Construction cranes still surround the brand-spanking-new plant in Kulim’s industrial park in Malaysia. But inside, legions of workers hired by Austrian tech giant AT&S are already gearing up to produce at full capacity by year’s end.

Outfitted in head-to-toe coveralls, with oversized safety glasses and hard hats, they’re reminiscent of the worker bees in the movie Minions, but colour coded by function: Blue for maintenance. Green for vendors. Pink for janitors. White for operators.

AT&S is just one of a flood of European and American companies that have recently decided to move to or expand operations in Malaysia’s electrical and electronics manufacturing mecca.

US chip giant Intel and German corporation Infineon are each investing US$7bil (RM32.81bil). Nvidia, the world’s leading maker of chips powering artificial intelligence, is teaming up with the country’s utilities conglomerate to develop a US$4.3bil (RM20.15bil) artificial intelligence cloud and supercomputer center. Texas Instruments, Ericsson, Bosch and Lam Research are all expanding in Malaysia.

The boom is evidence of how much geopolitical friction and competition are reshaping the globe’s economic landscape and driving multibillion-dollar investment decisions. As rivalries between the United States and China over cutting-edge technology simmer and trade restrictions pile up, companies – particularly those in crucial sectors like semiconductors and electric vehicles – are looking to strengthen their supply chains and production capabilities.

AT&S had production sites in Austria, India, South Korea and China – its largest plant – when it started hunting for a new location.

“It was clear after 20 years of investment in China, we needed to diversify our footprint,” AT&S CEO Andreas Gerstenmayer said. The company manufactures high-end printed circuit boards and substrates, which serve as the foundation for advanced electronic components that power artificial intelligence and supercomputers.

The company’s site search started in early 2020, just as warnings began to spread about a dangerous new coronavirus in China. AT&S scouted 30 countries on three continents before settling on Malaysia.

South-East Asia’s strategic position in the South China Sea and long-standing economic ties to China and the United States make the region an attractive place to set up shop. Nations like Thailand and Vietnam, AT&S’ second choice, are also aggressively courting semiconductor firms to expand, offering tax incentives and other lures.

But Malaysia has the advantage of a head start.

The country has been riding the tech wave since the 1970s when it energetically courted some of the world’s electrical and electronic superstars, like Intel and Litronix (now ams Osram, with headquarters in Austria and Germany). It created a free-trade zone on the island of Penang, offered tax holidays, and built industrial parks, warehouses and roads. Cheap labour was an additional draw, as was its large English-speaking population and stable government.

Malaysia’s history in the back end of making semiconductors was one of the primary draws, Gerstenmayer said.

“They are quite aware of what the needs of the semiconductor industry are,” he said. “And they have a well-developed ecosystem in the universities, in education, labour force, supply chain” and more. Support from the government was another attraction, he said.

Tengku Zafrul Aziz, Malaysia’s minister of investment, trade and industry, said foreign investment began to pick up in 2019, driven by the widening use of semiconductors in everything from automobiles to medical devices. “There’s 5,000 chips in one car,” he said.

After the Covid-19 pandemic revealed devastating weaknesses in global supply chains, interest in Malaysia as an additional source soared.

That trend accelerated as great power conflicts bubbled over.

Both China and the United States moved to forge their own reliable semiconductor supply chains, in addition to supporting other critical sectors like renewable energy and electric vehicles.

“US and European companies and even Chinese companies wanted to diversify out of China,” Zafrul Aziz said. China, too, is locating production facilities outside the mainland, in part, some say, to sidestep US sanctions. It’s a “China plus one” strategy.

Worries about Taiwan, the world’s largest producer of semiconductors, has further fueled investment in Malaysia, he said. The island is a source of growing friction between China, which maintains Taiwan is part of its territory, and the United States, which supports it politically.

Malaysia is already the world’s sixth largest exporter of semiconductors, and packages 23% of all American chips.

“For a country of this size to be having that big an impact on the global semiconductor market is quite fantastic,” said David Lacey, director of advanced development and services at Osram, one of the world’s largest lighting companies.

Seated at a large conference table at the Sciences University of Malaysia on Penang, he rapidly pointed to the technology around the room. “There’s a TV, there are lights, there’s a projector, there are phones,” he said. “You can pretty much guarantee there is a Malaysia component somewhere.”

The proximity of so many tech companies also exerts a gravitational pull. In Penang and Kulim, which are connected by two long, snaking bridges, there are more than 300 companies.

“Everything is here,” said Eric Chan, a vice-president and general manager at Intel in Malaysia. After a half century, that network and infrastructure are not easily duplicated.

Chan also mentioned the government’s crucial cooperation during the pandemic in keeping factories open.

Foreign direct investment was nearly US$40bil (RM187.50bil) last year, more than twice the total generated in 2019.

Mario Lorenz, managing director in Malaysia for the German logistics company DHL Supply Chain, said “most of our big investments have happened in the last two years”.

During that time, the semiconductor sector has grown to dominate the company’s business in Malaysia. “We followed the trend,” he said.

Inside DHL Supply Chain’s newest global distribution center, Penang Logistics Hub No. 4, are bespoke orange and blue shelves specifically designed to handle the heavy, oversized crates used by a semiconductor company.

Four new supply chain facilities are in the works in Malaysia.

Malaysia’s track record has been mostly in the back end of the semiconductor supply chain – which includes packing, assembling and testing components – activities that traditionally have been considered less complex and of lower value.

But now the industry’s focus on packaging smaller chips – chiplets – more tightly together to increase computing power is increasing the value and technical complexity of those activities.

Intel is building its first overseas facility for advanced 3D chip packaging in Malaysia. When you bring in cutting-edge technology there is a “ripple effect”, said AK Chong, a vice president and managing director of Intel in Malaysia. That development will attract dozens of new businesses and help advance the labour force’s entire skill set.

Although such advancements will require a huge expansion of utilities like green energy, sanitation, water and a 5G digital infrastructure, several company executives said they were confident of the Malaysian government’s commitment.

“They have projects to provide green energy by building up big solar farms,” Gerstenmayer said. “Malaysia is on good path to becoming a hot spot in the electronics industry globally.”

Source: The Star / The New York Times

Malaysia rises as crucial link in chip supply chain

Proton Holdings Bhd’s collaboration with Chinese carmaker Geely has not marginalised local vendors and suppliers, said industry specialist Hezeri Samsuri.

He emphasised that the usage of locally sourced parts in car manufacturing has actually increased.

He said the use local components is scrutinised by the Investment, Trade and Industry Ministry.

In light of the concerns raised by suppliers and vendors affiliated with Proton on escalating operational expenses, Hezeri said there will always be vendors who are dissatisfied.

“According to my sources, there are many other vendors who are willing to take their slots.

The ministry should conduct surprise inspections of not only car companies but also vendors.  

“We do not want vendors assembling imported parts and then claiming them to be local.

Some sort of local raw material should be in play.” The Proton Vendors Association (PVA) comprising 77 companies claimed that they are facing severe financial strains due to escalating operational expenses and lower volume of sales.

PVA is recognised as a representative of the automotive components sector in Malaysia.

Members include units of large outfits like UMW Holdings Bhd, Sime Darby Bhd, Sapura Group Bhd, Pecca Group Bhd, APM Automotive Holdings Bhd (part of the Tan Chong group of companies) and EP Manufacturing Bhd.

According to Datuk Low Kok Chuan, president of the Malaysia Fujian Chamber of Commerce and Industry (MFCCI), despite PVA reaching out to Proton to address the challenges, their appeals have been disregarded.

Low claimed that many vendors are grappling with financial issues attributed to dwindling orders, especially since early last year, leading to an unsustainable business environment.

He cautioned that if this situation persists, it could lead to many vendors going bust.

He attributed the root cause to Proton’s failure to fulfil the promised quantity of parts orders for its X50, X70, and X90 models, which has resulted in a significant reduction in output by almost 50 per cent.

Consequently, many vendors are experiencing financial losses, forcing some to cease operations altogether, he claimed.

Ricky Tan, the treasurer-general of MFCCI and the auditor for PVA, claimed that even though Proton had originally contracted vendors to supply parts for 1,500 cars each month, that number has now dropped to 200 to 300 cars per month.

“Some members have suffered financial losses as a result of this significant decline in orders.” In response to the concerns raised by vendors, Proton affirmed its readiness to engage in fair discussions with all PVA members, except those who are unable to provide clear evidence regarding the issues raised.

“At Proton, we create an equitable and respectful business environment with our partners built on our unwavering commitment to fair and firm business dealings.  

“To achieve this, we collaborate closely with PVA, the official representative for all 116 Proton vendors, having frequent discussions and joint initiatives that are mutually beneficial,” it said in a statement.

Acknowledging the difficulties faced by certain vendors, Proton reiterated its commitment to open dialogue.  

The national car company also expressed empathy for the challenges they are encountering.

Proton underscored its history of transparent and constructive dialogue and affirmed its dedication to maintaining this approach in the long term.

“We recognise the importance of resolving matters quickly by working closely with all parties involved and inviting engagement via official channels.”

Meanwhile, Hezeri said vendors who are significantly impacted may have to close down, but he noted that many automotive vendors do not depend on one manufacturer alone.  

Although there are many reasons why a company has to wind down, he said this matter still requires investigation.  

“The closure of the Goodyear factory in Shah Alam is a good example of how its cost-cutting effort. Hoping for cheap labour is a short-term solution as workers demand a higher salary.  

“I would say the future for Malaysia is in the manufacturing and production of high tech components due to increasing labour costs.  

“It is high time Malaysia became a producer and not just an assembler,” he said.  

Universiti Kuala Lumpur Business School economic analyst Associate Prof Aimi Zulhazmi Abdul Rashid said one of the conditions given by the government when Geely offered to partially acquire Proton was to develop and enlarge the local vendor network and increase the local parts percentage.

“A study should be conducted to determine whether the target has been achieved on the back of globalisation of the first national car icon.

“A good comparison would be the second car project in Perodua, the supply chain of parts.

Good points from both projects must be shared in order to boost the automotive industry,” he added.

Source: NST

Industry specialist says Proton-Geely collaboration has not marginalised local vendors, suppliers

The future of Malaysia’s automotive sector lies in the manufacturing and production of high tech components given our rising labour cost.

Automotive specialist Hezeri Samsuri said Malaysia should focus on becoming a producer instead of just an assembler as most cars today are equipped with high tech components. 

“I would say the future for Malaysia is in the manufacturing and production of high tech components due to our increasing labour cost. 

“Cars nowadays are littered with computers and high tech components and it is high time that Malaysia become a producer, and not just an assembler,” he told Business Times.

“Take a lesson from Taiwan. They started like us but where are they now and where is Malaysia?” he asked.

Commenting on the rising operational cost faced by auto parts vendors affiliated with Proton Holdings Bhd, he said many are bound to close down should the situation worsen. 

“In the world of manufacturing, we can run away from cost cutting measures. 

“Many automotive vendors do not depend on one manufacturer alone. There are many reasons why a company has to wind down and this require some investigation,” he said. 

He added that majority of sales in the local automotive industry come from completely knocked down (CKD) vehicles. 

To maintain the CKD status and to enjoy its benefits, Hezeri said car company must maintain a certain number of local components. 

“This is being practiced in many countries and the best is a vendor should not focus on one client only.

“Having said that, Investment, Trade and Industry Ministry should help companies who want to come up with their own technology by introducing it to the global market. 

“We can start by exporting high tech components with better technology.”

He added that the transition from internal combustion engine to electric vehicle (EV) is a good start.

“But we should be more focused. For example, in the next 10 years, we want EVs assembled in Malaysia to use critical EV components made here. 

“They can either be the electric motor, or the Battery Management System, or any other high tech component that an EV requires,” he said.

Source: Bernama

What’s the future of Malaysian automotive?

The semiconductor industry is poised for recovery this year due to advancements in artificial intelligence (AI) technology, according to Rakuten Trade.

Its head of research Kenny Yee said the semiconductor industry’s performance has been sluggish over the past two years but increasing demand for AI globally will drive semiconductor demand.

“Therefore, I think global demand for semiconductors will increase and Malaysia (as one of the largest exporter of semiconductors in the world) will benefit from this spike in demand for semiconductors,” he said during Rakuten Trade’s virtual media briefing on Malaysia’s Q2 Market Outlook yesterday.

“The demand for AI will require a lot of semiconductor parts. That will increase the demand and the producers will ramp up their production. That will increase the semiconductor industry,” Yee explained.

Rakuten Trade pointed to International Data Corporation which indicated that semiconductor sales will recover by 20% in 2024. It said the ongoing AI frenzy, coupled with stabilising demand for smartphones and resilient growth in the automobile industry is expected to usher in a new wave of growth for the semiconductor industry.

Yee also mentioned that the banking, construction, and telecommunications sectors will serve as the primary drivers of the Malaysian economy throughout the year.

“To grow the economy the country needs the banks to support the economic growth,” said Yee.

Moreover, he said, numerous projects have been announced for the construction sector, with more expected soon.

“Other than government infrastructure projects, there will be private projects that will drive the construction sector,” he added.

As for the local stock market, the firm anticipates the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) to possibly touch 1,660 points by end-2024 based on 15.5 times price-to-earnings ratio (PER) premised on 16% earnings growth.

“For curiosity purposes, in the event fund flows normalise, we may even see the index breaching the 1,700 mark premised on just 16 times PER. Foreign fund inflows finally emerged albeit sluggishly,” said Yee.

He said corporate Malaysia closed 2023 on a decent note despite some refinements along the way. This led to a flat 2023 while 2024 corporate Malaysia may experience an eye-catching 16.3% jump mainly due to the low base effect, he added.

As for 2025, Yee said Rakuten Trade expects a more stable 6.7% growth for corporate Malaysia, underpinned by growth across the board.

As for the ringgit, he reckoned prevailing rates do not truly reflect the country’s improving environment.

“Hence, we believe it will strengthen going forward to between the 4.50/55 range by end-2024 on the back of the easing interest rate trend in the US/EU and improving investment climate domestically,” he explained.

Source: The Sun

Semiconductor sector poised for recovery, riding on AI wave: Rakuten Trade

Malaysia sees a huge opportunity to be tapped in the electrical and electronics (E&E) sector amid the United States (US)-China tensions, said Tengku Datuk Seri Zafrul Abdul Aziz.

The belief is supported by the diversion of investment flow into this region, the Investment, Trade and Industry Minister said, stressing that Malaysia must not squander the opportunities presented.

“I am confident as I can see that most of the investors are from the E&E sector, showing that the supply chain flow is coming to Southeast Asia, where Malaysia is among the countries that are already well-established in the industry,” he said on Bernama TV’s Ruang Bicara programme last night.

According to Tengku Zafrul, the E&E sector is highly important to the country, with 56 per cent or RM85 billion of the total approved investment last year being in the manufacturing sector.

“This is one of the New Industrial Master Plan 2030 targets. The flourishing digital economy sector requires E&E products such as chips – semiconductors are needed by all.

“With the US-China geopolitical issue, Malaysia has a window of opportunity to strengthen the industry by attracting more investors to enhance our industry,” he said.

From the government’s standpoint, he said, the challenge is in providing a skilled workforce; however, this challenge is not unique to Malaysia.

“In Malaysia, we have an abundance of talent; but following a large investment inflow, (skilled labour) has become an issue. So, for the short term, we will find a way to ensure we can accommodate the demand (for highly skilled talent) from foreign investors,” he added.

Giving chip maker Intel as an example, the minister said the tech giant has given a commitment to invest RM30 billion over the next 10 years to expand its operations in Penang and Kedah, and the corporation requires at least two to three years to prepare.

“Hence they have collaborated with Universiti Sains Malaysia to develop highly skilled talent,” he said.

The additional investment is expected to create more than 4,000 job opportunities at Intel.

At the same time, he said, the relevant ministries are also working with public and private institutions of higher learning to entice Malaysian workers abroad to return home and serve in the country.

“There are many Malaysians working as engineers (as an example), not only in Singapore but also the US and Europe.

“For the short term, I will be discussing with the Higher Education Minister and Human Resources Minister to find solutions,” said Tengku Zafrul. 

Source: Bernama

Malaysia sees opportunity to strengthen E&E sector amid US-China tensions

The government will focus on providing direct current (DC) electric vehicle charging bays to resolve range anxiety concerns of electric vehicle (EV) users making long journeys.

Deputy Investment, Trade and Industry Minister Liew Chin Tong said the Ministry of Investment, Trade and Industry (MITI), Malaysia Automotive, Robotics and IoT Institute (MARii) and Malaysia Green Technology and Climate Change Corporation (MGTC) are examining and refining the feasibility of increasing DC charger targets.

He said the proposal to reevaluate the target of 10,000 EV chargers was raised during the first meeting of the National EV Steering Committee (NEVSC) for this year.

“The results of the study will be presented in the NEVSC meeting in the second quarter of 2024,“ he said when winding up the debate on the Motion of Thanks for the Royal Address on behalf of MITI in the Dewan Rakyat today.

Liew said that to help achieve the government’s EV charging bays target, a concession company will collaborate with Tenaga Nasional Bhd to ensure sufficient power for the needs of DC-type EV charging stations.

He added that the Malaysian Highway Authority will also assist the concession company and EV charging station operator to expedite the required approval process.

As at Jan 1, 2024, 2,020 EV charging bays had been established nationwide, excluding in Labuan, comprising 429 DC-type bays and 1,591 alternate current bays.

Meanwhile, Liew said that to complete the automotive ecosystem, including EVs, the government introduced the Authorised Automotive Treatment Facility (AATF) initiative to ensure the handling or management of abandoned vehicles and used automotive components are orderly and in accordance with the Environmental Quality Act 1974.

The deputy minister said that currently, two AATFs have been licensed by the Department of Environment, and five companies are still in the evaluation stage for AATF licensing, and one of these companies can recycle EV batteries.

“Apart from this, the government is developing the Guideline for EV Battery Recycling and Remanufacturing in Malaysia based on MS 2697:2018 (4R), which is expected to be finalised in the second quarter of 2025,“ he added. 

Source: Bernama

Govt to provide DC-type EV charging bays to resolve range anxiety concerns – MITI

Malaysian plywood manufacturers should diversify into producing hardwood plywood products for niche markets internationally beyond the construction industry.

They can consider diversifying into the production of wooden flooring, high-density fibreboard and wood panels that cater to interior usage of buildings, according to International Tropical Timber Organisation (Itto) executive director Sheam Satkuru.

Most Malaysian plywood manufacturers now produce products for the construction industry.

“They need to upgrade their factories and prepare to invest in new technologies and machinery to manufacture new plywood products to be competitive in the international market.

“The future of tropical plywood is to capture the niche market from eco-friendly hardwood plywood for the construction industry. The tropical plywood industry should adapt to changing demand to supply products to both lower and higher end-users,” she told StarBiz.

She said to encourage plywood manufacturers to upgrade their plants and invest in new machinery, the Malaysian government could help by providing tax rebates or other incentives if these manufacturers are producing legally certified plywood products for export.

Satkuru is Itto’s first female executive director and second Malaysian to head this only inter-governmental organisation focused exclusively on the sustainable management of tropical forests and the sustainable and legal trade of tropical timber and timber products.

Before her election as Itto executive director in December 2021 for a four-year term, Satkuru was Itto director of operation (October 2017 to January 2022) and was based in Europe for Malaysia. She has nearly 30 years of experience in tropical forest policy and the wood products industry.

“Tropical plywood production has undergone major changes in location, from Japan and Indonesia to Malaysia (until the 2000s) and then to China, India and to a lesser extent Vietnam.

“This is due to the relative competitiveness of plywood processing in the major producer countries and growth in domestic plywood demand in China and India, declining availability of large-diameter peeler quality logs and changes in production technology, rising production costs and the increased availability of panel substitute products,” said Satkuru.

She said China and Vietnam have now become major tropical manufacturing hubs for processed wood products (SPWP).

According to Japan Finance Ministry’s latest data carried by Itto in its bi-monthly “Tropical Timber Market” report, the country has raised the imports of plywood from China and Vietnam in recent years and sharply cut the shipments from top suppliers Malaysia and Indonesia.

In 2022, Malaysia and Indonesia were tied as both countries exported 702,700 cubic metres (cu m) of plywood to Japan, but the export volume fell to 533,300 cu m and 543,700 cu m respectively in 2023.

During the same period, China and Vietnam had raised their plywood export volume to Japan from 108,600 cu m and 134,000 cu m each to 142,900 cu m and 178,800 cu m, respectively.

Japan is the No. 1 export market for tropical hardwood plywood produced in Sarawak. In 2023, Japan paid RM1.21bil (free on board value) for 474,402 cu m imported from Sarawak, and this represented about 81% in value and 77% in volume out of the RM1.49bil earned by Sarawak in the export of 613,548 cu m for the year.

In 2021, Sarawak exported 987,694 cu m of plywood worth RM2.15bil, according to export figures from the Sarawak Timber Industry Development Corp (STIDC).

Sarawak’s plywood production volume has dropped significantly over the years as log shortage and rising log prices have impacted plywood manufacturing activities.

One of the leading timber companies, Jaya Tiasa Holdings Bhd, shut down its loss-making plywood plants three years ago while most other companies have reportedly cut down their annual production volumes due to the weak imported plywood prices in the Japanese market.

Satkuru said Malaysia, Indonesia and Thailand are also important tropical SPWP producers based on plantation timber.

As log production from tropical natural forests is declining as a result of governments’ sustainable forest management policy, she said degraded tropical forests should be reforested through the cultivation of high-value fast-growing timber species.

Satkuru called for joint ventures by consuming and producing countries to embark on industrial tree plantation projects on a share-profit basis to ensure the supply of wood materials for the wood-processing mills.

On global deforestation, Satkuru said many Itto member countries are making serious attempts to reduce the deforestation levels, adding, “I foresee in the next five to seven years, many countries will substantially improve in the deforestation levels.”

The world lost an estimated 10 million ha of forest (an area the size of South Korea) per year between 2015 and 2020, only slightly less than the 12 million ha per year lost between 2010 and 2015, according to global forest resources assessment 2020.

Based on Itto reports, the deforestation levels in Malaysia and Indonesia have fallen to near record lows. Malaysia achieved a 57% reduction rate from 2015-2017 to 2020-2022 period.

Itto Strategic Action Plan 2022-2026 lists one of the priorities as to “reduce tropical deforestation and forest degradation, enhance forest landscape restoration and the resilience of forest ecosystems to climate change and conserve biodiversity and ecosystem services”.

Satkuru said tropical forests represent 45% or 1.84 billion ha of all forests. On funding for Itto projects in member countries, she said Itto had for the first time in 10 years raised more than US$7mil in 2023 from voluntary contributions, mainly by Japan, China and the United States.

“We are now targetting non-traditional donors as it is insufficient to rely only on traditional donors for the funds. We are in talks with three potential external donors, one of them is expected to come to fruition in 2024.

“We need a minimum of US$10mil a year to fund Itto projects in Asia, Latin America and Africa. In addition, we require about US$7mil a year for the administration requirements of Itto,” she added.

Since it became operational in 1987, Itto has funded more than 1,200 projects, pre-projects and activities valued at more than US$430mil. A major Itto project in Sarawak is the Lanjak Entimau Wildlife Sanctuary, a 1,870-km large protected area for especially orang utan conservation.

“Malaysia has always been seen as a shinning beacon of tropical forestry leadership,” said Satkuru. “Malaysia is one of the founding members of Itto, which currently has 76 members from both producing and consuming countries.”

Source: The Star

Call for plywood manufacturers to diversify into niche global markets

Malaysia has reportedly emerged as an unexpected destination for the global semiconductor industry, inching out the conventional favourite China amid companies’ bid to protect its geopolitical interests.

United Kingdom-based business newspaper Financial Times reported that dozens of companies have set up operations in Peninsular Malaysia in the last 18 months, especially in Penang, such as American chip giants Micron and Intel, European semiconductor companies AMS Osram and Infineon, and Suzhou-based Fengshi Metal Technology.

“It’s a rush. It’s not only Chinese companies [setting up in Penang]. It’s Korean, it’s Japanese, and it is Western.

“And all of this is related to the tech war between the US and China,” US parts supplier Kemikon’s chief executive Marcel Wismer was quoted saying.

Meanwhile, David Lacey, a Penang-based executive for Swiss-based AMS Osram — which was among the first overseas firms to establish a presence in Penang — told the paper that supply chain diversification had started with the pandemic but “the geopolitical [backdrop] is causing people to find alternative locations and sources”.

The report said Malaysia has been part of the “back end” of the semiconductor manufacturing supply chain for the past five decades — being involved in packaging, assembling and testing chips — but is now attempting to move up the value chain and involve itself in higher-value activities such as wafer fabrication and integrated circuit design.

Investment in Penang has been booming with RM60.1 billion in foreign direct investment in 2023, more than the total it received from 2013 to 2020 combined — leading to among others an increase in prices of industrial land from about RM50 per square foot in 2022 to as much as RM85 per square foot, according to real estate firm Knight Frank Penang’s executive director Mark Saw.

Among the new players in Penang include Chinese companies, leading Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai to caution of a future where the US may put products and equipment built in Malaysia on the restricted list.

“Further restrictions will probably prove counterproductive, especially considering the significant presence of US companies in Malaysia,” said the Minister of Investment, Trade and Industry Datuk Seri Tengku Zafrul Aziz, who pointed to the “question mark” of what else can the US do.

FT also cited Prime Minister Datuk Seri Anwar Ibrahim saying that developing Malaysia’s semiconductor industry and workforce into higher-value manufacturing is a “critical goal”.

Anwar was also quoted acknowledging a degree of past “complacency” in boosting the semiconductor industry after the initial boom in the 1970s and 1980s.

He also said that Putrajaya has directed the Ministry of Investment, Trade and Industry to look into what other countries are offering to stay competitive.

In January, its minister Tengku Zafrul had said that Malaysia’s semiconductor export is set to reap the benefits from higher global demand.

He said Malaysia is seeing the benefits coming from the electrical and electronics (E&E) sector, especially from the chips and semiconductor sector, and the nation’s policy on “active neutrality” between the United States (US) and China is very important as Malaysian companies are looking for supply chain resiliency.

Source: Malay Mail

FT: Amid US-China trade war, neutral Malaysia ‘surprise’ choice for global semiconductor industry

The Kerian Integrated Green Industrial Park (KIGIP) project is still at the initial planning stage, focusing on the land acquisition from Sime Darby Plantation Bhd, said Deputy Investment, Trade and Industry Minister Liew Chin Tong.

He said the Ministry of Investment, Trade and Industry, the Malaysian Investment Development Board, and the Perak state government have established a joint committee to implement and lead the project.

“We hope that we will be able to secure an agreement from all parties and this project can be launched this year,” he said during a question-and-answer session at the Dewan Rakyat today.

Liew was replying to a supplementary question from Datuk Ku Abd Rahman Ku Ismail (PN-Kubang Pasu), who wanted to know about the direction, timeline of outcomes, and progress of the KIGIP project to-date.

Meanwhile, he said local universities play an important role in developing more talents in the semiconductor and electrical and electronics industries.

“We need to create an environment where wages are higher, especially in the semiconductor industry, in line with the National Industrial Master Plan 2030 where the average wage can reach RM4,510,” he added.

Source: Bernama

Chin Tong: Kerian Integrated Green Industrial Park project still at initial stage

The Selangor State Development Corporation (PKNS) has launched the first phase of the Kota Puteri Green Industrial Park project (GRIP) in Rawang, Selangor, involving the development of 13 exclusive industrial lots in Rawang, Selangor, scheduled to be completed in 2027.

PKNS chief executive officer Datuk Mahmud Abbas said the GRIP development will involve the construction of 52 semi-detached factory units on a 22.2-hectare (55-acre) site.

“We hope the launch of the 13 industrial lots will be able to attract more industry players to purchase the GRIP Kota Puteri products, thus becoming a catalyst for economic growth and industrial development in the area,“ he told reporters after the launch ceremony for the project, which was officiated by Selangor Investment, Trade and Mobility exco Ng Sze Han, here, today.

Mahmud said the proposed development plan for the entire Kota Puteri GRIP is planned to be implemented in three phases, with the first phase starting in May 2024. The entire phase is expected to be completed within 10 years, he said.

GRIP Kota Puteri, which was inaugurated last year by Selangor Menteri Besar Datuk Seri Amirudin Shari, is expected to attract investments amounting to RM8 billion and is projected to generate about 5,000 job opportunities.

Mahmud said the overall development of GRIP on a 152.5-hectare (377-acre) site here has its unique investment attraction due to its easily accessible location and not far from Port Klang. He said the project with a gross development value of RM2 billion will be equipped with various state-of-the-art infrastructures to ensure that the area is being developed sustainably.

Developed under a managed industrial park (MIP) concept, he said GRIP has also received the state’s endorsement, allowing manufacturers to gain a competitive advantage with the green policy. He shared that PKNS is also planning to develop a halal hub in the area and centralised labour quarters (CLQ) to accommodate about 4,000 workers.

“The development of a green industrial park in Kota Puteri which is expected to provide up to 6,000 job opportunities will provide an abundance of sustenance and stimulate economic growth around the area,“ he added.

Source: Bernama

PKNS launches first phase of Kota Puteri Green Industrial Park in Rawang

Nestlé (Malaysia) Bhd has initiated the operation of a biomass boiler servicing the needs of its Chembong factory, a pivotal step towards further reducing its carbon footprint. 

The biomass boiler was developed and installed by technology partner ENCO Systems Sdn Bhd and entailed an investment of RM18 million. 

The biomass boiler began operations at the end of 2023 at the factory and utilises oil palm empty fruit bunches (efb) and palm kernel shell as renewable energy sources. 

It replaced fossil fuels to generate steam used for heating processes in its manufacturing operations. The company stated this approach is part of a natural carbon cycle and does not contribute to long term carbon emissions, making it carbon neutral. 

It is projected to significantly reduce the factory’s greenhouse gas emissions by 14,000 tonnes of carbon dioxide emissions annually, while simultaneously minimising pollution, reducing landfill waste, and preserving valuable natural resources. 

Nestlé Malaysia chief executive officer Juan Aranols said the initiative enabled the company to make significant progress towards its environmental goals, namely the reduction of its carbon footprint. 

“It also serves as a testament to our dedication in producing high quality products made in Malaysia, by Malaysians. 

“With the adoption of a biomass boiler and the use of renewable electricity, Milo is taking further strides towards a more sustainable future,” he said. 

Established in 1993, the Chembong factory is the company’s largest Milo plant in the world. 

Negeri Sembilan menteri besar Datuk Seri Utama Aminuddin Harun officiated the biomass boiler at the factory yesterday. 

“Driving meaningful change and sustainable development requires a collective effort, with both the public and private sector playing a role. 

“As such, I laud forward thinking companies such as Nestlé that are going the extra mile to champion sustainability in their business by taking proactive measures ti minimise their carbon footprint. 

“This aligns with the state government’s shared values of environmental stewardship and responsible economic growth,” he said.

Source: NST

Nestle Malaysia speeds up sustainability journey via biomass boiler at world’s largest Milo factory

The majority of approved investments in the manufacturing sector are from existing businesses expanding their operations, which demonstrates their confidence in Malaysia, said Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.

“In the manufacturing sector alone, 63 per cent of investments approved are from existing businesses expanding their operations.

“This shows the companies’ confidence towards Malaysia’s economic stability and growth prospects,” he said in a post on X today.

Tengku Zafrul added that Malaysia recorded 5,310 approved projects in 2023, which could generate 130,000 jobs. 

In a separate post, he said that Prime Minister Datuk Seri Anwar Ibrahim’s visit to Australia was a resounding success. 

“The prime minister announced RM24.5 billion in potential investments from five companies within the next five to ten years, and several projects will assist Malaysia in establishing a strong digital economy and renewable energy ecosystem that is estimated to create over 1,200 high-skilled job opportunities,” he said.

The visit also resulted in potential exports exceeding RM962.1 million to Australia, encompassing a diverse range of products, including urea, wood products, food and beverages, as well as electronic components.

Tengku Zafrul said these potential investments are in sectors targeted under the New Industrial Master Plan 2030 (NIMP 2030), such as renewable energy, chemicals and digital economy.

“The government is targeting industries such as these to create high-salary jobs for the people and better opportunities for small and medium enterprises.

“These achievements also mirror the belief in the MADANI government’s policies and its capacity to implement them,” he added.

Source: Bernama

Businesses expanding manufacturing operations demonstrates belief in Malaysia’s strength – Tengku Zafrul

Goodyear is currently collaborating with several companies, including Proton Holdings Bhd to employ its workers who are affected by the closure of its factory in Shah Alam.

Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz said the company has taken steps to ensure a smooth transition for its workers.

Additionally, Goodyear has assured that they will provide compensation higher than what is mandated by law.

“The closure of the Shah Alam factory is part of the cost-cutting measures undertaken by the company as it is targeting a cost reduction of up to US$1 billion per annum.

“Goodyear is also set to close two tyre factories in Germany, affecting 1,750 workers. A tyre factory in the United Kingdom is also slated for closure, so it’s not just the operations in Malaysia that are affected, but Goodyear’s operations worldwide are also impacted,“ he said in a message on the X app on Friday.

Earlier today, the Malaysian Investment Development Authority (MIDA) said that the government, through initiatives led by the Ministry of Investment, Trade and Industry (MITI) and MIDA, has mobilised a special team to facilitate job placements, as well as offering upskilling and reskilling programmes for the 500 affected employees.

Source: Bernama

Goodyear collaborating with companies for employment of affected workers – Tengku Zafrul

CHERY Malaysia may be the first Chinese automotive brand to assemble its electric vehicle (EV) in Malaysia, with the newly launched Omoda E5 the likeliest pick.

Chery Malaysia executive vice-president Leo Chen made the announcement during the launch of the E5, which also signalled the start of the company’s environmental, social and governance (ESG) initiative.

 Also present were Deputy Prime Minister Datuk Seri Fadillah Yusof and Chinese ambassador to Malaysia Ouyang Yujing.

“This initiative aligns with the government’s policy of localisation compliance and will assist Malaysia to become a hub for EVs in the region,” said Chen, adding that it would create more job opportunities and boost the local economy.

“Meanwhile, the E5 represents a significant step forward in our mission to provide sustainable mobility solutions. We believe that it will not only meet but exceed the expectations of Malaysian consumers, perhaps also setting new standards for green mobility,” he added.

Local assembly may begin as early as in the second quarter.

The company said this was possible as the E5 shared the same body frame as the Omoda 5 sport utility vehicle, which was already being assembled in the country.

The E5 is powered by a 61kWh high-capacity lithium iron phosphate blade battery and boasts  201hp and 340Nm of torque.

The three-in-one flat-wire motor paired with a two-wheel drive (2WD) setup and three leading control systems deliver a power consumption of 15.5kwh/100km and a 430km (WLTP) range. It can charge from 30 per cent to 80 per cent in 28 minutes.

The AC charging rate is 9.9kW while it is 80kW for DC charging.

The E5 also features vehicle-to-load (V2L) technology in the event that remote powering is required.

The E5 boasts rather generous dimensions.

It has a length of 4,420mm, a width of 1,830mm, a height of 1588mm and a wheelbase of 2,630mm. The boot capacity is 483 litres.

The cabin features a dual-tone combination of blue and white-beige as well as black, coupled with the use of high-quality faux leather materials.

There is a 24.6-inch curved 2K HD dual-screen, Premium Sony Sound System, dynamic ambient lighting with more than 60 colours to choose from, in-car wireless 50W charger, active cooling system and a central console that is also a cooling storage compartment.

The E5 also has the Advanced Driver Assistance System 2.5 (ADAS 2.5) with 17 functions, including front collision warning, autonomous emergency braking, adaptive cruise control, lane departure warning, multi-collision brake, traffic jam assistant, door open warning, rear cross-traffic braking, integrated cruise assist and rear cross-traffic alert.

The E5, which is available in the Aqua Green, Khaki White, Phantom Grey and Dark Black colour options, is priced at RM146,800.

The warranty package offers a seven-year or 150,000km vehicle warranty, an eight-year or 160,000km battery warranty and an eight-year or 160,000km drive unit warranty that covers the power motor, power motor control unit, power battery management system and the vehicle’s control unit.

The company is the first brand to partner with sustainable energy infrastructure solutions provider EVC to provide autocharge services at 474 charging stations nationwide.

Chery Malaysia is also offering a one-to-one exchange if the battery’s state of health falls below 70 per cent during the warranty period.

The first 2,000 customers will receive a complimentary wall box charger, V2L charger and charging credits worth RM1,000 at EVC roaming partners.

Maybank is currently offering an all-exclusive 2.08 per cent interest to customers who purchase the E5 during the promotional period (terms and conditions apply).

Source: NST

Chery Malaysia launches Omoda E5, CKD in the works

Leaders of multinational companies face unprecedented uncertainty in shaping their supply chain strategies and reconfiguring network footprints in response to global geopolitical upheaval.

Dynamics between manufacturing powerhouse China and several major trading partners have accelerated pre-existing production shifts. Technology and relative labour costs are changing. Covid-19 demonstrated the need for more resilient supply chains at a time when geopolitical tensions have created more complex considerations for global trade partners.

CEOs must also assess how to establish an ESG-compliant supply base while identifying which geographical location will be the engine of economic growth in the coming years. These complex considerations are why over 90% of global manufacturers intend to redesign their supply footprints in the next five years, according to a survey by Boston Consulting Group (BCG).

Resilient companies are twice as likely to outperform non-resilient peers in long-term total shareholder return performance. What’s more, a successful footprint transformation can improve companies’ resilience and sustainabilityandcut global manufacturing and supply-chain costs by 20% to 50%.

With companies looking to manage supply costs and mitigate risks, Malaysia could capture significant value in this evolving ecosystem, energised by new investment priorities and a focus on manufacturing opportunities.

Southeast Asia: A new centre of global manufacturing

Southeast Asia’s attractive proposition is framed by the compelling cost-competitiveness of its manufacturing landscape. BCG’s proprietary Global Manufacturing Cost Comparison Model assesses that baseline manufacturing costs in Southeast Asia are now up to 15% lower than in China — even before applying potential logistics and tariff costs — in a region boasting large volumes of skilled, low-cost labour.

Southeast Asia has already benefited from significant shifts away from China, with exports to the US soaring by 65% from 2018 through 2022, while US goods imports from China declined by 10%.

Domestic consumption in Southeast Asia is projected to reach US$4 trillion (RM19.04 trillion) by 2031. Rapid regional growth has also fashioned a large domestic market, with a GDP of US$3.6 trillion in 2022, with the share of middle- and high-income households on track to reach 84% of households by 2031.

Regionally, the Association of Southeast Asian Nations (Asean) has implemented a range of supportive policies in recent years, with measures to enhance the free flow of goods and services among member states. Expansion and modernisation of ports have been complemented by investment in energy, transport and digital infrastructure. The Indonesia-Malaysia-Thailand Growth Triangle, the Singapore-Kunming rail project and the Asean Highway Network all offer potent examples of this evolving ecosystem. These initiatives align with the wider Asean Economic Community Blueprint, which looks to embed a deeply integrated and mutually beneficial regional economy with seamless movement of goods and people.

Major trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP) offer competitive trade access with countries that together account for 40% or more of global GDP.

Globally, the value-add of Southeast Asia’s manufacturing industry will double from US$748 billion in 2022 to US$1.4 trillion by 2028. The projected compound annual growth rate (CAGR) of 11% puts Southeast Asia at the forefront of global manufacturing growth, outpacing competitors India (8.4%), China (3.6%) and Mexico (3.3%). In fact, according to our latest report Jobs, National Security, and the Future of Trade, cumulative Asean trade is forecast to grow by US$1.2 trillion in the next ten years.

Manufacturing opportunities in Malaysia

Southeast Asia’s manufacturing market is dominated by six key countries, with unique considerations as to the opportunities they present. Malaysia, Indonesia, the Philippines, Singapore, Thailand and Vietnam boast diverse manufacturing opportunities across a broad range of industries.

Malaysia’s own manufacturing opportunity is evolving, but companies must make careful strategic choices to unlock the greatest share of this value, assessing local benefits and challenges.

Foreign direct investment (FDI) into Malaysia has soared in recent years, growing at 34% CAGR from 2015 to 2021. Malaysia’s FDI relative to its GDP from 2015–2019 outperformed neighbouring countries Thailand, Indonesia and the Philippines, with only Singapore and Vietnam performing better over this period.

Malaysia ranks eighth in the World Economic Forum’s Workforce Quality Index, powered by a multicultural workforce with over half the population speaking English and more than a quarter proficient in Chinese.

Low productivity-adjusted manufacturing costs — 10% to 15% lower than China — offer a compelling proposition, backed by mature infrastructure that includes over 140,000km of road network connecting Thailand in the north and Singapore in the south.

The local manufacturing landscape is dominated by three key regions — Penang-Kedah, Kuala Lumpur-Selangor and Johor — that together account for 76% of manufacturing output and 69% of manufacturing investment.

Malaysia does have local challenges to address. Its position on IMD’s World Competitiveness Rankings declined 11 ranks to 25th from 2015 to 2021. The relatively modest size of the domestic market and more limited access to foreign markets also restrict market access. The dynamic contemporary political climate could also be perceived to impact future market performance.

To address these challenges, the government of Malaysia has introduced a number of supportive investment and manufacturing policies. The National Investment Aspirations (NIA) seek to catalyse investment to boost Malaysia’s economic recovery, secure its global position in a post-Covid-19 era, and deliver on the promise of inclusive development. This will be supported by five pillars: increasing economic complexity, creating high-value job opportunities, extending domestic linkages, developing new and existing economic clusters, and improving inclusivity.

The NIA also anchors Malaysia’s New Investment Policies, which aim to strengthen Malaysia’s foundations to develop new and existing high-value growth ecosystems while ensuring that future policies and investments are targeted at delivering maximum mutual value to investors and the nation alike. A sector-specific strategy to address investment challenges and drive systemic growth will initially target electronics and electricals (E&E), digital economy and pharmaceuticals while a second wave will further support the chemicals and aerospace industries.

Key supporting strategies, including the National 4IR Policy (N4IRP) and New Industrial Masterplan, further cement intentions to invest in a maturing economic landscape with support for manufacturing. The New Industrial Masterplan sets goals to grow manufacturing value-add at 6.5% CAGR to reach RM587.5 billion by 2030, increase manufacturing-related employment from 2.7 million in 2022 to 3.3 million by 2030, and increase median salaries from RM1,976 in 2021 to RM4,510 by 2030.

Southeast Asia, including Malaysia, is an attractive destination for supply chain relocation thanks to persistent geopolitical trends, regional policy measures and a growing domestic market. While the regional opportunity is ripe, understanding the local context is vital. Those who tread this path successfully are poised to position themselves at an exciting new heart of global manufacturing potential.

Kazutoshi Tominaga is managing director and senior partner at the Boston Consulting Group (BCG). Hitesh Tak is managing director and partner at BCG. Boston Consulting Group partner and director of global trade and investment Michael McAdoo contributed his insights to this article.

Source: The Edge Malaysia

Growing Champions: Malaysia’s supply chain opportunity in a shifting global landscape

Industry players should work with universities – not only for primary research but also for the commercialisation of products, says Datuk Seri Dr Wee Ka Siong.

Dr Wee, who is TARC Education Foundation board of trustees chairman, said this is one of the ways to bridge the gap between industry and academia.

“Research (done at universities) can be very theoretical. Industries know the preferences of their customers. For industries to do research is not easy because they are not trained.

“Industries making use of universities to do research and universities at the same time understanding industrial requirements and public demand is something that will help,” he told the media after attending Tunku Abdul Rahman University of Management and Technology’s (TAR UMT) InnoGratitude Day 2024 held at its main campus in Setapak here yesterday.

Dr Wee, who is also MCA president, said the ratio of research and development (R&D) spending to the country’s gross domestic product (GDP) is currently very low.

“Malaysia should increase its investment in R&D.

“Industries should come up with more initiatives and work with universities to upgrade knowledge and adopt the latest technologies,” he said.

Earlier in his speech, Dr Wee said industry collaboration is an important aspect in the growth of TAR UMT as outlined in its 10-year roadmap.

“One of the university’s aspirations is to be a leader in innovative academia-industry collaboration.

“This gathering is meaningful in celebrating the diverse innovative collaborations the university has forged with 83 industry partners,” he said.

Apart from producing practical industry-relevant solutions, Dr Wee said academia-industry collaborations enrich educational experiences, as students gain exposure to real-world problems, industry best practices and potential career pathways.

“This is the essence of TAR UMT’s Beyond Education philosophy, which focuses on the other important aspects of students’ development, including industry-ready skills and relevant experiences,” he said.

At the event, Dr Wee unveiled the university’s Academia Enterprise Partnership logo and also presented awards of appreciation to industry partners.

He also visited an exhibition by the university’s faculties titled “Collaboration and Innovation Through Time: Shaping the Future Together”.

Also present at the event were TAR UMT board of governors member Datuk Chong Sin Woon and president Prof Dr Lee Sze Wei.

In his closing remarks, Prof Lee expressed his hope that more collaborations will be established in the future to bring the university to the next level.

“Being a university that is very focused on its role in the socio-economic development of the country, we are very proud to forge partnerships with our industry partners and make an impact in nation-building,” he said.

Separately, in a message posted on his Facebook page after the event, Dr Wee highlighted TAR UMT’s collaboration with Technology Visionary Sdn Bhd, which is one of the university’s 83 industry partners from various industries, including finance, business and accounting, technology and engineering, food and beverage, media, applied sciences and education.

“Its chief executive officer Jeyashanker RK is very pleased to have conducted the internship programme in his company,” Dr Wee wrote in his post.

TAR UMT – with five branch campuses in Penang, Perak, Pahang, Johor and Sabah – started as a community college in 1969 before being upgraded to university college status known as Tunku Abdul Rahman University College (TAR UC) in 2013.

It gained its full-fledged university status upon receiving a certificate of registration from the Higher Education Department on Nov 7, 2022.

Source: The Star

‘Industries must link with varsities’

EVIDENTLY, age is just a number for semiconductor veteran turned venture capitalist Datuk Lai Pin Yong. BlueChip VC Sdn Bhd, which he co-founded, is raising US$200 million (RM956 million) to back Penang-based semiconductor companies in three promising segments — advanced packaging, integrated circuit (IC) design and niche equipment — and eventually have them listed on Bursa Malaysia.

With an initial capital of RM120 million, BlueChip VC set up shop as a specialised technology fund just a year ago, in early 2023, in George Town, Penang. It is now gunning for an annual return of more than 20% from its investments in promising investee companies seeing a spurt in growth as global supply chains are recalibrated with “friendshoring” or “China plus one” in mind amid heightened US-China trade tensions.

“The RM120 million starter fund has been fully committed to leading local electronics companies. Their names will be announced upon completion of formalities,” Lai tells The Edge in an interview.

“We are now planning to launch the US$200 million fund in view of the overwhelming response and strong requests to participate. We have met up with and received endorsement or interest from not just Malaysian sovereign wealth funds, but also regional ones. Some of these funds will be partners in our new fund as well as co-investors in our identified investee companies.”

An electrical engineering graduate of the National Taiwan University with five decades of experience in the semiconductor industry, Lai, who turns 80 in April, was among the pioneer batch of Malaysian engineers when Intel Corp set up shop in Penang in 1972 — the US chip behemoth’s first overseas manufacturing facility. There, he worked his way up to general manager, vice-president and eventually managing director of Asia-Pacific between 1983 and early 1994. In late 1994, he moved to Motorola Inc, where he was corporate vice-president and president of Motorola (China) Electronics Ltd, before being promoted to senior vice-president of Motorola Inc.

Lai says he has had a role in fostering the creation of champions in the local chip sector.

“At Intel, I initiated a then new policy to foster a local supply chain by localising the design of assembly, testing and packaging machines, and as a result building up the capability of local engineering firms.

“This was followed by encouraging promising young engineers, who had the [expertise] to set up their own companies, with contracts [from large foreign tech multinational corporations that had begun to outsource smaller jobs]. Eventually, it created many new semiconductor-related companies, of which at least eight have been listed [or are seeking to list] on Bursa Malaysia,” he elaborates without naming the eight companies.

Lai also says he fostered the deepening of the supply chain when he ran Motorola in Greater China. “I asked the suppliers of Motorola to set up operations in China. Otherwise, the contracts would not be given to them. Consequently, about 100 downstream foreign suppliers went to China.”

The experience and network helped to draw industrial leaders from China and Malaysia to be limited partners (LPs) at BlueChip VC, says Lai. Both he and BlueChip VC CEO Tim Chen Yongzheng are among the 12 LPs of the fund. Chen previously headed Motorola, Microsoft and Hon Hai Technology Group’s (Foxconn) operations in China.

“We will be able to induce the Chinese semiconductor firms to set up operations in Malaysia, which can serve as their second home to export, especially to the US. So far, the response from my China network in Suzhou, Tianjin, Wuxi and Shenzhen to invest in Malaysia has been overwhelming,” says Lai.

BlueChip VC and its partners can also be co-investors, which could then introduce new businesses to the local semiconductor firms, he adds, noting that US sanctions restrict the supply of semiconductors, associated intellectual property and equipment to China’s manufacturers — not just from the US, but also other allied countries such as Japan, the Netherlands, the UK and Germany — necessitating a response from Chinese firms.

Given that Penang has established a strong electrical and electronics (E&E) ecosystem over the past 50 years, Lai is of the view that the state should have the know-how, trained personnel and network to absorb the diverted orders from Chinese firms and to support their new factories.

“It is this realisation that crystallised the starting of BlueChip VC, if you like, as a catalyst and ‘marriage broker’ to further broaden and deepen the industry. It is our hope that a new impetus can be given to Malaysia, especially Penang’s semiconductor industry for the next 50 years,” he says.

While Penang is BlueChip VC’s initial focus, the venture capital firm has also received invitations and support to move into other states in Malaysia.

“However, we will be disciplined in establishing ourselves soundly with investments in Penang before branching out. We will work with semiconductor companies operating in Malaysia, be they locally owned or foreign owned, who are willing to work with us,” says Lai.

Apart from bringing in capital to its investee companies, BlueChip VC will also help them access the China market, he says. “Our targeted investee companies must be in targeted segments — advanced packaging, IC design and niche equipment — with strong market positioning and good growth opportunity, as well as a strong and ethical management team. To ensure a timely and fruitful exit, we would like to help investee companies get listed on Bursa Malaysia, or at least be attractive for a private placement.”

Lai goes on to say that BlueChip VC will not insist on having a representative on the board of directors of investee companies.

“What is more important to us is a good collaboration, as well as frequent and in-depth discussions on progress. Definitely, we will endeavour to use our network to add value to them,” he says.

Lai highlights that when these investee companies take root in the Malaysian economy, they will work closely with the locals. “In the so-called Semiconductor Industry 1.0, we have seen many outstanding local engineers get motivated to become entrepreneurs and set up their own businesses. We hope our efforts will bring about a positive momentum, with more high-value jobs being created. For sure, more partnerships and investments will help to elevate our country’s E&E industry.”

Semiconductor veterans assembled

According to Lai, BlueChip VC is a closed-end fund whose capital will be fully invested within three to four years, with the aim of returning all proceeds before the end of the 10th year.

“In other words, we have a high target of 20% return per year. Our LPs are all professionals and high-net-worth individuals. We will assemble a special research and investment team under Tim. They will be responsible for investment decisions,” he says.

“Meanwhile, I will provide advice and assistance in the analysis. We pride ourselves as a team with strong domain knowledge as most of us are from the semiconductor industry. Unlike other funds, we don’t have to draw our industrial knowledge from consultants.”

Apart from Lai and Chen, other LPs include the founders of three listed E&E companies in Penang who worked under Lai at Intel, a co-founder of a top 10 semiconductor company in China, an Asian chief technology officer of a global tech giant, as well as leading economists and financial experts.

“We have a good mix of global industry experts, local industry leaders and financial specialists as our LPs,” says Lai, declining to name the other LPs at the current juncture.

BlueChip VC is working to set up a complete team as soon as possible to undertake “vigorous evaluation of opportunities” coming its way. “Obviously, we will follow a sound risk-controlled investment strategy, meaning we will spread investments in all these areas without excessive concentration in any single industry or company,” he says.

Lai believes the global consumption of semiconductors will increase rapidly and spread into more areas in the coming years.

“We are very optimistic about the semiconductor sector. That is why we set up BlueChip VC and plan to launch more funds. We are seeing enhancement of many traditional operations using technology, be it artificial intelligence, green technology or energy savings. The world of technology is growing and improvements in tech are increasing efficiency, yield and greater sustainability,” he says. 

Source: The Edge Malaysia

Tech: Semiconductor veteran turned VC raising US$200 mil to back IPO-able chip firms

“The proposed industrial park, about the size of 1,000 football fields, will be one of the largest purpose-built fully integrated new industrial estates in Johor.”

Iskandar Waterfront Holdings Sdn Bhd (IWH) and PLS Plantations Bhd, two entities linked to tycoon Tan Sri Lim Kang Ho, are in talks with a China state-owned company to develop an industrial park and innovation hub in Johor.

The two companies inked a memorandum of understanding (MOU) with Shenzhen provincial government-owned Shenzhen Shenyue Joint Investment Co Ltd (SSJI) on Tuesday, for the proposed development of a 1,000-acre Johor-Shenzhen Industrial Park in Ulu Sedili, together with a 50-acre Johor-Shenzhen Innovation Development Hub in Johor Bahru, according to a statement from IWH.  

“The proposed industrial park, about the size of 1,000 football fields, will be one of the largest purpose-built fully integrated new industrial estates in Johor. It will be designed to provide companies with offices and production facilities, as well as related support services to promote industrial development and collaboration,” the property developer said.

“This will be supplemented by the Johor-Shenzhen Innovation Development Hub to be set up within the Johor Bahru central business district, which will provide resources and support for innovative activities and research and development initiatives in Johor,” the group said.

PLS Plantations is the landowner of one of the identified locations for the developments, said IWH, adding that SSJI’s parent, Shenzhen Investment Holding Co Ltd, has developed 50 industrial parks covering 8,000 acres in Shenzhen.

Lim, who represented both IWH and PLS Plantations at the signing of the MOU, said the two projects would ride on Johor’s industrial wave spurred by the Johor-Singapore Special Economic Zone (JSSEZ) and the Johor Bahru-Singapore Rapid Transit System (RTS).

“These two projects are a positive value proposition for Johor and will attract interest from businesses, both domestic and foreign,” he added.

IWH, in which the Johor state sovernment owns 37% through Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ), is one of the biggest land developers in Iskandar Malaysia. The IWH group owns more than 4,200 acres of land bank, including prime waterfront land in Johor Bahru.

Source: The Edge Malaysia

IWH, PLS Plantations in talks with China state-owned firm to develop industrial park, innovation hub in Johor

Masimo Medical Technologies Malaysia Sdn Bhd (Masimo Malaysia), a mission-based medical device and technology company, has invested RM100 million to set up a new production facility in Pasir Gudang near here.

Plant manager Jayakumar Krishnan said the plant has a maximum capacity of 100 million devices per year for the domestic and export markets.

“Our cutting-edge facility represents a significant investment in the future of healthcare, and we are excited to leverage Malaysia’s strategic location and robust infrastructure to drive innovation and growth in the region,” he told reporters after the grand opening ceremony of the plant today.

He said the opening of the new plant reaffirmed the company’s commitment to advancing medical technology and patient care in Malaysia.

“This factory is a symbol of our dedication to excellence, innovation, and growth.

“Equipped with cutting-edge technology, it positioned us to meet the challenges of the future while ensuring the highest quality in our products,” he said.

Meanwhile, Malaysian Investment Development Authority (MIDA) executive director of manufacturing development (resource) Umarani Muniandy said the medical technology (MedTech) industry in Malaysia has seen considerable growth characterised by a vibrant culture of innovation.

“Currently, Malaysia proudly hosts about 30 multinational MedTech companies, which engage in a wide spectrum of activities ranging from manufacturing to research and development,” she said.

She said last year, the medical devices industry witnessed approved investments totalling RM2.17 billion, consisting of 26 projects.

“Of this amount, foreign investments made up 54 per cent, with the balance of 46 per cent coming from domestic sources.

“This bears testament to our robust manufacturing capabilities, thriving research base and innovation ecosystem, which together serve as a strong value proposition for MedTech companies to grow their operations here,” she said.

She said the Malaysian government is steadfast in its commitment to bolstering the MedTech industry.

“In our ongoing efforts, we have streamlined regulations, creating a more welcoming environment for international investors,” she said.

She said this strategic move is designed to expand the Malaysian market, fostering a vibrant ecosystem for medical advancements.

“Central to our national strategy is the prioritisation of the medical devices industry within Mission 1 of the New Industrial Master Plan 2030.

“Our vision is clear: to elevate Malaysia as a globally recognised, innovation-driven manufacturing powerhouse,” she said.

She said the plan emphasised the development of the medical devices and pharmaceutical industries, capitalising on innovative technologies and harnessing the potential of our high-skilled talent pool.

She added that this approach is aimed at propelling our economy towards greater complexity and resilience.

Source: Bernama

Masimo Malaysia invests RM100mil to set up production facility in Johor

Sandakan has been earmarked for the development of the Palm Biomass Collection and Processing Centre (CPC).

Deputy Agriculture and Commodities Minister Datuk Chan Foong Hin said the centre, with an estimated investment of RM60 million, is a collaboration between Nextgreen Global Bhd and Kumpulan Sawit Kinabalu.

He said the project is one of the initiatives under the National Biomass Action Plan 2023-2030, which was launched on Dec 7 last year.

“The plan is designed to assist in the planning and development of the national biomass industry until 2030,” he said during the question-and-answer session in the Dewan Rakyat here.

Chan, who is Kota Kinabalu member of parliament, was responding to a question by Vivian Wong Shir Yee (PH-Sandakan) regarding the ministry’s plans to develop downstream palm oil and biomass industries in Sabah, particularly in the Sandakan region.

Last year, the Malaysian Palm Oil Board (MPOB) said that Sabah has 125 operational palm oil mills and the second-highest area of oil palm cultivation in Malaysia at 1.51 million hectares.

Sabah also has 10 palm kernel crushing factories and 11 refineries in operation.

The Sandakan region, which includes Sandakan, Kinabatangan, and Sugut/Labuk in Beluran, covers a total oil palm planting area of 742,304 ha with 34,016 ha dedicated to replanting.

There are 65 operational palm oil mills in this region.

The estimated availability of palm biomass in the Sandakan region is 13.04 million metric tonnes, comprising palm fronds (8.19 million metric tonnes), palm trunks (2.53 million metric tonnes), empty fruit bunches (0.87 million metric tonnes), mesocarp fibers (0.92 million metric tonnes), and palm kernel shells.

Source: NST

Palm biomass collection and processing centre to be built in Sandakan

Actiforce, which is part of Germany’s Hettich Group — one of the world’s largest manufacturers of furniture fittings — is investing RM50 million to set up a new manufacturing plant in Penang

Actiforce, which originates from the Netherlands, plans to have the plant serve as a hub for research and design, manufacturing and distribution of furniture fittings for the Europe and the US markets, according to a joint statement from Actiforce, InvestPenang and the Malaysian Investment Development Authority or Mida.

“It will be instrumental in Actiforce’s global expansion. The move to consolidate manufacturing capabilities in one area, creating a comprehensive one-stop centre, exemplifies Actiforce’s commitment to lean manufacturing and delivering better value to customers.

“The company aims to enhance the local economy, generate employment opportunities for the local community, and solidify its position as a key contributor to regional prosperity,” the statement read.

Penang Chief Minister Chow Kon Yeow said the state is proud to host Actiforce to showcase its capacities and capabilities in Penang, as it further supports the needs of industrial players in next generation technologies and growth strategies.  

“The opening of the new plant will pave the way towards creating employment opportunities for local talents across various categories,” Chow added.

“With the increasing technological development and advancement of high-quality components by companies like Actiforce, Malaysia’s position as a global supply chain and distribution hub is further solidified,” said Mida chief executive officer Datuk Wira Arham Abdul Rahman.

Actiforce chief financial officer Harry Slingerland said the group is thrilled to inaugurate its new facility in Penang, which reflects its commitment to pushing the boundaries of innovation and delivering quality products and services.

“Penang has proven to be an ideal location for Actiforce due to its strategic positioning, skilled workforce, and the supportive business environment provided by the local community and government,” Slingerland said.

Source: The Edge Malaysia

Furniture maker Actiforce to set up RM50 mil manufacturing plant in Penang

The global oleochemicals industry is set to expand at least until 2029 with the Asia-Pacific leading in the regional share and growth rate, according to Nikhil Vallabhan,  director of chemicals, materials, and food practice at business consulting firm Frost & Sullivan.

He said the compound annual growth rate (CAGR) of oleochemicals in the global market is expected to be maintained at around 3.5% to 4% by volume from 2023 to 2028 and around 5% to 5.5% by revenue from 2024 to 2029.

Drivers for the industry’s growth include the greater usage of oleochemicals as additives in plastics processing and their ability to offer the same functionality and performance as petroleum chemical sources, he noted.

The estimated value growth of over 5% should indicate that prices for various oleochemical products are expected to improve because of the value addition in markets such as Europe and North America, particularly in personal care, cosmetics, soaps and detergents, he said.

“We are looking at a total volume of approximately 30 million tonnes of oleochemical products by 2028 or 2029,” Vallabhan said during his presentation at the 35th Palm & Lauric Oils Price Outlook Conference & Exhibition.

He emphasised that the Asia-Pacific region would lead in market share and growth as several industries that require oleochemicals have moved there due to better economies and logistics.

“China continues to be one of the largest consumers of various types of oleochemicals. Even though the growth might not be coming from China specifically, the sheer volume of consumption required in China still makes it a very attractive market to be in. It is a market that we cannot completely neglect,” he said.

“As producers of oleochemicals in the Asia-Pacific market, countries such as Malaysia, Korea, Japan and India are your go-to countries at the moment,” he added.

On the other hand, Vallabhan said the North American market had reached a stage of maturity with its demand becoming relatively slower, while the European market could be maturing by 2030 as well.

Nevertheless, he said the margins will be greater when supplying to European customers, largely due to the growing luxury cosmetics sector in Europe, with an increase in per capita spending on luxury personal care products.

Source: The Edge Malaysia

Oleochemicals industry to grow in the near term with Asia-Pacific leading

The nation’s manufacturing sector, which is one of the key economic sectors, is expected to strengthen in the coming months owing to improvement in the export-oriented sector.

Economists are anticipating the country’s external trade to improve and exports to further improve in the near term, partly attributing to the improvement in China’s economy and in anticipation of the technology upcycle.

Malaysia’s exports grew 8.7% year-on-year (y-o-y) in January to RM122.4bil, higher than the 3% projected by 17 economists in a recent Reuters poll.

The latest export figure also reversed Malaysia’s exports downtrend, which started in March last year.

On the whole, total trade increased 13.3% to RM234.7bil in January. Trade surplus was at RM10.1bil, but this was lower than the RM18.1bil in the same month a year earlier.

Kenanga Research said it is reiterating its outlook that domestic manufacturing conditions, especially in the export-oriented sector, will continue recovering in the coming months.

This is largely driven by the expectation of a technology upcycle, which is likely to appear more imminent in the second half of this year, the research house added.

Additionally, the brokerage said China’s gradual economic recovery is expected to pick up pace, given the significant amount of stimulus from the government.

“Nevertheless, the downside risk to our outlook remains associated with external factors such as escalating geopolitical tensions in the Middle East and Eastern Europe which could disrupt the global supply chain and potentially drag global trade activity into a prolonged downturn.

“Against this backdrop, we maintain our 2024 gross domestic product (GDP) forecast of 4.5% to 5%, compared with 3.7% last year,” Kenanga Research noted.

Malaysia’s manufacturing sector continued its recovery path, with the seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) rising to 49.5 in February, up from 49 in January.

The February figure was the highest since September 2022.

Output declined at the slowest pace since August 2022 with signs of recovery in both new orders and exports orders. The index has remained in contraction (below the neutral threshold of 50) since August 2022 due to subdued global trade.

Manufacturing PMI is a measure of the prevailing direction of economic trends in manufacturing. A reading above 50 signals expansion while below 50 indicates contraction.

TA Research said, traditionally, it draws correlations between PMI figures and official statistics such as real manufacturing sector data, real GDP and real exports.

“Notably, there exists a significant correlation of 62.2%, 60.4%, and 44.2%, respectively.

“Upon a more detailed analysis of the ongoing trend, there is a sense of optimism for a potential improvement in the first quarter (1Q), even if it remains below the growth threshold.

“This aligns with our maintained perspective, anticipating a positive momentum in the manufacturing segment’s contribution to real GDP, in contrast to the 0.3% contraction observed in 1Q23 (1Q24 real manufacturing forecast: 2% y-o-y).”

Moreover, the research house said as per insights from S&P Global, the historical relationship between PMI and official data indicates an upward trend in both GDP and manufacturing production, pointing towards improvement in 1Q24.

Looking ahead, the brokerage said optimism for the year-ahead outlook in terms of output slightly decreased to a six-month low in February, but confidence remains buoyed by the expectation of an improved demand environment and stabilised price conditions.

Source: The Star

Manufacturing sector predicted to strengthen

Lotte EM Malaysia Sdn Bhd plans to expand its operations in Sama Jaya Free Industrial Zone.

According to a press release from Datuk Amar Awang Tengah Ali Hasan’s office, a delegation led by newly-appointed chief executive officer Park Jae Chel briefed the Deputy Premier during a courtesy call today.

The meeting was also to introduce Park to Awang Tengah, who is also International Trade, Industry and Investment Minister.

Also present were Deputy Minister of International Trade, Industry and Investment Datuk Dr Malcolm Mussen Lamoh, Ministry of International Trade, Industry and Investment deputy permanent secretary Lo Sheau Sia, and InvestSarawak chief executive officer Timothy Ong.

Lotte EM Malaysia Sdn Bhd is a company that manufactures Elecfoil (Electrodeposited Copper Foil) in Kuching with foreign investment from its parent company in South Korea.

Elecfoil is an essential basic material of the electronic business and it is used as a major component for lithium-ion batteries.

Source: Borneo Post

South Korea’s Lotte EM Malaysia to expand operations in Sama Jaya

China-based information technology company GDS Holdings Ltd is set to expand its business in Johor.

Johor Menteri Besar Datuk Onn Hafiz Ghazi said GDS Holdings, which is a leading data centre operator, had invested RM14.33 billion in the state, with the opening of two data centres in the Nusajaya Tech Park and Kempas Tech Park.

“I’m happy that GDS Holdings has stated its readiness to expand its business in Johor, and is confident Johor is capable of becoming a competitive artificial intelligence hub,” he said in a post on Facebook on Sunday.

Onn Hafiz, who is currently on a working visit to the Shenzhen Special Economic Zone, China, from March 2-7, said the Johor government’s delegation held a meeting with GDS Holdings, and gained valuable insights into the company’s business framework.

“I’m amazed to [be able to] learn about their vision and business model in developing data centres, which have successfully contributed to making China a smart nation and digital economy powerhouse,” he said.

He added that as a global giant company, GDS Holdings had more than 100 data centre projects across Asia, and is ranked ninth out of the top 250 data centre companies in the world in 2024.

“With the establishment of the Johor-Singapore Special Economic Zone, I am confident that Johor can attract more investors to the state and create high-impact investment packages, besides emulating Shenzhen as a leading global investment hub,” he added.

Source: Bernama

China-based GDS set to expand business in Johor, says MB