country.
Over the past few years, the country has also attracted multibillion-dollar investments from the U.S. chipmaker Intel and the German firm Infineon, as well as investments from other leading Western and Chinese firms. Malaysia now accounts for 13 percent of global semiconductor testing and packaging, and is already the world’s sixth-largest exporter of semiconductors, according to a report last year in the New York Times. However, most of this involves the more rudimentary steps in the chipmaking process, such as assembly and testing.
Among the goals of the Malaysian government’s National Semiconductor Strategy (NSS), which was unveiled in May of last year, is to push into more technologically sophisticated processes such as design and advanced manufacturing. In announcing the NSS last year, Anwar said that his government plans to establish at least 10 local companies in design and advanced packaging for semiconductor chips, and “move to the frontier” of the strategically crucial technology.
Under the NSS, Malaysia is targeting an additional $1o0 billion in foreign investment. It has also earmarked fiscal support of at least $5.3 billion to offer incentives to foreign investors, including tax breaks, subsidies, and visa exemption fees, and to train 60,000 Malaysian engineers to meet industry demand.
A large part of Malaysia’s pitch is that it is a safe destination for investment in a region roiled by geopolitical tensions. Last year, Anwar pitched Malaysia to foreign chipmakers as “the most neutral and non-aligned location for semiconductor production.” This is a message that he repeated yesterday, saying that it was Malaysia’s “neutrality and openness for partnership that make us a natural hub for all.” If the past year means anything, it seems that an increasing number of foreign companies are finding this to be a compelling pitch.