Malaysia aims to become Southeast Asia's hub for electric vehicle (EV) production, as stated by Prime Minister Anwar Ibrahim during his welcome of a US$ 500 million investment by South Korean automotive giant Hyundai Motor, which will establish a second assembly plant in the region.

Trade-dependent Malaysia has been seeking new investors and markets over the past year, as increasing tariffs related to the US-China trade and technology disputes have affected its solar industry and raised concerns over its vital semiconductor sector.

These concerns have been exacerbated by the re-election of Donald Trump, who has threatened blanket tariffs on imports to the US, particularly targeting strategic sectors such as renewables and semiconductors.

In October, Malaysia joined Thailand, Indonesia, and Vietnam as new partner countries of the Brics bloc, led by China, Russia, and India.

Recently, the government announced Hyundai Motor's MYR 2.16 billion (US$ 500 million) investment in its first Malaysian plant, located in Kulim, northern Kedah state.

The deal, disclosed during Anwar's three-day official visit to South Korea, did not specify a timeline for when operations will commence at the plant, which will have the capacity to assemble up to seven different car models.

Welcoming the project, the Prime Minister assured that the government would "ensure an attractive investment climate for automotive assembly, especially for EV models, which will make Malaysia an automotive production hub for the ASEAN market," as stated in an social media post, referring to the Association of Southeast Asian Nations.

Anwar further noted that Hyundai's investment, focusing on energy-efficient and electric vehicles, would enhance Malaysia's automotive ecosystem.

This plant will be Hyundai's second in Southeast Asia, following the opening of a factory in Indonesia in 2022 with an annual capacity of up to 250,000 units, including the Kona Electric SUV model.

In July, Hyundai and LG Energy Solution launched Indonesia's first battery cell production plant for EVs.

This announcement comes as Asian car manufacturers of petrol and gas-powered vehicles scale back production in Southeast Asia, as consumers increasingly turn to EVs.

Japan's Nissan, for example, has announced plans to cut or transfer approximately 1,000 jobs in Thailand, according to a media report, as Southeast Asia's largest automobile manufacturing centre faces a sharp decline in demand.

In October, 2024, the Federation of Thai Industries reported that total production in Thailand fell by more than 25% in September, with shipments down by nearly 11%.

In a separate announcement, Anwar revealed plans by chemicals conglomerate OCI Holdings to expand investments in polysilicon production in Malaysia to meet growing demand in the semiconductor and solar industries.

In a series of social media posts, Anwar highlighted South Korea's role as a crucial regional partner in sectors ranging from semiconductors and renewable energy to rare earths processing and the halal industry.

He expressed enthusiasm about the commitment shown by South Korean firms, stating that it reflects confidence in Malaysia's stability, policies, and strategic position as an investment destination.

South Korea, along with Japan and Taiwan, was central to Malaysia's "Look East" policy, which facilitated the country's rapid shift from an agrarian economy to industrialisation during its economic boom in the 1980s.

Total trade between Malaysia and South Korea reached MYR 91.1 billion in the first 10 months of 2024, according to government data, with South Korean firms investing MYR 61 billion in 616 projects during the same period.