In December, President Ursula von der Leyen announced the EU\u2019s intention to invest $10 billion into the ASEAN region by 2027 \u2013 part of the so-called \u201cGlobal Gateway\u201d initiative, widely seen as a response to China\u2019s \u201cBelt and Road\u201d.\u00a0 With a focus on crucial areas such as digitalisation, energy, transport, and sustainable value chains, the announcement was warmly welcomed across the region.\u00a0<\/p>\n\n\n\n
As an ASEAN member, Malaysia is set to benefit from this, of course.\u00a0 Following a rather poor 2020 in terms of FDI inflows (when they dropped to the lowest since 2009), FDI into Malaysia surged in 2021 to its highest level on record ($11.6 billion); investment in manufacturing, and in electronics in particular, was key to this.\u00a0 German electronics multinational Infineon is in the process of constructing a new state-of-the-art wafer fab module in Kulim, due to open in 2024, and Micron Technology and Intel are expanding their semiconductor operations too, both increasing global capacity and fending off issues elsewhere in their supply chains.\u00a0 Other foreign manufacturers, including Toyota, Porsche, Bosch, Denso, AT&S, Jinko Solar Holding, Risen Energy, Chinadata and Wiwynn, also invested significantly in new or expanding manufacturing capabilities in Malaysia.\u00a0 Though record FDI levels fell back during the second part of 2022, they have already rebounded to a significant extent, and the general FDI outlook is very favourable.<\/p>\n\n\n\n
As south east Asia\u2019s fourth largest economy, consistently ranked by the World Bank as one of the easiest countries in the world in which to operate, and the only nation in the region to feature in the top-thirty of Milken Institutes Global Opportunity Index, it seems surprising that Malaysia has sometimes found it harder to attract manufacturing FDI than its near-neighbour Vietnam, for instance.\u00a0 However, these recent large-scale investments into Malaysia by global manufacturing names will surely be followed by others, and by foreign SMEs too, in order to meet the needs of a rapidly developing manufacturing sector.<\/p>\n\n\n\n
Large-scale manufacture of high-tech products demands effective deployment and ongoing support of leading-edge technologies \u2013 measurement technologies, for instance, in order to meet stringent production Quality Control requirements, as well as for research and development.\u00a0 As such, leading instrumentation and testing companies are among those finding growing opportunities here, in sectors as diverse as semiconductors, vehicle components, and oil and gas.\u00a0\u00a0<\/p>\n\n\n\n
During 2022, Malaysia\u2019s manufacturing sector was buoyed up by the strength of its manufacturing exports. Overall, exports performed strongly during 2022, rising by 25% on the previous year. Exports of manufactured goods were up by 22% year on year, with exports of electrical and electronic products rising by 30%, now making up 38% of merchandise exports.\u00a0 With commodity prices high last year, Malaysia\u2019s revenues from oil and gas exports also rose strongly.\u00a0 Though GDP is currently not as strong as hoped, and 2023 will likely be a challenging one overall for the economy overall, the growing strength of key parts of Malaysia\u2019s manufacturing sector and exports in particular, driven by confident long-term investments from major overseas players, point to a healthy future \u2013 one from which the national as a whole will certainly benefit.<\/p>\n\n\n\n