Malaysia wants to lure US tech giants Microsoft Corp and Alphabet Inc’s Google in its drive to be a data hub and as it positions itself as a neutral supply chain base amid rising US-China tensions, Investment, Trade and Industry Minister Zafrul Abdul Aziz said in an interview with Bloomberg Television.

“We are attracting as many as we can,” and “slowly establishing ourselves” as a data center hub, Zafrul said in an interview with Haslinda Amin last Friday (June 9).

Malaysia’s investment success this year includes attracting companies such as Tesla Inc and Amazon Web Services. Tesla plans to import its electric vehicles into the Southeast Asian nation and build a network of superchargers, while AWS will invest MYR25.5 billion ($5.53 billion) in cloud-computing infrastructure by 2037.

“We are seeing a lot of realignment of supply chain, you know, looking at resiliency and security coming to this region,” Zafrul said in the interview.

Tensions between US and China are increasingly pushing global businesses to seek locations outside of China, Bloomberg added. Malaysia is vying with other Southeast Asian countries such as Vietnam and Thailand for investments that are aimed at building new supply chains.

Malaysia attracted MYR71.4 billion in approved investments in the first quarter of this year, up 67 percent from a year earlier, according to the Malaysian Investment Development Authority. FDI made up more than 52 percent of the flows. Earlier this month, the country secured MYR23 billion of potential investments during a trade mission Zafrul led to Japan.

“We are in the position of being neutral and being part of the critical supply chain,” he said. “Malaysia has been a net beneficiary.”

According to Zafrul, Tesla chose Malaysia because of a proven ecosystem built over the past 50 years. Malaysia has also sought to capitalize on its attractiveness as a semiconductor hub amid uncertain regional geopolitics, with the minister noting that “we have to be opportunistic sometimes”.

Malaysia caters to about 13 percent of the world demand for chip testing and packaging, and what Zafrul estimated as a quarter of US chip-testing and assembly needs. Companies in the sector already provide services of more than MYR200 million to Tesla, according to him.

Malaysia’s exports fell the most in almost three years in April, and the weakness may persist as China’s economic recovery loses traction.

The benchmark stock index is among the worst-performing Asian stock gauges this year as weakening commodity prices and concerns about a slowdown in the world economy prompted global funds to exit local shares. The ringgit has slid 4.6 percent year-to-date as rising US interest rates supported the greenback, according to Bloomberg.

Malaysia’s gross domestic product expanded a faster-than-expected 5.6 percent in the first quarter from a year ago, and the government has projected a 2023 growth rate of 4.5 percent, a moderation from last year.

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