As result of the ongoing trade conflict, an increasing number of U.S. and Chinese businesses have been moving manufacturing out of China to escape tit-for-tat tariffs. To win this trade-war business, Malaysia has set up a panel to encourage investment in Southeast Asia’s third-biggest economy.
The new National Committee on Investment I (NCII) aims to fast-track investments. It approved investments worth $526 million in its first meeting, Ong Kian Ming, deputy minister in the Ministry of International Trade and Industry, told Reuters.
The new committee is headed by the ministers of finance and international trade and industry. They have the authority approve incentives immediately.
“If approvals took three months earlier, now it would take a month – from when the documentation is complete to when the committee will approve it,” Ong said in a recent interview. “It would try to expedite investments that are relocating because of the U.S.-China trade conflict.”
Vietnam not the only beneficiary of trade war
Vietnam has been widely seen as the biggest beneficiary of businesses relocating to escape the higher U.S. tariffs on goods produced in China. But Thailand has also introduced a package of incentives to attract relocations.
Foreign direct investment (FDI) to Malaysia nearly doubled to $12 billion in the first half of this year, of which over half went to manufacturing. Ong said he was hopeful of an even bigger rise in the second half of the year.
Malaysia investments: Electrical and electronics industry benefits
U.S. investment topped $5.62 billion in the first half of 2019 and Ong said he expected that to pick up further.
“We do see re-investments coming from existing U.S. companies and new E&E players coming to Malaysia. I know of at least one company that has expressed its very serious interest to come to Malaysia. This is a new factory that will be built,” he said, without identifying the company.
Intel Corp, Dell Technologies Inc and On Semiconductor Corp are the lead players in Malaysia’s well-established electrical & electronics (E&E) industry.
In addition, the number of investment applications from China has also risen in recent months.
(Content by Reuters)