February 13, 2024 – The Economy Ministry acknowledges the necessity of a collaborative effort involving both the government and the private sector to leverage the potential “tsunami” of investment opportunities, particularly within the semiconductor industry.

Towards this end, its minister Rafizi Ramli invites venture capital (VC) firms and fund managers to contribute to Malaysia’s economic growth in the semiconductor sector by working with Malaysian entrepreneurs to stimulate greater productivity.

Rafizi said the move is timely as it can address concerns about the shortage of high-value and high-return projects in Malaysia, which has led domestic funds to seek investment opportunities abroad.

This trend, according to him, highlights the challenge of domestic direct investment over foreign direct investment (FDI).

Last week, Rafizi received a delegation from Blue Chip Venture Capital (BCVC), led by its chairman and founder Datuk Lai Pin Yong, at his ministry.

BCVC is a specialised fund to tech up and value up the semiconductor industry.

The 80-year-old Lai, a veteran in the semiconductor industry, said the fund aims to “move the needle” within the semiconductor industry, elevating the value chain of the Malaysian semiconductor industry.

Speaking to StarBiz, he said the decoupling of global supply chain from geopolitical events, particularly the China and US trade war, has triggered a wave of inward investment into Malaysia.

“Due to this geopolitical tension, not only Chinese companies but also foreign companies located in China are seeking to relocate outside of China to avoid sanctions from the United States.

“This is a golden opportunity for Malaysia to catch the wave of the industry’s relocation and get the industry going,” he said.

He believes that Malaysia, particularly Penang due to its strong roots in the semiconductor industry, is a preferred option for these companies looking to relocate.

Sharing some insights, he said the local semiconductor industry is witnessing robust interest in three key areas of the value chain — integrated circuit design, advanced packaging, and equipment manufacturing.

Coming back to BCVC, Lai said the fund aims to facilitate companies relocating from China, providing confidence through co-investing.

“The ultimate aim is to encourage these companies to localise and list on the local stock exchange,” he said.

According to him, this model represents a departure from traditional approaches, which often involve foreign companies operating somewhat independently from the local economy, using the host country’s land, water and electricity and cheaper labour to make products for export.

These are important but need to go further, he added.

“We need to deepen the collaboration where FDI becomes ingrained in the fabric of Malaysian business, committing to talent development and building up the local supply system, thereby contributing to long-term economic development and growth.”

Source: The Star