Malaysia is emerging as an AI manufacturing hub as global trade and geopolitical tensions drive investment into the country, drawn by its established industrial base and relatively stable political environment. Medhini Group founder Joel William is beginning a feasibility study for a Chinese client weighing a chemical plant in Sarawak, Malaysia’s biggest state on the northern coast of Borneo, after the conflict in Iran upended plans to build the factory in the Middle East. Such projects build on more than RM116 billion (S$36.4 billion) of inflows into Sarawak over the five years through 2025, making it one of several hotspots in a nationwide investment boom. Johor is attracting data centre developers, while Penang is drawing fresh chip-related capital amid a global race to build artificial intelligence. Malaysia is one of the world’s four largest net exporters of AI-related hardware, alongside South Korea, Taiwan and Thailand, according to the International Monetary Fund. Data centre investments have climbed to an estimated nearly 18 per cent of gross domestic product – the highest share globally, HSBC Holdings analysts say. Gross domestic product surged 5.8 per cent in the second quarter, outpacing the 5.2 per cent consensus estimate, as domestic demand, AI-linked investments and electronics exports countered the impact of the war in the Middle East. Bank JPMorgan Chase subsequently raised Malaysia’s 2026 GDP forecast to 5.3 per cent. Malaysia’s status as a net energy exporter has also