KUALA LUMPUR: Huge investments committed by global firms Infineon and Enovix Corp are expected to strengthen Malaysia's role as a key regional partner, driving job creation and economic growth, economists said.
They, however, cautioned that despite the positive outlook, uncertainties and potential risks related to regulatory factors and environmental impacts should not be overlooked.
Tradeview Capital Sdn Bhd vice president Tan Cheng Wen said the investments by Infineon and Enovix, both established global players, are a huge endorsement and underscores Malaysia's status as a reliable partner in the region.
This also serves as a huge validation to the country's endeavours in levelling-up across the value chain and carrying out the many policies and blueprints such as the National Energy Transition Roadmap (NETR) and Madani framework.
"These investments will definitely be a huge boost to foreign direct investment (FDI), bringing multiplier effects that will benefit our local players and suppliers, create job opportunities whilst setting in motion transfer know-how to upskill our local workers.
"From an investments perspective, we believe players such as Malaysian Pacific Industries Bhd and YBS International Bhd should stand to gain in the long run," he told Business Times.
Conversely, economist Dr Geoffrey Williams opined that the full impact needs to be considered because the profits from these investments will not remain in Malaysia.
He noted that they will be repatriated by foreign investors, leaving costs to be borne by Malaysian taxpayers.
Williams also said there had been many announcements reflecting interest in investment in Malaysia.
However, he said these announcements, such as the recent ones about Tesla's investments in Asia, are subject to changes and uncertainties.
"The Tesla news is not confirmed by them but it does reflect the uncertainties of the environment.
"We have also seen a report from BMI Country Risk & Industry Research that shows risk in technology investment due to regulatory factors. So again, we cannot just look at the headline announcement in isolation," he noted.
Williams also said that there are concerns about the impact of high electricity and water use by data centres and other technology infrastructure.
He added that this increased demand could put pressure on existing supplies and potentially cause costs to rise.
Yesterday, the Malaysian Investment Development Authority (MIDA) announced two major investments that were expected to boost Malaysia's economy, manufacturing sector, and technology industry.
Infineon, Europe's leading chipmaker, kicked off production at its largest-ever power chip plant in Malaysia and would invest an additional RM30.1 billion (€5 billion) for Phase 2 of the plant.
This is on top of the original €2 billion for Phase 1 on the plant in Kulim, Kedah as Infineon builds the world's largest 200-millimetre (mm) silicon carbide power fabrication plant.
Both Phase 1 and Phase 2 will generate 900 and 600 high value jobs in Malaysia respectively. In total, 4,000 jobs will be created.
Meanwhile, Enovix opened its first high-volume manufacturing facility in Malaysia and planned to invest RM5.8 billion (US$1.2 billion) here over 15 years.
The facility produces high-energy density batteries and is currently hosting visits from leading global customers.