KUALA LUMPUR – Prime Minister Datuk Seri Anwar Ibrahim’s remarks that Taiwan is part of China are unlikely to cause an immediate withdrawal of Taiwanese investments from Malaysia, but they could shape future investment considerations, economist Dr Samirul Ariff Othman said.
He said companies would continue to focus primarily on commercial fundamentals, particularly in the semiconductor sector, where Malaysia has built a strong ecosystem over several decades.
“Commercial fundamentals will probably remain the dominant consideration unless political tensions escalate further,” Samirul told Scoop.
However, he cautioned that Taiwanese companies evaluating new or discretionary investments may begin placing greater emphasis on geopolitical risks.
“A company considering Malaysia versus Singapore, Vietnam or another ASEAN location may now add another question: ‘Could our investment become exposed to future political tension between Kuala Lumpur, Taipei and Beijing?” he asked.
Despite the potential concerns, Samirul said Malaysia continued to hold significant advantages that competing destinations would struggle to replicate quickly, particularly Penang’s established semiconductor ecosystem.
“Penang has a mature semiconductor ecosystem, an established engineering workforce, good logistics, decades of multinational manufacturing experience and a dense supplier network,” he said.
Penang’s role in Malaysia’s high-tech economy has continued to expand, with the state securing RM32.9 billion in approved investments across various sectors in 2025.
These strengths, Samirul said, meant Malaysia was unlikely to experience an immediate investor departure.
“Therefore I would not predict an investment exodus,” he said.
However, he stressed that Malaysia must avoid creating unnecessary uncertainty at a time when the country is benefiting from the global technology and semiconductor boom.
Malaysia’s economic relationship with Taiwan remains substantial, with bilateral trade reaching RM147.75 billion in the first half of 2026, a 34.7% increase year-on-year. The growth was largely driven by electrical and electronic products, as well as optical and scientific equipment.
At the same time, China remains a major economic partner for Malaysia, while the country remains deeply integrated into regional semiconductor supply chains involving both China and Taiwan.
The strong trade performance highlights the careful balancing act Malaysia faces in maintaining economic ties with both sides.
For Samirul, the bigger concern is not the possibility of existing investors leaving Malaysia, but whether geopolitical uncertainties could affect future investment decisions.
“Boardrooms evaluate alternatives. Malaysia does not want that question entering investment calculations unnecessarily,” he warned.
He said Malaysia’s challenge would be to preserve its reputation as a politically stable and commercially competitive destination while navigating increasingly complex tensions between China and Taiwan.
The issue carries particular significance for Penang, where the semiconductor industry depends on an extensive network of global companies, suppliers and skilled workers.
The importance of maintaining investor confidence is underscored by Malaysia’s expanding trade links with both China and Taiwan.
According to the Ministry of Investment, Trade and Industry (MITI), trade with China accounted for 18.2% of Malaysia’s total trade in July 2026, with exports to China rising 30.2% to a record RM20.59 billion.
Taiwan accounted for another 8.2% of Malaysia’s total trade during the same month, with Malaysian exports to the island nearly doubling to a monthly record RM15.36 billion, driven mainly by strong demand for semiconductors and electronic products. – August 20, 2026