Malaysia says tech firms, hit by pandemic and trade war, keen to move to country

KUALA LUMPUR (Reuters) - Malaysia said on Friday it had a pipeline of investment projects worth about $13 billion and that many local and foreign electrical and electronics (E&E) firms were looking to relocate their businesses to the country to diversify production.

Its five-decade-old E&E industry accounts for 10% of the global back-end semiconductor output, and the government said it was engaging high-technology businesses looking for alternative production sites after the COVID-19 pandemic and U.S.-China trade war exposed their heavy dependence on China.

"Based on our recent engagements with both domestic and foreign business communities, there are businesses who are eyeing on relocating their businesses into Malaysia," the Ministry of International Trade and Industry (MITI) told Reuters in an email.

"Many viewed that Malaysia can be a new alternative centre for Asia, having the advantage as a strong E&E base, good supporting local engineering supporting cluster and talent base."

MITI said it was working on drawing a further 433 "high-profile leads" with potential investments of 97.4 billion ringgit. It declined to name the potential investors.

In a success for Malaysia this week, Germany's Bosch Group announced that next year it would build a plant in the Southeast Asian country's north to test components such as semiconductors used in automotive airbag systems or engine-control units. Bosch does similar testing at home as well as in China.

MITI, however, acknowledged a shortage of labour in the country that has prompted it to shift its "focus to attract more high-value added and quality investments instead of low end production".

($1 = 4.2640 ringgit)

(Reporting by Krishna N. Das; Editing by Chizu Nomiyama)