High anticipation due to strong government policies, improved FDIs and adoption of new tech
Contributed by Sulaiman Saheh
There is high anticipation for Malaysia’s industrial sector as the country moves further into 2025, driven by strong government policies, improved foreign direct investments (FDIs) and the continued adoption of Industry 4.0 technologies.
Recent developments indicate that Malaysia is cementing its position as a regional manufacturing and logistics hub, with significant progress in semiconductor production, electric vehicle (EV) manufacturing and digital economy initiatives.
Notably, major multinational corporations have announced new investments in high-tech sectors, reflecting strong confidence in Malaysia’s industrial ecosystem. The industrial property market has also been witnessing heightened demand, particularly in logistics and smart industrial parks.
The government’s commitment to enhancing infrastructure and digital connectivity has further propelled investor interest. Moreover, the New Industrial Master Plan (NIMP) 2030, alongside Budget 2025’s strategic incentives, signals a forward-looking approach to industrial development.
The government recognises the industrial sector as a key driver of economic progress and has taken significant steps to enhance its competitiveness. The introduction of the New Investment Incentive Framework (NIIF), expected later this year, is designed to attract high-value investments that focus on advanced manufacturing, economic complexity, high-skilled talent development and supply chain resilience.
Strategic investment fund
The allocation of RM1bil in a strategic investment fund will provide essential support for industries that align with the National Investment Aspirations and NIMP 2030. This master plan aims to transform Malaysia into a high-tech industrial hub by emphasising digitalisation, sustainability and industrial upskilling.
In line with these efforts, Budget 2025 has outlined various fiscal and non-fiscal measures aimed at fostering sustainable industrial development. These include targeted tax incentives, automation grants and financial assistance to encourage technological adoption and digitalisation.
Additionally, the government will be introducing an Industrial Park Star Rating System this year, which will evaluate and rank industrial parks based on infrastructure quality, sustainability practices and digital readiness.
As Malaysia moves towards becoming a leading industrial hub, several major industrial park projects are set to be launched in 2025. These developments are designed to accommodate high-tech industries, promote sustainability and support the goals of NIMP 2030. Among the notable projects is the expansion of the Kulim Hi-Tech Park, which will cater to semiconductor and electronics manufacturers. Additionally, the East Coast Economic Region (ECER) will see new industrial zones focused on green technology and renewable energy industries. The Batu Kawan Industrial Park (BKIP) in Penang continues to attract foreign direct investment, particularly in the fields of electric vehicle (EV) manufacturing and high-tech assembly. A recent new addition to the BKIP conurbation is the A-Park Batu Kawan, a 20.5-acre industrial development launched in March 2024 and divided into 3 phases.
New Star Rating System
The Malaysian Investment Development Authority (MIDA) is said to spearhead the launch of the Industrial Park Star Rating System this year, a transformative initiative aimed at elevating the standards of industrial parks across the country. This system will serve as a benchmark for evaluating industrial parks based on key factors such as infrastructure quality, environmental sustainability, technological readiness, accessibility and overall investor appeal. By implementing a standardised rating system, the government seeks to enhance transparency for investors, helping them make informed decisions when selecting industrial locations. The rating system will categorise industrial parks into different tiers, recognising those that adopt best practices in green technology, digital integration and efficient land use. Industrial parks that implement smart solutions, such as AI-driven logistics, renewable energy integration and advanced waste management systems, will be rated higher.
This will incentivise industrial park developers to continuously enhance their facilities to attract high-value tenants. Moreover, the initiative aligns with NIMP 2030 by promoting sustainable and technologically advanced industrial spaces that reflect global investment trends. Beyond guiding investors, the rating system is expected to shape future government incentives and infrastructure funding. High-rated parks could receive additional government support in the form of grants, tax breaks or enhanced infrastructure development, ensuring Malaysia remains competitive on the global stage. This structured approach to industrial park evaluation will benefit not only large multinational corporations seeking top-tier facilities but also small and medium enterprises (SMEs) looking for high-quality, well-connected industrial spaces to expand their operations.
Push for digital transformation
Looking ahead, the growing emphasis on automation, digitalisation and sustainability will drive demand for industrial real estate, particularly in smart industrial parks and free trade zones. The push for digital transformation will accelerate the development of smart industrial parks equipped with automated warehouses, AI-driven logistics systems and green energy solutions. Investors will prioritise industrial estates that offer integrated supply chain facilities and seamless connectivity to major transport hubs. With the expansion of e-commerce and global trade, Malaysia is experiencing a surge in demand for modern warehouses and fulfilment centres. The government’s commitment to developing Smart Logistics Complexes (SLCs) will further strengthen the logistics real estate segment, making it an attractive investment opportunity. Under Budget 2025, the scope of logistics tax incentives has expanded beyond Integrated Logistics Services (ILS) to include Smart Logistics Complexes (SLCs), making qualified companies eligible for a 60% Investment Tax Allowance (ITA) on qualifying capital expenditures.
Overall, Malaysia’s industrial sector is expected to experience technologically driven growth in 2025, fuelled by government support, strong FDI inflows and the acceleration of Industry 4.0 initiatives. The combination of fiscal incentives, automation grants and investment-friendly policies will help Malaysia maintain its position as a competitive manufacturing and logistics hub in the region. Despite being the less glamorous segment of the property market, the industrial real estate market will remain a resilient performer, with high demand for smart industrial parks, logistics hubs and high-tech manufacturing spaces. As we move beyond 2025, continued collaboration between the public and private sectors will be crucial in shaping a resilient and future-proof industrial landscape to reinforce Malaysia’s position as a premier destination for industrial investments.
Sulaiman Saheh,
Director of research
Rahim & Co International, a global real estate agency.
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