“This is a position for Malaysia to lose,” it said, with countries such as Indonesia, Vietnam and Singapore reaping the benefit by welcoming US investments with open arms.

The chamber, known as Amcham, represents US business interests in Malaysia. Its warning of investment flight comes in the wake of a new government policy from Nov 1 giving preference to Malaysians over the recruitment of foreign workers and expatriate staff.

Amcham urged the human resources ministry to reconsider. It said American multinational companies had strong localisation policies with many companies reporting over 90% local hires.

It said Malaysia’s population size provided a limited talent pool which needed “augmentation”. However, the new labour policy would affect investment decisions if mobility of talent was further limited.

“The movement and use of talent, including expatriates, is essential to operations,” Amcham said.

Citing data from the Malaysian Investment Development Authority, Amcham said that US companies invested RM28.63 billion in Malaysia last year.