Malaysia woos Microsoft, Google to bolster data hub ambitions
MALAYSIA wants to lure Microsoft and Alphabet’s Google in its drive to be a data hub and as it positions itself as a neutral supply chain base amid rising US-China tensions, said Trade Minister Zafrul Abdul Aziz. “We are attracting as many as we can,” and “slowly establishing ourselves” as a data centre hub, Zafrul said in an interview with Bloomberg Television on Friday (Jun 9).
Malaysia’s investment success this year includes attracting companies like Tesla and Amazon Web Services (AWS). Tesla plans to import its electric vehicles into the country and build a network of superchargers, while AWS will invest RM25.5 billion (S$7.4 billion) in cloud-computing infrastructure by 2037.
Simmering tensions between Washington and Beijing are pushing global businesses to seek locations outside China. Malaysia is vying with other South-east Asian countries like Vietnam and Thailand for investments aimed at building new supply chains.
Malaysia attracted RM71.4 billion in approved investments in the first quarter of this year, up 67 per cent from a year earlier, said the Malaysian Investment Development Authority. Foreign direct investments made up over 52 per cent of the flows. Earlier this month, the country secured RM23 billion of potential investments during a trade mission to Japan.
Tesla chose Malaysia because of a proven ecosystem built over the past 50 years, Zafrul said. Malaysia has also sought to capitalise on its attractiveness as a semiconductor hub amid uncertain regional geopolitics. “We are in the position of being neutral and being part of the critical supply chain,” he said. “Malaysia has been a net beneficiary.”
It caters to about 13 per cent of the world demand for chip testing and packaging, and what Zafrul estimated as a quarter of US chip-testing and assembly needs. Companies in the sector already provide services worth more than RM200 million to Tesla, said Zafrul.
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Malaysia’s economy is heavily dependent on trade and vulnerable to shocks resulting from disruptions in commerce, especially involving China, its largest partner since 2009.
The battered trade picture is contributing to what Zafrul called a “very challenging year” for growth in addition to monetary policy tightening, and the continuing impact of Russia’s war in Ukraine.
Malaysia’s exports fell the most in almost three years in April, and this may persist as China’s economic recovery loses traction. Its gross domestic product expanded a faster-than-expected 5.6 per cent in the first quarter from a year earlier, and the government has projected a 2023 growth rate of 4.5 per cent, a moderation from last year.
The benchmark stock index is among the worst-performing Asian stock gauges this year as weakening commodity prices and concerns about a slowdown in the world economy prompted global funds to exit local shares. The ringgit has slid 4.6 per cent year to date as rising US interest rates supported the greenback. BLOOMBERG
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