Malaysia's $240 billion US investment plan: A necessary step to secure competitive tariff rate, but a significant bill to foot.

Malaysia has pledged to invest up to $240 billion in the US to reduce its trade gap with Washington. The commitment includes $150 billion in purchases by multinational companies in Malaysia's semiconductor, aerospace, and data center sectors over five years, and $70 billion in Malaysian investments in the US over 10 years. The deal secures a competitive tariff rate of 19% from the previous 25%. Economists and analysts generally think the commitment is necessary, but acknowledge it could be a significant bill to foot, especially in the short term.

Malaysia has agreed to invest up to $240 billion in the United States to reduce its trade gap with Washington. This significant commitment, announced by Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz, includes $150 billion in purchases by multinational companies in Malaysia's semiconductor, aerospace, and data center sectors over five years, and $70 billion in Malaysian investments in the US over 10 years [1].

The deal secures a competitive tariff rate of 19% from the previous 25%, which was a result of negotiations between the two countries. Key components of the agreement include:

- A US$150 billion commitment by multinational corporations in Malaysia to procure goods such as semiconductors, data centers, and aircraft over five years.
- A US$70 billion commitment in cross-border Malaysian investments in the US over 10 years.
- A US$19 billion purchase of Boeing aircraft by Malaysia Aviation Group (MAG) for fleet renewal.
- Annual purchases of US$42.6 million in liquefied natural gas by Petronas and US$42.6 million in coal by Tenaga Nasional Bhd.

Economists and analysts generally think the commitment is necessary to maintain trade relations and mitigate the impact of potential US tariffs. However, they also acknowledge that it could be a significant financial burden for Malaysia, especially in the short term.

The deal is part of a broader strategy to narrow the trade deficit between Malaysia and the US, which is expected to benefit both economies. Malaysia’s aerospace sector, for instance, is projected to contribute RM25.1 billion to the country’s gross domestic product in 2024 and support 30,000 jobs [3].

The agreement is subject to formal codification in a reciprocal trade agreement between the two governments, which is expected to be signed soon. Minister Zafrul emphasized that while Malaysia offered significant trade and investment commitments, it did not compromise on national interests, maintaining Bumiputera equity requirements in strategic sectors and rejecting full liberalization of sensitive industries [1].

References:

[1] https://theedgemalaysia.com/node/765144
[2] https://www.freemalaysiatoday.com/category/nation/2025/08/04/malaysia-bracing-for-possible-us-tariffs-on-semiconductors
[3] https://www.businesstimes.com.sg/international/asean/malaysia-pledges-over-us240-billion-us-deals-avert-trade-fallout-and-lower-tariffs