Malaysia seeks to deepen trade ties with South Korea in chips, AI, halal sector

Malaysia is seeking to elevate its economic partnership with South Korea beyond traditional manufacturing and trade by positioning itself as a long-term strategic partner in high-value industries, ranging from semiconductors and AI to electric vehicles, renewable energy and the fast-growing global halal economy.In an interview with The Korea Times, Malaysian Investment Development Authority (MIDA) director Redzuan Abd Rahman and Malaysia-external-trade-development-corporation" class="entity-link entity-organization" data-entity-id="181888" data-entity-type="organization">Malaysia External Trade Development Corporation (MATRADE) trade commissioner Mohamad Termizi HJ Piee said the two countries’ economic relationship had entered a new phase, with growing opportunities for South Korean companies to leverage Malaysia as both an investment destination and a gateway to the wider Asean market.“Malaysia and South Korea have built a strong and enduring economic partnership over the past several decades,” Redzuan said. “We believe the greatest opportunities lie in deepening collaboration in industries that are shaping the future of our economies.”According to MIDA, South Korean companies have implemented investments totalling US$11.7 billion across more than 400 projects in Malaysia as of 2025, creating nearly 50,000 jobs. Those investments span chemicals, transport equipment, electrical and electronic products, petroleum products and basic metals.Redzuan highlighted that the two countries’ respective national development strategies were highly complementary, explaining that while South Korea continued to advance its leadership in semiconductors, artificial intelligence, advanced manufacturing, mobility, batteries and green technologies, Malaysia was implementing the New Industrial Master Plan 2030, the National Semiconductor Strategy and the National Energy Transition Roadmap “to accelerate industrial transformation towards higher-value, innovation-driven and sustainable industries”.Students discuss an automation machine system in a laboratory in Bangi, Malaysia. The Malaysian government is seeking to advance the country’s semiconductor sector under its 2030 masterplan. Photo: TNSThis strong strategic alignment presents significant opportunities for deeper Malaysia-South Korea collaboration in investment, technology and industrial partnerships, reinforcing Malaysia’s position as a strategic destination for South Korean companies seeking regional growth.Termizi echoed that assessment from the trade perspective, pointing to rapidly expanding bilateral commerce between both countries.“Malaysia and the Republic of Korea have built a strong and resilient economic partnership, supported by growing trade, complementary industries and close cooperation through Asean and regional trade agreements,” he said.From January through June this year, bilateral trade increased a whopping 52.3 per cent year on year to US$19 billion, with Malaysia’s exports to South Korea rising 44.2 per cent and imports from South Korea climbing 58.9 per cent.“From MATRADE’s perspective, the next phase should focus on diversifying trade into emerging sectors such as AI, robotics, medical devices, green technology, digital services and the halal economy, while helping more Malaysian small and medium-sized enterprises (SMEs) participate in South Korean supply chains,” he said. “Ultimately, our priority is to transform conventional buyer-seller relationships into long-term partnerships involving technology, innovation, joint product development and access to wider regional and global markets.”As South Korean companies continue diversifying their supply chains across Southeast Asia, both officials highlighted Malaysia’s advantages beyond competitive production costs. Redzuan said Malaysia combined “industrial maturity, strategic location and policy stability” with more than five decades of experience in electrical and electronics manufacturing.“Malaysia handles roughly 13 per cent of global semiconductor packaging and testing, providing an established supplier ecosystem that significantly lowers market entry risks,” he said.An illustration of a microprocessor made in South Korea. Malaysia says South Korea can be a key tech partner for the Asean country. Photo: ShutterstockHe also stressed the country’s multilingual, English-proficient workforce, strong intellectual property protection and long-term industrial policy frameworks.Further Reading“Unlike markets that compete solely on low labour costs, Malaysia offers South Korean investors an ecosystem capable of supporting capital-intensive, hi-tech and ESG-compliant manufacturing from day 1,” Redzuan said.Termizi similarly described Malaysia as “a strategic gateway to Asean,” citing its participation in major trade agreements including the Regional Comprehensive Economic Partnership and the free trade agreement between South Korea and the Association of Southeast Asian Nations, in addition to its multilingual business environment. He added that the coming Malaysia-South Korea FTA was expected to further strengthen bilateral trade and investment, enhance market access and create new opportunities for businesses in both countries.“These strengths make Malaysia an ideal sourcing partner for South Korean companies seeking to build resilient and diversified supply chains,” Termizi said.Asked where bilateral cooperation could expand most significantly over the coming years, both officials identified advanced technology industries as priority areas. Redzuan said Malaysia aimed to deepen collaboration with South Korea in advanced electronics, electric vehicles (EV), renewable energy and digital infrastructure, in tandem with the Southeast Asian country’s acceleration of its dual transition towards a hi-tech and low-carbon economy.“We see South Korean firms not merely as foreign investors, but as long-term strategic partners that co-develop intellectual property, upskill local engineering talent and integrate Malaysian suppliers into global value chains,” Redzuan said.Termizi likewise pointed to opportunities in semiconductors, AI, robotics, smart manufacturing, medical devices, green technology and digital services.“Malaysia is already a key player in the global semiconductor ecosystem, while South Korea is recognised for its leadership in advanced technologies and industrial innovation,” he said. “These complementary strengths create opportunities for greater collaboration in supply chains, technology partnerships and regional market expansion.”01:39Malaysian police investigate how pilot moved drugs past 4 layers of airport checksRedzuan cited South Korean conglomerates including SK Nexilis, Samsung, POSCO, OCI and Lotte as examples of successful investments in Malaysia, highlighting SK Nexilis’ US$540 million EV copper foil manufacturing facility in Sabah as the company’s largest overseas investment.He said MIDA supported investors through end-to-end facilitation, including manufacturing licences, tax incentives and expatriate services, while MATRADE connected South Korean companies with Malaysian suppliers through business-matching programmes.“Together, MIDA Seoul and MATRADE Seoul handhold investors from the initial site selection and regulatory approvals all the way through to commercial operations and supply chain localisation,” he said.Both officials reaffirmed their commitment to supporting South Korean companies seeking opportunities in Malaysia, noting that MIDA Seoul and MATRADE Seoul were conveniently co-located at the Malaysian Trade and Investment Centre near Jonggak station in central Seoul. That arrangement, they said, gave South Korean businesses a single point of contact for investment- and trade-related inquiries, reflecting Malaysia’s commitment to delivering seamless support throughout every stage of the investment journey.On sustainability, Redzuan said both countries’ shared commitment to net-zero emissions by 2050 would create significant room for collaboration in renewable energy, hydrogen, carbon capture and storage, solar manufacturing and the circular economy.Termizi noted that MATRADE launched its Sustainability Action Values for Exporters (SAVE) initiative back in 2019 to help Malaysian exporters strengthen environmental, social and corporate governance practices and remain competitive in global supply chains.“By combining South Korean technology with Malaysian manufacturing, engineering and market-access capabilities, companies from both countries can jointly develop and commercialise sustainable solutions for Malaysia, Asean and wider global markets,” he said.Both officials also highlighted the halal economy as an area with particularly strong growth potential.Redzuan said combining South Korea’s advanced biotechnology and pharmaceutical capabilities with Malaysia’s internationally recognised halal certification system could unlock major opportunities in halal pharmaceuticals, functional foods and cosmetics.Termizi emphasised that halal had evolved well beyond food: “Another misconception is that halal is only relevant to food,” he said. “In reality, the halal economy now covers cosmetics, pharmaceuticals, healthcare, logistics, tourism and many other sectors, representing one of the world’s fastest-growing consumer markets.”He encouraged South Korean businesses to leverage Malaysia’s well-established halal ecosystem to expand into Muslim markets across Asean, the Middle East, South Asia and Africa, while also pointing to the MIHAS as a platform for building international partnerships.