KUALA LUMPUR (July 12): The ongoing trade tension between the US and China may position Malaysia as a key source for importing raw materials, parts and components, and new finished products for companies looking to reduce their reliance on either of the two superpowers.

According to the Ministry of Investment, Trade and Industry (Miti), the uncertainty in US-China trade relations will encourage multinational companies from other nations to seek alternative production locations in third countries, including Malaysia.

"This could lead to increased foreign investment and employment opportunities in Malaysia," the ministry said in a written response posted on Parliament's website on Thursday.

Miti was responding to a query from Mohd Misbahul Munir Masduki (Perikatan Nasional-Parit Buntar) regarding the risks and implications for Malaysia amid US-China trade tension.

Simultaneously, the ministry noted that Malaysia could seize the opportunity to attract investment from China, particularly as the US increases tariffs on Chinese goods.

"However, Malaysian companies are advised to conduct thorough due diligence to ensure that potential Chinese business partners do not intend to use Malaysia as a means to circumvent high US tariffs," it said.

Miti also affirmed that Malaysia will continue its policy of neutrality, maintaining good relations with all its trading partners, including both the US and China.

"In balancing the challenges and opportunities arising from the trade tension, the actions and initiatives taken by the government will consider the needs and interests of local companies," the ministry said.

Moreover, Miti highlighted that the trade tension had already spurred an increase in foreign investment, with American giants such as Intel investing RM30 billion in Malaysia, and GlobalFoundries establishing an operational hub in Penang.

The ministry also acknowledged that the Russia-Ukraine crisis will have an indirect impact on Malaysia's semiconductor industry.

https://www.theedgemarkets.com/node/718723