Malaysia Heads Towards Market Liberalisation To Grow EV Sector

Malaysia is embarking on a path of market liberalisation under the leadership of Prime Minister Anwar Ibrahim's administration. The goal is to enhance the country's competitiveness, attract substantial investments in the electric vehicle (EV) sector, and transition towards a net-zero carbon future.

For years, local players in industries like automotive and power generation in Malaysia have enjoyed preferential treatment, while foreign investors face requirements to partner with local businesses and often pay high fees to introduce non-local brands. This policy, rooted in affirmative action to support the Malay majority, has hindered Malaysia's competitiveness. The government now aims to change this approach.

"We are too protective of some industries, thinking that they will improve. But how long can we protect them?" stated Tengku Zafrul Aziz, Malaysia's investment, trade, and industry minister. "Local players become complacent, and our competitiveness wanes. We must now introduce reforms and open up the market."

Malaysia's strategy includes allowing foreign investors to have full ownership of their operations in the country. Tesla has already entered the Malaysian market, and discussions with the company have included the potential establishment of a battery manufacturing plant. Additionally, talks with Chinese automakers are ongoing to set up EV operations in Malaysia.

While Malaysia has previously declared intentions to liberalise its market and attract investors, the current situation necessitates a more urgent response.

One of the early sectors the government plans to liberalise is talent acquisition, allowing companies to hire foreign students graduating from local campuses. This move is expected to accelerate economic transformation.

Furthermore, the government will maintain control over transmission lines but is considering opening up power generation to external investors to expedite the transition to renewable energy. This step is crucial to hasten the adoption of renewable energy sources.

Zafrul is optimistic that market liberalisation will bolster Malaysia's efforts to attract more EV investments. Even if investors such as TESLA choose to establish their operations in neighbouring countries, Malaysia remains an attractive hub for the EV supply chain due to its strategic location in the ASEAN region. Malaysia aims to position itself at the high end of the EV supply chain, capitalising on its logistical advantages within the region.

Source: The South China Morning Post