something remarkable is happening in Malaysia Tech Giants are expanding their operations in the country even while new competitors arrive daily Intel and infinion are each investing $7 billion in Malaysia meanwhile Nvidia is set to build an AI data center worth $4.3 billion and Texas Instruments has allocated $3.1 billion for two new semiconductor assembly facilities but this is only the tip of the iceberg the influx of foreign Capital includes the likes of Germany's boss Austria's at and S Sweden's Ericson South Korea's simtech and major state-backed Chinese manufacturers such as funy metal technology for Malaysia business is booming and the government wants to use that momentum to move up in the global value chain it wants to become a high-tech economy like Japan Taiwan or South Korea but things are rarely ever that easy before Malaysia can call itself Rich it must navigate through a maze of complications some of these complications are by its own doing but some are Beyond its control like its Geographic position sitting smack in the middle of an American Chinese trade War for Malaysia the pressure is on the government needs at least 107 billion Dollar in Investments to become the next Global semiconductor Hub if it fails it will become a hostage to Regional and Global Rifts the only way to escape that fate is to gather enough economic clout at home and so Malaysia must go big or go under today's sponsor is ODU it's the ultimate all-in-one management software that lets the user spend less time on tedious administrative tasks and more time on what truly matters ODU enhances business management with a wide array of features you easily streamline invoicing accounting sales emails and much more typically you would need multiple apps to handle what ODU does on its own but my favorite part is that odu's first application is free for life with unlimited hosting and support so let's make use of that to design a website of our own first select website click continue no banking details are needed to sign up and they also offer a one-year free custom domain name so that's pretty neat click next select color I'm I'm going with this one this layout looks pretty good select that and there it is it looks blank now but you can customize it precisely like you want using the block system let's make a Blog about Iraq I'm going to make a new page really quickly post a cover here upload a photo change the title easy peasy if you're short of inspiration they have ai integrated too check out Odo today by hitting the link in the description and supporting me by supporting ODU renowned for its stunning landscape and Lush biodiversity Malaysia has long sought to shift from low-end manufacturing to high value Industries like South Korea Malaysia had trouble growing its economy the two struggled in the 1960s and the decades after they started with rough the same GDP per capita and while there was economic growth wages Rose too quickly which then made the respective Industries less competitive for cheap labor this phenomenon called the middle income trap keeps nations in a position where they are neither truly wealthy nor entirely poor in 1985 South Korea finally broke through the middle inome trap its investments in Innovation and improved productivity paid off and its GDP per capita swiftly climbed to a high income status Malaysia however faced a different path it was unable to develop Innovative Industries in time and remained trapped now Malaysia is looking to make things right as tensions simmer between Beijing and Washington Tech Giants are pursuing an offshoring insurance policy known as China plus one in pursuit of Greater profit and security companies are hedging their bets by expanding into the surrounding economies at the center of the storm is a race for dominance in artificial intelligence Advanced Robotics and Green Technology development a $617 billion Global industry that is growing with each passing year Malaysia is uniquely placed in this Tech race with its location robust infrastructure wellestablished semic conductor industry and educated English-speaking Workforce quala lumur has an edge over the regional competition to become the next Global chip Giant in addition Malaysia already holds a 13% global market share in the low-end field of assembly testing and packing of semiconductors a factor that accounts for 25% of the country's GDP to turn Malaysia into the next Taiwan local firms such as s Tera and upstar Technology are looking to leverage the influx of foreign talent to expand into high-end activities such as wafer fabrication and integrated circuit design to this end koala lumur has launched the new industrial master plan 2030 an ambitious set of policies aiming to boost domestic production and settle itself as the next Global Hub for Semiconductor Manufacturing there is seldom a reward without great risk Malaysia needs to go big or go home yet large-scale plans have a mixed history of success in the country beginning in the 1970s quala lumur embarked on a radical economic restructuring effort known as the New Economic Policy the stated aim was to redistribute wealth within the country while transitioning away from the export of raw materials such as Rubber and Tin following decolonization quala lumur emerged with a strong drive to reinvent itself however ethnically defined equalities resulted in severe unrest in the decades prior resulting in the expulsion of ethnic Chinese from Singapore in 1964 which at the time was part of Malaysia so for the new Malaysian state to survive things had to change and fast local lawmakers stepped up and a decade later Malaysia succeeded in industrializing its landscape a new homegrown semiconductor sector had developed and local Industries had made a name for themselves however the country was still reliant on lowcost manufacturing so to speed up the transition to a high income economy the government poured massive sums of money to accelerate the development of high-tech Industries unfortunately a crucial component was left out research and development was completely neglected in the process this mistake sealed Malaysia's Fate In addition the government's wealth redistribution policy inadvertently led to a brain drain thousands of non-ethnic malaise moved abroad never to set foot in Malaysia Again by the 1980s economic growth slowed considerably and with the Asian financial crisis of 1997 Malaysia entrenched itself even deeper in the middle income trap yet quala lumper had an ace up its sleeve as part of its postc Colonial overhaul Malaysia had also embarked on a 50-year long Endeavor to transform its Coastal state of panang into the Silicon Valley of the East beginning its existence as a small fishing Village panang served as one one of British malaya's primary Naval bases throughout the 19th century upon Independence its strategic location took on a more geoeconomic nature with the Bayan laas free industrial Zone welcoming conglomerates such as Bosch Motorola Dell Intel and hulet Packard to assist in its transformation by the 1990s the results were clear panang had reinvented itself from a post Colonial Backwater to one of Malaysia's biggest success stories today the region is home to over 350 multinational corporations amounting to an estimated 5% of global semiconductor exports as such despite its small size panang punches well above its weight accounting for almost 8% of Malaysia's economic output while measuring just over 1,000 square km eventually however penang's success became its downfall Malaysian lawmakers in the capital felt predisposed and left behind so they spent the last two decades reinvigorating koala lumur resources talent and wealth were actively diverted from the provinces into the capital it needn't have been this way but Malaysia scored one of the biggest own goals in history not surprisingly panang declined in importance and Korea's Samsung and taiwan's tsmc relegated Malaysia's homegrown manufacturing to the sidelines by the turn of the Millennium now as of 2024 Malaysia is getting a second chance at Prosperity this time the government wants to get it right so it is committing significant resources to bolster its industrial sector Reviving panang plays a big role in that plan the construction of a 1 million square foot industrial park in panang has already drawn interest from new names such as jabil Western Digital and lamb research further Inland in the Kim District Germany's infinion plans to invest $5.4 billion to construct the world's largest production site for silicon carbide chips which is a vital component in the manufacturing of electric vehicles they are join joed by over 50 Chinese conglomerates that are moving south in an attempt to loop around Washington's sanctions on Chinese manufacturing regardless of State allegiances private Logistics Giants such as DHL Express are lining up to form the necessary Supply chains between the industrial manufacturing zones of southern China and Malaysia's panang further south are the port cities of Kang and tanong ppas by capacity these sites already number among the 15 largest global ports and the government has a special purpose for them the plan is to transform the cities into industrial hubs where incoming chips can be built tested and shipped to Consumers across the globe still nearby in samban and Mala the government looks to develop industrial hubs where semiconductor Giants such as nexperia and Infineon can settle down likewise across the sea in borneo's coching City Japanese firms such as Tao yuden are expanding their operations a hive of high-tech activity is spreading across the country for Malaysia The Best Is Yet To Come southeast Asia is in an economic boom Tech giants that are looking to Offshore their operations away from China have plenty of room to settle elsewhere the Assan Market in particular is well suited for High Tech Industries with Singapore Thailand and Vietnam posing the greatest competition to Malaysia's semiconductor Hub Ambitions however even within Malaysia itself things are not what they seem there are sincere shortcomings that prevent some companies from setting up camp for one Malaysia is see seeing high levels of immigration people are moving out and looking for better employment opportunities abroad the result is a nationwide brain drain Malaysia now has an estimated labor shortage of 1.2 million workers of which half are from engineering and Manufacturing in a country that produces only 5,000 engineering graduates per year such numbers don't bode well the government has a plan to train an additional 60,000 high-skilled local semiconductor Engineers but it won't work if Malaysian Engineers earn just 90% of the median National wage the paycheck is just too little hence the brain drain another domestic problem for Malaysia is housing the influx of foreign companies into panang for instance has driven up housing prices considerably the local authorities have tightened rent controls but it's only a temporary fix in Malaysia's federal system Regional Dynamics often snowball into larger issues for the ruling Coalition meanwhile neighboring and English-speaking Singapore has welcomed $4 billion worth of investment from Big names in the industry such as Global Foundry saw and tsmc affiliate Vanguard international semiconductor they join Applied Materials which is expanding its presence in the country country through the construction of a $450 million Factory in the city state with such investment Singapore hopes to achieve a 50% growth in the manufacturing of advanced electronics semiconductors and Robotics by 2030 Singapore's Edge over Malaysia is its proximity and higher pay which stands at $1,495 per month compared to just4 $169 per month in Malaysia that's a $1,000 difference for the same labor no wonder in the first quarter of 2024 the number of Malaysians immigrating to Singapore jumped by 62% when compared to the previous year another Advantage Singapore has is its Consolidated system of governance in the last four years Malaysia has seen four different Prime Ministers such rapid changes often due to political scandals severely undermined cohesive policymaking at the executive branch multi-billion dollar companies looking to do business prefer political stability Above All Else Malaysia offers too little of that an example of this is the debate surrounding the introduction of a goods and services tax in April 2015 then prime minister najib razak introduced the tax only for it to be repealed in a dramatic reversal when mahathir Muhammad came to power in May 2018 since then current prime minister anoir Ibrahim has once again advocated introducing a goods and services tax on multiple occasions this back and forth legislative is not a landscape Tech giants look to do business in Singapore doesn't have such administrative instability it's almost unheard of Singapore isn't the only competition though Thailand for instance offers robust infrastructure a skilled Workforce geopolitical neutrality and generous tax privileges for investors the perks have caught the interest of Sony Group which has already invested almost $600 million in 17 projects across the country likewise Vietnam has seen interest from major developers such as Samsung who invest Ed $3.3 billion in the country to bolster semiconductor production with proximity to China's Southern Industrial Zone and a more stable political and demographic situation Vietnam is shaping up to be yet another potential Challenger in the race to become the next Global chip giant that being said Malaysia still has cards up its sleeve its proximity to its competitors could play in its favor for instance in the case of Singapore Malaysia could negotiate for cooperation rather than competition the two could act as extensions of one another malaysian-based firms could assemble test and package chips that are designed and manufactured in Singapore yet this industrial symbiosis would require the Malaysian leadership to dial down its ambition to become the next Global chip Giant in Practical terms terms that would mean embattled Malaysian firms such as unism Carm and Inari aratron would be left out in the cold in exchange however Malaysia would retain its Regional dominance even so Malaysia would have to tread carefully at all times while business follows profit geopolitics sets the rules Washington has already voiced its disapproval of prime minister anoir ibrahim's cooperation with Chinese firms and there are fears that the sanctions regime May expand to include Malaysia for instance jetronics a Malaysian firm has already come under Fire for allegedly supplying strategic electronic components to Russia in violation of the sanctions should Washington feel inclined they can end Malaysia's semiconductor boom with the stroke of a pen so yeah tread carefully China likewise accounts for $ 56.7 billion worth of Malaysia's Imports and $13 billion worth of its exports this trade includes the import of germanium and gallium which are irreplaceable materials in the production of semiconductors in addition China has been Malaysia's largest trade partner for the past 15 years a relationship only balanced by the United States as Malaysia's largest investment partner sitting precariously in between two of the world's biggest economies Malaysia must therefore dance between Giants without stepping on any toes I've been your host chivon from Caspian report thank you for your time and so [Music] oh [Music]