European firms eye Sarawak expansion, but long-term certainty matters

European companies in the energy, data centre and semiconductor sectors are considering Sarawak as an expansion destination beyond Peninsular Malaysia, says EuroCham Malaysia.

Its CEO, Kati Ferry, said the chamber wanted to strengthen its engagement with Sarawak, citing the state’s ambitions in energy and green industrialisation.

“We would love to engage more with Sarawak because we see they are very progressive, not only as an energy hub but also in green industrialisation,” she told FMT.

She said Sarawak’s direction aligned with the European Union’s longstanding focus on sustainability, making the state a natural fit for European companies.

“Wherever green technology or green industrialisation is implemented, that’s where you will see European companies.”

However, investment decisions depended on more than initial setup and operating costs.

“It’s not only the cost of business, but it’s the cost of owning the business. So whatever investment the companies are doing now, it has to translate into a very long-term partnership.”

Ferry said European companies remained keen on Malaysia but were becoming more strategic about where and how they invested.

Three factors were particularly important: skilled workers, predictable regulations, and a strong supply chain and industrial ecosystem.

“Whenever a European company invests in a foreign market, they invest for the long term: 10, 20, 30 years. So, they want to make sure that the regulations are predictable, and things don’t change in the middle of their investment.”

Malaysia already had several advantages, including an established manufacturing base, strengths in semiconductors and electronics, and strong economic ties with various markets.

Its neutral approach to regional and global markets was also helping attract investment, she said.

Ferry added that industrial policies such as the New Industrial Master Plan and ongoing negotiations for the European Union-Malaysia Free Trade Agreement were sending positive signals to investors.

Sectors drawing interest included semiconductors, advanced manufacturing, digital technology, cybersecurity, healthcare and medical devices.

However, she cautioned that attracting higher-value investments required more than tax incentives.

“It’s not a tax-free (incentive) for 10, 15 years. Companies need (to have the) confidence (that) they can build sophisticated systems here over the long term,” she said.

This required skilled engineers, software developers and technical specialists, as well as reliable energy supplies, she added.

Ferry also called for closer collaboration between industry, universities and the government to equip graduates with practical skills for advanced manufacturing and other high-value industries.

She cited the Penang Skills Development Centre as an example of successful industry-academia-government cooperation.

European companies helped fund training programmes and sent workers to the centre for reskilling and upskilling from its inception.

More than 180,000 workers had been trained under the model over the past three decades, she said.

“We see it’s a successful example and would love to have more like this across Malaysia,” she added.

Subscribe to our newsletter and get news delivered to your mailbox.