“Malaysia is seeing the benefits coming from the electrical and electronics (E&E) industry, especially from the chip and semiconductor sectors.
“The nation’s policy on ‘active neutrality’ between the US and China is very important as Malaysian companies are looking for supply chain resiliency,” he said.
Tengku Zafrul said Malaysia has been in this sector for a while now, in the last 50 years.
“In terms of the global market share of the semiconductor testing sector, we are about 12% to 13%, and we are the sixth-largest exporter of semiconductors.
“The E&E sector is so big in Malaysia that 40% of our exports are actually from the E&E sector,” Tengku Zafrul said in an interview with CNN.
He noted that there were increased investments into Malaysia and the Southeast Asian region last year against a “tough global economic outlook”.
“In 2022, the total foreign direct investment (FDI) that flowed into Asean increased 5% and if you look at what is happening in the world, the global FDI is down by 12%.
“However, Malaysia’s investments for the first nine months (of 2023) were at a record high in the last decade. This shows that there is opportunity against the tough backdrop of the global economic outlook,” Tengku Zafrul said.
Malaysia attracted RM225 billion of approved investments in the first nine months of last year, exceeding its full-year target for 2023, with FDI accounting for 55.9% of the total.
Tengku Zafrul said the ministry is looking to diversify trade with other countries and regions while also increasing intra-trade within the Asean region, which currently stands at 20%.
“As trade ministers in the region we are working closely to make sure to increase this number.
“One of the things that we are looking into is to complete an agreement called the Digital Economic Framework Agreement by 2025 because electronic trade will definitely increase within the region,” he added.
He also noted that there was a significant upside of potentials coming from intra-trade within Asean due to its young population aged below 30 years, comprising 50% of the total population of 680 million.
Meanwhile, the government is cautiously optimistic about Malaysia’s gross domestic product (GDP) being at 4% to 5% in 2024 and expects the country’s economic growth to be around 4% as well.
“There will be some negative impact from what is happening globally and that is why we are a bit conservative with our GDP forecast of around 4% to 5%. Malaysia is a trading and open economy whereby trade to GDP is 160%.
“We will be watching these global economic events closely and we hope the situation will not escalate and have an impact on the region and Malaysia as well,” Tengku Zafrul said.
On whether the liquidation risk of China’s Evergrande Group could potentially pose a headwind for Malaysia, Tengku Zafrul stressed on the importance of insulating an economy like Malaysia.
He said China remains an important trading partner in the Asean region, and Malaysia is one of the largest.
“Growth in China is going to have an impact on regional growth. We all know what is happening in the property sector in China and that may possibly impact the whole economy of China.
“We will watch it closely but as I said, insulating an economy like Malaysia is important as China and the US constitute 45% of the total GDP. Having said this, these two economic powers are going to influence the economy of Southeast Asia, especially Malaysia,” he added.
A Hong Kong court on Monday ordered the liquidation of property giant China Evergrande Group, a move likely to send ripples through China’s crumbling financial markets as policymakers scramble to contain a deepening crisis.