China manufacturing exodus, US trade war tariffs spur investment in Malaysia’s ‘Silicon Valley’

Malaysia’s electronic industry has seen a surge in investment as US and Chinese companies look to escape tariffs placed on each other’s products

Reliable infrastructure, established supply chain and skilled workforce give it an edge over other parts of Southeast Asia as manufacturing hub, Malaysian companies say

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The Malaysian island of Penang has seen a surge of foreign investment over the past 18 months, with companies operating in China scrambling to take advantage of its long-established electronics sector and evade US tariffs that have been slapped on hundreds of millions of dollars of Chinese exports. Illustration: Brian Wang

Published: 9:00am, 31 Jan 2020Updated: 11:17am, 31 Jan 2020

Nearly two decades after losing its shine to China, the “Silicon Valley of Southeast Asia” is regaining its competitive edge as a growing number of multinational firms look to Malaysia to escape the effects of the US-China trade war.

The Malaysian island of Penang has seen a surge of foreign investment over the past 18 months, with companies operating in China scrambling to take advantage of its long-established electronics sector and evade US tariffs that have been slapped on hundreds of millions of dollars of Chinese exports.

With China “no longer cost competitive” for some businesses, enquiries about establishing factories or relocating operations to the Southeast Asian nation have been rising, said Heng Huck Lee, CEO of Globetronics, which designs and manufactures a range of electronic products for multinational firms.

“In the last 18 months Penang has been a very active location, with lots of Chinese manufacturers, lots of US companies, looking into relocating and expanding their facilities here,” Heng said. “If you were to look back into 2019, Penang’s foreign direct investment was the highest in many, many years.”