With US multinational corporations (MNCs) diversifying their investments under the China+1 strategy, or relocating their operations out of China, Asean nations are poised to be the next destination of new investments, according to Maybank group president and CEO Khairussaleh Ramli.

The alternative Asian supply chain, known simply as “Altasia”, stretches like an arc from Japan all the way to India, Khairussaleh said at the InvestMalaysia 2023 conference today.

“Malaysia, being in the middle of this ‘crescent’, is the best location for multinationals looking for places to put their investments,” he said.

The diversion of trade and relocation of supply chains out of China picked up pace in 2019, a year after the start of the US-China trade war during the Donald Trump administration.

The disruptions to global manufacturing supply chains and the strict measures imposed by China to curb the spread of Covid-19 from 2019 to 2022 only worsened the already tense situation.

“That has now been further exacerbated by increasing geopolitical tensions between the US and China, as well as rising labour costs in China,” Khairussaleh said.

He noted that multipolar geopolitical turbulence has also altered the global landscape and continues to shape macroeconomic developments.

“The war in Ukraine may be seen as a proximate cause of various disruptions, including surging inflation, concerns around food and energy security, and the prospect of a sharp slowdown in economic activity in most parts of Europe,” he added.

According to the International Monetary Fund, global economic growth is expected to slow down to 2.9% this year from 3.4% last year.

“Malaysia’s real gross domestic product growth on the other hand is projected to be about 4.5% this year versus 8.7% last year,” Khairussaleh said.

He said that despite uncertainties, Malaysia continues to attract high-impact investments that will have spillover effects on the economy over the medium to long term.