Govt reaching out to industry to improve investment climate for semiconductor firms

KUALA LUMPUR — The government is reaching out to the Malaysia Semiconductor Industry Association (MSIA) to improve the investment climate and ease of doing business to lure global semiconductor companies to relocate to Malaysia.

MSIA president Datuk Seri Wong Siew Hai said there should be regulatory changes to improve the investment climate accompanied by operational efficiency.

He also said that equally important is reducing bureaucracy, having the right infrastructure in place, the necessary utilities, as well as an industrial ecosystem which should include industrial clusters to support the relocating companies.

“This will position Malaysia as a preferred investment destination for renowned companies wanting to expand abroad and grow their business due to geopolitical tensions brought on by the US-China chip war,” Wong, who is a veteran with 27 years of working experience in the semiconductor industry, told Bernama in an interview today.

He noted that of utmost importance is Malaysia not to lose sight of the fact that the semiconductor industry is the “golden goose” of the nation.

“We need to nurture it carefully, grow and make the industry to be globally significant,” Wong said, adding that agencies involved in attracting and approving investments including state governments need to reduce bureaucracy and achieve greater ease of doing business.

Malaysia needs to prepare for foreign investments by building the necessary infrastructure and not rest on its laurels amid regional competition, he said.

These include power, water, airports, as well as facilitating shipments which would lead to increased exports for the company and the country.

Wong explained that it is important to develop an industrial ecosystem, including clusters, wafer fabrication (fab) plants and assembly test facilities, to build these fabs to increase chip manufacturing capacities so that multinationals find relocating to Malaysia more attractive.

Competition is stiff as these companies are being pursued by countries like Vietnam, Thailand, the Philippines and India, all of which are “trying to also chip in and play the game”.

These measures to improve the investment climate are pertinent, more so since the MADANI government is aiming for Malaysia to be ranked 12th in global competitiveness within a decade from its 27th position currently.

To facilitate the necessary improvements to investment, Wong, who has had a long stint with Intel Penang, said MSIA has gathered feedback from the electrical & electronics (E&E) industry and passed it on to the government.

“The good news is that the government is engaging with MSIA,” he said, adding that MSIA’s feedback has led to online applications for work permits for expatriates in the industry being shortened to just 10 days now from 6-12 months in 2022-2023, and a mere five days for those in the green lane or fast-track basis.

“There are other areas which may be more difficult to resolve, but at least with the political will and the willingness to work together, we can continue to make progress.

“If our rate of improvement is faster than them (other countries), then we will be a favoured country for investment,” Wong said.

One of the major factors that led foreign semiconductor companies to relocate to other destinations besides their home base was business grinding to a halt during COVID-19.

Recalling the pandemic, he said many countries could not ship their products such as Taiwan, the United States and Germany, among others, and not just Malaysia.

“But Malaysia was highlighted as a country that stopped all the production of cars worldwide. This was because we have a few semiconductor companies which produced automotive chips or integrated circuits for cars.

“To mitigate such risks, a lot of companies — especially American and Chinese companies — felt they could not be in just one country but decided to relocate to other destinations and avoid US tariffs as well.

“That was how all this (scramble to look for other investment destinations) started and Malaysia turned out to be the perfect destination and beneficiary,” said Wong. — BERNAMA / pic BLOOMBERG