The industrial sector in Malaysia is poised for sustained growth in 2025, backed by strong government initiatives, infrastructure advancements, and emerging industrial parks integrating artificial intelligence (AI). According to Knight Frank Asia-Pacific's latest outlook report, global trade tensions, particularly the anticipated tariff increases under a potential Trump administration, will prompt manufacturers to diversify their production bases, further reinforcing Malaysia's appeal as a strategic industrial hub.

Manufacturers Shifting Strategies Amid Trade Tensions
With geopolitical uncertainty and trade tensions expected to take center stage in 2025, particularly due to a potential Trump administration's tariff increase, the report says manufacturers are expected to focus on limiting risks, managing costs, and seeking alternative production markets. Malaysia is well-positioned to benefit from this shift due to its strategic location, strong government incentives, and evolving industrial ecosystem.

Allan Sim, Executive Director of Land & Industrial Solutions at Knight Frank Malaysia, states, "With trade tensions likely to take centre stage in 2025, primarily in response to Trump's planned tariff increase against other countries, manufacturers will strive to limit risks, manage costs, and explore new markets for production. Malaysia's industrial sector growth, driven by supportive government initiatives promoting industrialization, infrastructure improvement and the establishment of new planned industrial parks integrating AI elements, will set to further transform the country's industrial landscape."

AI and Automation to Transform Malaysia's Industrial Landscape

The report highlights the increasing role of AI and automation in shaping the industrial sector, particularly in logistics, warehousing, and advanced manufacturing. The integration of AI-powered industrial parks is expected to enhance operational efficiencies, predictive maintenance, and sustainability efforts, making Malaysia an attractive destination for both local and foreign investors.

"As Malaysia transitions into a high-tech, high-value manufacturing hub, we are witnessing a shift towards more sophisticated industrial facilities that align with global supply chain trends," said Keith Ooi, Group Managing Director of Knight Frank Malaysia. "AI-integrated industrial parks will be a game-changer, offering enhanced operational efficiencies, predictive maintenance capabilities, and optimised resource management, ultimately attracting both domestic and foreign direct
investments." Ooi added.

Resilience and Investment Momentum in 2025
Despite global economic uncertainties, Malaysia's industrial sector is expected to maintain resilience, fueled by strong investor interest in logistics, warehousing, and advanced manufacturing. The Knight Frank Asia-Pacific report notes that emerging markets in Southeast Asia, including Malaysia, have witnessed a significant rise in industrial investment volumes, driven by favorable government policies and increasing investor confidence.

As businesses re-evaluate supply chain strategies, Malaysia's proactive policies, strategic location, and skilled workforce will further solidify its role as a preferred destination for industrial and manufacturing investments.