GEORGE TOWN: Malaysia’s integration into global supply chains, rather than short-term incentives or one-off trade deals, continues to attract and retain American investment, says outgoing US Ambassador to Malaysia Edgard D. Kagan.
He cited Penang as an example of how a sustained US corporate presence can shape local economies over time.
“Companies aren’t coming to Malaysia because they want to export to China. They’re coming because Malaysia is integrated into global supply chains,” Kagan told reporters during a press conference at the Penang Institute on Friday.
“When you get investment from an American company, you almost always get a going concern. You get a factory, you get an R&D centre that produces value for Malaysia. There are other countries where you get a high-profile ceremony, you get some quick construction and then empty buildings,” he said.
Kagan described US companies as long-term partners that operate within regulatory frameworks.
“As a general rule, American companies work very, very hard on compliance. They invest in corporate social responsibility programmes. They don’t do this as charity. They do this because American companies understand that they have a stake in Malaysia,” he said.
According to Malaysia External Trade Development Corporation, Malaysia’s trade performance for the January-November 2025 period reached RM2.775 trillion, up 5.8% year-on-year. Exports climbed 6.1% to RM1.454 trillion, while imports rose 5.6%, resulting in a RM132.6 billion trade surplus.
Penang was among the states recording strong export growth in 2025, reflecting its role as a manufacturing and export hub within Malaysia’s broader industrial ecosystem.
Electrical and electronic (E&E) products remain central to both Malaysia’s export profile and US demand. In 2025, E&E exports accounted for about 44% of total exports, with semiconductor shipments forming the core of that strength.
Kagan said the impact of US investment in the semiconductor sector extended beyond production output.
“If you look closely at Malaysian companies in the semiconductor industry, virtually all of them were founded by or are run by people who once worked at American companies.
“If you look at Broadcom and Intel, both of which have had quite a role in Malaysia and Penang, particularly Intel, they’re both run by people who were originally of Malaysian origin,” he said.
Kagan highlighted that about 312,000 Malaysians work in US companies, with many more employed in associated contractor and supplier networks.
Beyond E&E, Kagan said, segments showing growth potential include medical device manufacturing, driven by ageing populations and rising healthcare demand globally.
He also spoke of Hot Wheels (scale model cars) production as something that touches people around the world.
“Mattel has been making Hot Wheels in Penang since the early 1980s. I think they have produced more Hot Wheels cars in Penang than there are people in the world.”
Despite the strong fundamentals, Malaysia continues to face tariff and policy challenges in its trade relationship with the US. Nearly 60% of Malaysian goods exported to the US are subject to a 19% tariff, placing Malaysian exporters at a disadvantage compared with competitors facing lower trade barriers.
Kagan said the importance lies in confidence rather than immediate commercial gains.
“The real value of it is the signalling. It tells companies that both countries are willing to make long-term economic and political commitments,“ he said.
Kagan will be leaving Malaysia on Feb 15, marking the end of his tenure after more than five years of diplomatic service in the country.
