Malaysia has set its sights on a larger share of the electric vehicle (EV) supply chain business as competition in Southeast Asia heats up, following Tesla's announcement of a regional headquarters in Malaysia. "EVs happen to be our priority," Malaysian Prime Minister Anwar Ibrahim told CNBC in an exclusive interview on Friday at the prime minister's offices in Putrajaya, just south of the country's capital Kuala Lumpur.
Tesla's groundbreaking move with Malaysia is a boost to Southeast Asia's place in the EV supply chain and the first deal under the country's Battery Electric Vehicle Global Leaders initiative. The deal is also an opportunity for the US automaker to expand into new markets as growth slows in China and other key markets.
Under the terms of Tesla's agreement with Malaysia, the EV maker will be able to sell electric vehicles built in Shanghai directly without import tariffs or middleman markups. Tesla will also set up a regional headquarters and service center in Selangor, equipped with advanced diagnostic tools and staffed by highly trained Tesla technicians. Tesla users will eventually have access to a network of charging stations in major metropolitan areas in the country, with the first one planned for downtown Kuala Lumpur.
There are also plans for Tesla to start manufacturing EV batteries in Malaysia. Anwar said Malaysia is open to more EV investments, including from Chinese automakers. While Chinese automakers "are not asking," he said, "the possibility will be open." He said there would be synergy when foreign companies like Tesla invest in Malaysia, adding that "it can benefit three or four local industries".
Malaysia has a long-standing Bumiputera policy that favors indigenous populations, including the majority Malay-Muslim community and non-Malay indigenous groups. Foreign ventures started in Malaysia must meet a minimum 30% equity ownership by Bumiputera, but Tesla is exempt from the equity rule. "To me, [the Tesla deal] is as good as putting in 30% equity," Anwar said in an exclusive interview to be broadcast on The CNBC Conversation this week. "In fact, in terms of tangible gains back to the economy - it's better".
After he was sworn in as Malaysia's 10th prime minister last year, Anwar promised to fight corruption and make "Malaysia for all Malaysians," opening himself up to criticism that he might be looking to dismantle Bumiputera privilege.