He said he was confident Malaysian firms would similarly be keen to do business despite the legislation being enacted, South China Morning Post reported.

“Generally, Malaysian businesses are well aware of the need for the law,” he told the newspaper.

The law covers five types of crimes: treason, insurrection and incitement to mutiny, theft of state secrets and espionage, sabotage, and external interference.

Meanwhile, Malaysia is “ripe” for an AI transformation, said SenseTime Hong Kong deputy general manager Lien Huiluen.

SenseTime is one of China’s top facial and image-recognition technology AI companies.

Hong Kong eCommerce Supply Chain Association chairman Terry Chan said at least 30% of his members were looking at relocation as a way of reducing any possible risks due to the introduction of the new law.

He said there had been a 30-40% uptick in the number of Hong Kong brands establishing a footprint in Malaysia over the past two years, mostly in the cosmetic and electronic industries.

In July 2023, Hong Kong chief executive John Lee visited Malaysia during a tour of Southeast Asia.

Hong Kong signed 11 deals with Malaysia during the trip, including a US$2.1 billion railway and property deal with MTR Corporation for the Johor Bahru-Singapore rapid transit system.