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New Straits Times
05-07-2025
- Business
- New Straits Times
Malaysia poised to cement role as future-ready manufacturing powerhouse
KUALA LUMPUR: Malaysia is fast emerging as a competitive, future-ready manufacturing hub, a transformation that, if sustained, could chart the course of the nation's economic journey for years to come. Recent data and investment flows point to growing confidence in Malaysia's industrial capabilities, with an economist saying the country is poised for a stronger manufacturing performance in the second half of 2025. This cautious optimism comes despite lingering headwinds, from volatile energy prices and fragmented trade dynamics to ongoing shifts in global supply chains. UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research Mohd Sedek Jantan said the firm remains cautiously optimistic about the overall outlook for 2025, while holding a more confident view of the second half. "The external environment appears to be on a firmer footing, with a reduction in disruptive developments from major economies such as the United States and China. "Unlike the first half of the year—which was characterised by volatility in global trade policy, monetary tightening, and geopolitical uncertainty—the remainder of 2025 is likely to benefit from greater policy clarity, a more balanced global economic outlook and improving investor sentiment," he told Business Times. According to the Malaysian Investment Development Authority (MIDA), Malaysia approved RM89.8 billion in total investments in the first quarter of 2025, with RM30.5 billion directed specifically toward the manufacturing sector. Of this, foreign investments made up RM25.52 billion, representing 84 per cent of the manufacturing total, and are expected to generate 18,317 new jobs. Sedek said the key catalysts in the coming months include the resolution of tariff-related uncertainties. He said the 90-day reciprocal tariff pause is set to expire on July 9 and a constructive outcome, particularly the avoidance of a 24 per cent blanket tariff and continued exemptions for semiconductors, would remove a major source of trade-related risk. He added that at the domestic level, the upcoming 13th Malaysia Plan (13MP), scheduled to be tabled between July and August, will provide a critical medium-term development framework. "Aligned with the Madani Economy Framework, the New Industrial Master Plan 2030 (NIMP 2030) and the National Energy Transition Roadmap (NETR), the 13MP is expected to prioritise high-value sectors, digitalisation, sustainability and industrial deepening," he said. He added that further domestic catalysts include the upcoming rollout of the National Investment Incentives Framework (NIIF) and the Johor–Singapore Special Economic Zone (JS-SEZ) blueprint in the third quarter, both anticipated to attract significant investment and strengthen regional economic integration. "Momentum in capital expenditure remains strong, supported by increased approvals of manufacturing projects, rising imports of capital goods, and continued credit expansion for industrial building activity. "The data centre segment is a standout, with Pearl Computing expected to tender contracts for five hyperscale data centres valued at RM10 billion in the second half, while Tenaga Nasional Bhd (TNB)'s plan to sign up to 2GW in new electricity supply agreements reflects a structural shift in energy demand linked to digital infrastructure," he said. Sedek added that 2026 Budget, scheduled for tabling in October, is expected to be expansionary, potentially exceeding RM420 billion, as it aligns with 13MP, NETR, and NIMP 2030 goals. FUTURE-PROOFING MALAYSIAN MANUFACTURING By embracing market diversification and integrating advanced technologies such as artificial intelligence (AI) and automation, Malaysian manufacturers can build greater resilience, optimise costs and stay competitive in an increasingly unpredictable global environment. Epicor Malaysia senior country manager Ben Lim said the industry players must adapt digital transformation, automation and workforce development strategies to remain competitive amid escalating global trade uncertainties and supply chain disruptions. He said local manufacturers must prioritise agility, resilience and technological adoption to navigate the increasingly complex economic landscape. "Global supply chain realignment definitely is in place. Looking at such drastic trade policy uncertainties—and of course, there is protectionist measurement—this can really bring up a lot of challenges for manufacturing sectors," he said. While acknowledging the difficulties, Lim said geopolitical disruptions, including protectionist trade policies, have led to unpredictable costs and supply chain vulnerabilities. "It's a two-edged sword. While there are challenges, we're also seeing significant benefits, whereby foreign investment has been flowing steadily into the region. "Over the past five years, sectors like semiconductors, factory automation and industrial machinery have grown rapidly. In fact, Malaysia's manufacturing industry is booming," he added. Lim said technology, especially supply chain optimisation and AI, is now critical for manufacturers navigating unpredictable conditions. "They can look at advanced supply chain solutions. These are helping them to have a visibility which enables their capability to analyse," he added. Lim said Epicor's investment in AI began four years ago, with tools now evolving into intelligent assistants and allows users to make faster and smarter decisions. "We started this AI journey about four years back. Now we have predictive, generative and today personalised AI. That is where Epicor AI module heads towards—personalised AI—and a combination of all these different modes of AI that bring towards cognitive enterprise resource planning for Epicor Kinetic." Echoing the same sentiment, Sedek said local players especially MSMEs, need to diversify their markets and adopt new technologies to reduce risks and stay competitive. He said diversifying export markets and leveraging trade initiatives like the Malaysia–Gulf Cooperation Council (GCC) free trade agreement can reduce exposure to protectionism, while robust domestic demand, supported by wage hikes and tourism recovery, offers resilience in consumer-driven sectors. He added that AI will play an increasingly strategic role in reducing systemic risks and enhancing competitiveness, while simultaneously driving semiconductor demand and accelerating the expansion of Malaysia's data infrastructure. "With TNB expected to sign up to 10 new electricity supply agreements in 2025, supporting a 1.5–2GW capacity uplift, the country is consolidating its position as a regional data centre hub. "AI is also catalysing the development of smart city solutions, enabling decentralised decision-making, real-time monitoring, and greater operational efficiency across sectors. "These shifts are raising Malaysia's total factor productivity and embedding digital resilience into the industrial fabric," Sedek said.
New Straits Times
26-06-2025
- Business
- New Straits Times
Digital investments exceed target
KUALA LUMPUR: Malaysia has attracted RM310.7 billion in digital investments from 2021 to March 2025, more than double the national target of RM130 billion, cementing its position as a fast-emerging digital infrastructure hub in Asia Pacific. According to Malaysian Investment Development Authority (MIDA) chief executive officer Datuk Sikh Shamsul Ibrahim Sikh Abdul Majid, these investments have generated over 92,000 jobs, particularly in high-demand fields such as cloud engineering, artificial intelligence (AI) and cybersecurity. The influx of capital was facilitated through the Digital Investment Office (DIO), a strategic collaboration between MIDA and the Malaysia Digital Economy Corporation (MDEC). Speaking at the Bursa Malaysia-Hong Leong Investment Bank Bhd (HLIB) Stratum Focus Series titled "Data Centre 2.0: The Ecosystem and What's Next for Malaysia?', Sikh Shamsul said Malaysia is now leading a new wave of next-generation digital infrastructure development. The sector is evolving beyond traditional co-location services toward generative AI, quantum computing, and large-scale automation. The shift to Data Centre 2.0 reflects Malaysia's growing maturity in digital infrastructure, he said. "Recent global shifts, such as the United States (US) Department of Commerce's recalibration on AI division rules, signal a deeper understanding that digital leadership cannot be siloed or reactive. It must be strategic, collaborative and bold. "For Malaysia, this is a call to action. We must continue to lead with agility, vision and policy for data centre development," he said. In the first quarter of 2025, Malaysia approved RM89.8 billion in digital investments, marking a 3.7 per cent year-on-year increase. Of that, RM35.1 billion was directed into the information and communication technology sub-sector, underscoring continued investor confidence in the local digital economy. Menawhile, HLIB chief executive officer Lee Jim Leng said Malaysia must reinforce its position as a neutral, stable, and indispensable hub for data and AI development to remain competitive in the rapidly evolving digital economy. Lee said this goal demands bold, future-ready policies that not only catalyse homegrown AI innovation and uphold data sovereignty but also accelerate the development of energy-efficient, sustainable data centre infrastructure, critical components of any advanced digital ecosystem. He added that deeper collaboration between the government, industry players and academia will be crucial to ensuring Malaysia builds long-term competitiveness in high-performance digital infrastructure. "Malaysia is entering the era of Data Centre 2.0, a phase where the focus moves beyond basic co-location services to advanced, high-performance computing infrastructure that supports AI workloads, green innovation, and data sovereignty. "With RM6.7 billion in approved investments and another RM3.9 billion currently in advanced hyperscale discussions, Malaysia is no longer a peripheral player in the region. "Malaysia should now be positioning itself as a key digital infrastructure hub," she added. Lee noted that the global AI revolution is transforming every industry, and data centres are the backbone of this new digital era. However, she cautioned that this transformation is unfolding amid growing geopolitical tensions, particularly the recent US restrictions on exports of advanced AI chips, which have sent shockwaves through the global technology supply chain. "While Malaysia is not a direct target of these restrictions, we remain a vital node in an interconnected global economy. Any disruption to the supply of high-performance chips from giants like NVIDIA and AMD will directly affect the cloud providers, hyperscalers, and enterprises that are powering our digital future," she said. Despite these global challenges, Lee believes Malaysia has a real opportunity to solidify its position. She said this shift is backed by data reflecting rising investor confidence and market interest. She pointed out that MIDA had approved RM6.7 billion in data centre investments. While that figure is impressive, she said the additional RM3.9 billion currently under advanced discussion signals the massive opportunities still ahead. "This domestic boom is also further validated by our growing presence on the regional stage. According to global real estate services firm Jones Lang LaSalle (JLL), Malaysia now attracts 38 per cent of all new data centre investments across the Asean region. "Even more notably, JLL projects that our market share could surpass 40 per cent by next year. This isn't just growth. It marks a consolidation of our role as the destination of choice for digital infrastructure investment. "The momentum is clear, with RM2 billion worth of data centre construction contracts already awarded this year, proving that these multi-billion-ringgit commitments are moving quickly from blueprints to physical infrastructure," she said. Lee said global tech giants such as Google, Microsoft, and AWS are not only investing in Malaysia; they are doubling down, recognising the country's immense potential as a regional data powerhouse. She noted that demand for data centres continues to rise, fuelled by the rapid expansion of AI and cloud computing. Overall, Lee said the transition to Data Centre 2.0 presents both a challenge and an opportunity, but with the right strategies, Malaysia can turn global uncertainty into a national advantage and cement its leadership as Asean's digital infrastructure hub.
New Straits Times
25-06-2025
- Business
- New Straits Times
Data centre 2.0 transition key towards sustainable digital sector: MIDA
KUALA LUMPUR: Malaysia's shift towards Data Centre 2.0 is a crucial step in building a strong foundation for the country's digital sector growth, said Malaysian Investment Development Authority (MIDA) chief executive officer (CEO) Datuk Sikh Shamsul Ibrahim Sikh Abdul Majid He said data centres are going through a generational shift, transitioning towards generative artificial intelligence (AI), quantum breakthroughs and large-scale automation. "Recent global shifts – such as the United States (US) Department of Commerce's recalibration on AI division rules – signal a deeper understanding that digital leadership cannot be siloed or reactive. It must be strategic, collaborative and bold. "For Malaysia, this is a call to action. We must continue to lead with agility, vision and policy for data centre development," he said in his keynote address at the Bursa Malaysia-Hong Leong Investment Bank Bhd (HLIB) Stratum Focus Series titled 'Data Centre 2.0: The Ecosystem and What's Next for Malaysia?', here today. Sikh Shamsul also said Malaysia's digital ecosystem recorded RM89.8 billion in total approved investments in the first quarter of this year, a 3.7 per cent increase year-on-year, with RM35.1 billion channelled into the information and communication sub-sector. "From 2021 to March this year, the Digital Investment Office (DIO), a joint initiative by MIDA and Malaysia Digital Economy Corporation (MDEC), has facilitated RM310.7 billion in digital investments. "We have surpassed our national target of RM130 billion, well ahead of schedule, and generated more than 92,000 new jobs, many in frontier domains like cloud engineering, AI operations and cybersecurity," he said. Meanwhile, HLIB group managing director and CEO Lee Jim Leng said the global AI revolution is transforming every industry, and data centres are the very backbone of this new era. However, she noted that the transformation is unfolding against a backdrop of geopolitical tension, especially with the recently imposed restrictions by the US on advanced AI chip exports, which have sent shockwaves through the global technology supply chain. "While Malaysia is not a direct target of these chip restrictions, we are a key node in a deeply interconnected global economy. But, against this global challenge lies Malaysia's defining moment and opportunities. "The transition to Data Centre 2.0 is both a test and a tremendous opportunity. By leveraging our strategic advantages, fostering innovation, and strengthening our partnerships, we will be able to navigate global uncertainties and firmly establish Malaysia as ASEAN's leading data centre hub," she said.
New Straits Times
19-06-2025
- Business
- New Straits Times
Reform agenda on track, investor confidence growing
KUALA LUMPUR: The Prime Minister's Office rejected claims that reforms are not taking place, calling them unfounded. The prime minister's senior press secretary, Tunku Nashrul Abaidah, said the reform agenda is advancing steadily through structured action under the Madani Economy framework. "As presented by the Prime Minister (Datuk Seri Anwar Ibrahim) through the Madani Economy framework, the core objective is to raise the ceiling by strengthening the nation's economic resilience and ensuring the continued well-being of the people," he said during the Prime Minister's Office daily briefing today. Tunku Nashrul said Malaysia recorded RM89.8 billion in approved investments for the first quarter of this year, marking a 3.7 per cent increase compared to the same period last year, despite global economic challenges. "These investments are expected to generate 1,600 new projects and over 33,000 job opportunities across the country." In the microelectronics and semiconductor sectors, he said Malaysia secured RM4.6 billion in potential investments and RM507 million in potential exports from its participation in Semicon Southeast Asia 2025. "These announcements are clear evidence of investor confidence in the country's reform policies." Tunku Nashrul added that Malaysia's latest achievement in the IMD World Competitiveness Index 2025, where the country rose to 23rd position, up 11 places from 34th last year, the best performance since 2020, was not a coincidence. "The improvement is a result of continued commitment and comprehensive implementation by the Madani government through a whole-of-government and whole-of-nation approach. "The progress also demonstrates how economic and bureaucratic reforms are bearing fruit and that the Madani Economic framework continues to place the national economy on the right track." He said the success also reflects collective efforts to strengthen fiscal policies, simplify business processes and accelerate public service delivery reforms, including more than 1,000 initiatives under the Bureaucratic Red Tape Reform. "For example, the national bureaucratic perception index has jumped 22 places, an indication that reforms are producing tangible results, not only at the national level but also with international recognition." Tunku Nashrul said that the Madani government has consistently welcomed constructive criticism since taking office. "This stance is translated into action. Every piece of feedback is seen as an opportunity for improvement and today's achievements reflect that very approach," he said.
New Straits Times
15-06-2025
- Business
- New Straits Times
Analysts: Labour market to stay stable in 2025
KUALA LUMPUR: Malaysia's labour market is expected to remain stable throughout 2025, supported by resilient domestic demand, said economists. TA Securities economist Faris Burhanuddin said that despite persistent global geopolitical tensions, the labour market remains resilient, backed by a stable unemployment rate and strong growth in the services and technology sectors, as well as increasing investments in digitalisation and automation. "We also believe that Malaysia's labour market continues to demonstrate resilience, supported by the country's emergence as a prominent global hub for electrical and electronics (E&E) products, particularly semiconductors," he said in a note. Farid said the government's effort to position Malaysia as a leading hub for energy and semiconductor manufacturing has attracted substantial foreign investment. This includes a recent move by a Japanese company, which opened a manufacturing facility in Pasir Gudang, Johor, creating 460 high-skilled jobs with competitive salaries. In April 2025, the employment rate rose by 2.8 per cent year-on-year to 16.82 million persons, according to the Department of Statistics Malaysia. Meanwhile, the labour force participation rate increased to 70.8 per cent and the employment-to-population ratio sustained at 68.6 per cent. Farid said that structural initiatives such as preparations for Visit Malaysia 2026 are also expected to boost tourism-related employment starting this year. He pointed out that tourism data reinforces this positive outlook, with tourist arrivals reaching 13.38 million in the first four months of 2025, an increase of 21 per cent from 11.07 million last year and 12.4 per cent higher than the pre-pandemic level at 11.90 million in 2019. MIDF Research said rising employment and wage growth in domestic-orientated sectors will provide support to household spending. The firm said expansion in job creation and a healthy labour demand will be fuelled by robust domestic demand and sustained investment activities. "Steady employment growth coupled with a lower unemployment rate suggests more job seekers are successfully securing employment, though youth employment remains a persistent challenge. "Looking ahead, favourable labour market conditions are expected to support domestic demand and underpin economic growth despite external trade uncertainties," it said. Meanwhile, Hong Leong Investment Bank Bhd (HLIB Research) chief economist Felicia Ling said sustained domestic demand and supportive government policies will support the labour market. She said the continued realisation of RM89.8 billion in approved investments in the first quarter of this year is also expected to fuel job creation. TA Securities upgrades its full-year 2025 unemployment rate forecast to an average of 3.0 per cent, while MIDF Research expects it to average around 3.1 per cent. Despite the positive outlook, the economists remain cautious of potential external and domestic headwinds. Ling said the downside risks remain, as ongoing global policy uncertainty may worsen domestic business sentiment. "While we anticipate minimal impact from the Sales and Service Tax expansion taking effect on July 1, the potential pass-through of higher operational costs may prompt employers to be cautious," she added. Farid pointed out that the escalating trade tensions, particularly between the US and China, pose downside risks to Malaysia's trade-reliant sectors such as electronics, machinery and intermediate goods. He said this may lead to employment volatility in key export-oriented regions like Penang and Johor. He added that Petronas' intention to right-size its workforce in response to a more challenging global operating environment adds further uncertainty. "While the full details of the restructuring have not been disclosed, and the new organisational structure is only expected in the second half of the year, we currently view this as a limited downside risk to our labour force projections," he added.
