“Truly Asia” may be the country’s tourism slogan, but in recent years Malaysia especially has also been positioning itself as a truly welcome destination in Southeast Asia for foreign direct investment.
It is no secret that Malaysia has long welcomed FDI. As a recent U.S. State Department analysis points out, FDI has been an integral component of the country’s economic development.
The Malaysia Investment Development Authority states that the country has numerous features that make it attractive for FDI, including its strategic location for air and shipping lines, its widely English-speaking workforce, a business-ready environment and its stable economic foundation.
Particularly, MIDA states, Malaysia has been providing opportunities for investors from Japan and elsewhere in green energy, semiconductors and data centers.
One Japanese entity that has been pursuing such a green energy opportunity in Malaysia is the Japan Organization for Metals and Energy Security, a government institution that works to ensure stable supplies of both energy sources and metals.
Toward that end, in March 2023 JOGMEC signed a memorandum of cooperation with the Malaysian state-owned oil and gas company Petronas to cooperate on creating green energy projects in the state of Sarawak. The hope, according to JOGMEC, is that this will lead to technological development and joint research on green energy, as well as promote the participation of Japanese companies in Petronas projects.
Another Japanese entity pursuing the possibilities of green energy in Malaysia is the Chitose Group, a family of Japanese biotechnology companies focused on technological and business development in collaboration with partners at home and abroad.
The Chitose Group has established a project to promote the use of algae as a substitute for fossil resource-based materials. As part of this effort, Chitose created in Sarawak what it describes as the world’s largest photobioreactor system suitable for the efficient production of microalgae biomass. Known as Chitose Carbon Capture Central, this 5-hectare facility was completed in March 2023 and has already commenced production of microalgae.
As to the choice of Malaysia, according to local news reports, Sarawak was selected due to the state’s ideal temperature throughout the year, abundance of fresh water and the state being safe from major natural disasters like typhoons and earthquakes. The strategic location, logistically speaking, and the skilled Malaysian workforce were also considerations.
Japanese companies are not the only enterprises to have shown interest in Malaysia. Direct investment has also been coming from other Association of Southeast Asian Nations members, Europe, the U.S. and China.
For example, a World Economic Forum report notes that Malaysia’s semiconductor industry, centered in Penang, is thriving due to FDI, with major European and U.S. industries establishing footholds in the state.
Indeed, Prime Minster Anwar Ibrahim announced in May that the government planned to invest at least 500 billion ringgits (about $107 billion at the time) in the semiconductor industry toward its goal to make Malaysia a global leader in that field. The stability that Malaysia offers, according to the WEF, along with these government investments, are what is making it so attractive.
Malaysia’s possibilities as a location for data centers, too, has made it a focus for FDI. A Reuters report from August suggests that a recent rise in Malaysia’s benchmark KLCI stock index could be attributed to an artificial intelligence-driven data center boom in the country.
One prominent example of this was Google’s announcement in May that it would be making a $2 billion investment in Malaysia focused on developing its first data center and Google Cloud region in the country to expand and improve services around the world.
Perhaps in light of the heightened interest in FDI into Malaysia, the Malaysian government has also been working to raise awareness of Malaysian culture abroad. Readers in Japan may want to note the dates of Nov. 2 and 3, when a Malaysia Fair themed “All About Malaysia” will be held in Tokyo’s Toyosu district.
