Malaysia (Common Wealth) _Following Tesla’s announcement of a regional headquarters in Malaysia, Malaysia has set its sights on a larger share of the electric vehicle supply chain market as competition in Southeast Asia heats up.
“EV happens to be our priority,” Malaysian Prime Minister Anwar Ibrahim told reporters in his office in Putrajaya, located south of the country’s capital Kuala Lumpur.
Tesla’s historic deal with Malaysia strengthens Southeast Asia’s position in the EV supply chain and is the first transaction under the country’s Battery Electric Vehicle Global Leaders initiative. The agreement also marks an opportunity for the American manufacturer to develop into a new market as China’s economy slows.
Tesla will be able to sell its Shanghai-made electric vehicles directly without any import levies or middleman markup under the conditions of its deal with Malaysia. Tesla will also open a regional headquarters and service center in Selangor, which will be outfitted with modern diagnostic instruments and staffed by Tesla technicians.
Tesla owners will soon have access to a network of charging stations in the country’s major metropolitan regions, with the first set to open in downtown Kuala Lumpur. Tesla is also planning to start producing EV batteries in Malaysia.
Anwar stated that Malaysia is open to additional EV investments, especially those from Chinese automakers. While Chinese automakers have “not been asking,” he says “the possibility will be open.”
He stated that when foreign firms such as Tesla invest in Malaysia, there will be synergy, and that “it can benefit three or four local industries.” Malaysia has a long-standing Bumiputera policy that favors indigenous peoples, both the Malay-Muslim majority and non-Malay indigenous tribes.
Foreign companies launching in Malaysia must have at least 30% Bumiputera ownership, although Tesla is free from this requirement. Anwar committed to tackle corruption and make “Malaysia for all Malaysians” after being sworn in as Malaysia’s 10th prime minister last year, exposing himself up to charges that he may be aiming to destroy Bumiputera privileges. It’s not a matter of deconstructing, but of focused on areas that are crucial, according to Anwar.
Malaysia has provided such incentives before, including Tesla’s exemption from the 30% equity threshold. This is not a new phenomenon. The prime minister stated that exceptions have been made for digital transformation, IT-related activities, or investments. Malaysia has done this in the past, but in a very selective manner. So it’s not just Elon Musk, who he believes is needed in this country to instill trust and involvement in our players, he says.
Telsa’s statement was preceded by Chinese automaker Zhejiang Geely’s $10 million proposal to expand operations in Tanjong Malim, Perak, and German chipmaker Infineon Technologies’ 5 billion euros ($5.46 billion) development of its Kulim water fabrication plant in Kedah.
The Anwar government has been quick to highlight the increase in foreign investments that has resulted from the political stability it has brought to the table.
According to official figures, Malaysia registered a reduced net inflow of 3.1 billion ringgit ($666.9 million) in foreign direct investment in the quarter ended June 30, compared to the previous quarter’s 12 billion ringgit.
Recognizing infrastructure gaps and demands, the Malaysian government has vowed to install 10,000 EV charging stations by 2025 in conjunction with the private sector, as part of the Low Carbon Mobility Blueprint 2021-2030. Companies who contribute to the development of electric vehicle infrastructure in Malaysia may benefit from government incentives such as tax cuts. The government hopes that these incentives will entice other EV manufacturers to establish a presence in Malaysia, contributing to the country’s development as an EV manufacturing hub.
