This article first appeared in The Edge Malaysia Weekly on January 12, 2026 - January 18, 2026

After a bruising 2025 — brought about by the US tariffs — will things be better this year? The Edge posed this and other questions — on downside risks, businesses and the role of artificial intelligence (AI), among others — to a number of trade associations. In this second and concluding part, read what four of them say. 

(Editor’s note: The answers were given prior to the US’s capture of Venezuelan leader Nicolás Maduro on Jan 3.)

By Datuk Siobhan Das

CEO of the American Malaysian Chamber of Commerce (AMCHAM Malaysia)

The Edge: What are AMCHAM’s expectations for 2026? 

AMCHAM: AMCHAM’s latest outlook acknowledges that Malaysia has held firm as one of Asia’s leading electrical and electronic (E&E) supply chain hubs, including semiconductors. Its sharp ascent in the 2025 IMD World Competitiveness Ranking is no small feat, signalling that the nation’s fundamentals are sound and its reform path credible. Yet, momentum alone is not a growth strategy. The challenge now is to translate this momentum into sustained, measurable competitiveness.

Malaysia’s enduring edge has long been its reputation as an efficient and investor-friendly destination. That strength must be safeguarded. While tougher enforcement and stricter compliance are important to tackle any gaps in governance, the regulatory pendulum must not swing so far that it constrains good corporate actors. Overly burdensome bureaucracy, unpredictable licensing regimes and opaque tariff frameworks risk eroding confidence when clarity and stability are most needed.

The global economic map is being redrawn by technology and cost realignments. For Malaysia, the next phase of industrial strength will be built not on cost advantages but on capability. Investment in artificial intelligence, cloud infrastructure, cybersecurity and home-grown innovation must accelerate — not merely to keep pace, but to lead in the region. The New Industrial Master Plan 2030 (NIMP 2030) offers a blueprint, what remains is disciplined, execution-driven follow-through.

Malaysia stands at a strategic inflection point. The country’s narrative to investors is compelling: a trusted and stable partner; advancing digitalisation and sustainability; while maintaining a pragmatic balance between reform and business fluidity. If ambition, policy clarity and digital execution converge in 2026 under the Ministry of Digital, Malaysia could not only sustain its momentum but also redefine its role as a central engine of growth and innovation in Asia. It is also a moment when highly skilled Malaysian companies should look to expand and invest in the US market, to cement established ties and engage directly in the market.

What opportunities and challenges does AMCHAM foresee in Malaysia? 

Malaysia stands at an inflection point: brimming with promise for American investors, yet increasingly tested by rising costs, policy frictions and fast-moving Asean rivals. The question in 2026 is not whether Malaysia has potential; it is whether the country can move with enough urgency to turn that potential into a realised advantage.

From AMCHAM’s vantage point, Malaysia offers a mix that many economies would envy: a reputation as a trusted trading partner, access to regional frameworks such as agreement on reciprocal trade (ART)- and Asean-related free trade agreements and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and a growing ecosystem for supply chain integration and market expansion. Layer on future-ready infrastructure, energy transition ambitions and a policy tilt towards innovation, and the contours of a compelling long-term story are clearly visible.

But opportunity can be slowly suffocated by friction. For US companies weighing where to place their next regional dollar, regulatory complexity, rising input costs and uneven policy execution are no longer background noise; they are front-page considerations that can tip decisions away from Malaysia.

What are AMCHAM’s top priorities for strengthening US-Malaysia business ties in 2026?

AMCHAM’s priorities for 2026 can be summed up in three words: collaboration, competitiveness and clarity. The task now is to turn those principles into a sharper, more confident narrative that both governments and boardrooms can act on.

At the top of the agenda is deeper, more intentional collaboration. Public-private partnerships cannot remain a talking point; they must be the mechanism that aligns industry needs with national priorities under the 13th Malaysia Plan, from capability building and investment facilitation to the nuts and bolts of policy execution. With government efforts to develop the workforce, especially by upskilling small and medium enterprises (SMEs), and suppliers feeding into multinational value chains that are closely coordinated with what US companies actually require, Malaysia’s ecosystem becomes more resilient, future-ready and globally competitive.

Competitiveness, in turn, will hinge on whether Malaysia can truly anchor digital transformation and Al at the heart of its economic strategy rather than at its margins. Positioning the country as a leading Al-enabled economy will demand large-scale skills development, robust and secure digital infrastructure, and policy frameworks that encourage innovation while providing continuity and predictability for long-term investors. For US firms making multi-year, often multibillion-dollar, commitments, that combination of ambition and stability will be decisive.

Just as important is how Malaysia tells its story. The country already plays a compelling role in the US economic ecosystem as a trusted node in technology, manufacturing and supply chains; the opportunity now is to state that role more clearly and consistently. Clearer articulation of Malaysia’s openness to agreements such as ART, along with practical clarity on export controls, intellectual property protection, exemptions and taxation in key sectors, would go a long way towards boosting investor confidence and easing day-to-day operations.

If collaboration deepens, competitiveness sharpens and communication moves from slogans to specifics, US-Malaysian business ties in 2026 can move beyond resilience to genuine renewal. With alignment, transparency and disciplined execution, both sides stand to unlock a much larger, shared dividend over the long term.

AMCHAM’s most significant value in 2026 will be as a connector, identifying opportunities to translate high-level ambition into practical cooperation between policymakers and companies that are actually placing jobs and capital in Malaysia. The stronger the bridge it builds between those two worlds, the stronger US-Malaysia business ties will become.

In addition, the interconnectedness of the US-Malaysian trading ecosystem could also provide opportunities in 2026 for Malaysian companies to explore investments into the US market.

How does AMCHAM see Malaysia’s competitiveness compared to other Asean investment destinations?

Malaysia has spent decades building a high-complexity, high-value manufacturing base, particularly in semiconductors, chip design, medical devices and precision engineering, underpinned by infrastructure and industrial know-how that have been refined over more than half a century and supported by a multilingual, highly adaptable workforce that plugs smoothly into global supply chains.

Where some regional peers are still racing to assemble the basics, Malaysia is already moving decisively up the value chain. Investors find a mature operating environment with credible financial institutions, deep logistics and digital infrastructure, and an ecosystem that takes intellectual property protection seriously — all essential ingredients for higher-value, technology-intensive investments. The growing momentum in hubs such as Johor, including the Johor-Singapore Special Economic Zone, and the surge in data centre capacity, signals that Malaysia is positioning itself not just as a production base, but as a scalable platform for regional operations.

Reputation matters as much as hard assets and while Malaysia continues to score well, it needs to be nurtured. Its track record as a trusted, reliable partner; commitment to open, rules-based trade; and willingness to engage constructively in emerging frameworks such as ART all reinforce a sense of predictability that investors increasingly prize in a volatile world. If policy clarity and execution can keep pace with its ambitions, Malaysia will remain one of Asean’s most compelling — and future-ready — destinations for US and global capital.

What skills or talent gaps do US companies think Malaysia must address urgently?

US companies increasingly view Malaysia’s talent landscape as a critical factor in sustaining competitiveness, and [there are] several capability gaps that require urgent attention. The question they are asking is blunt: Does Malaysia have the skills base to sustain a high-complexity, high-value economy or just to host it?

Leading concerns revolve around AI and digital capabilities. Many companies are content to use tools rather than developing and deploying solutions and evolving rapidly. US boards seek a workforce capable of designing, managing and scaling these systems enterprise-wide, not just experimenting with them casually. Strong foundational skills, Maths, English and critical thinking in early education will be essential.

The second pressure point is the pipeline itself. Brain drain and aggressive job switching are symptoms of a market in which high-end skills remain too scarce, and career paths at home are not compelling enough. Rather than restricting mobility, the solution lies in strengthening talent pipelines, ensuring continuous skill development and building clear career pathways that make Malaysia a compelling place for high-skilled professionals to grow. Initiatives such as the Penang Skills Development Centre (PSDC) and Johor Skills Development Centre are strong examples of effective industry-aligned training models, particularly through technical and vocational education and training (TVET) and industry partnership programmes that prepare youth and mid-career talent for high-value roles.

Beneath all this sits a softer, but critical, gap — transformation skills. Problem-solving, leadership readiness, adaptability and collaborative working — especially in the managerial ranks — will ultimately decide whether digital strategies become real operational change or just slide decks. Get that mix right at scale, and Malaysia looks like a long-term bet; leave it unaddressed, and even the best incentives may not be enough to keep US capital committed.

If you could ask the Malaysian government for one thing, what would it be?

If you would indulge us, there are two asks.

Continue direct engagement towards a full FTA with the US and lock in the 50-plus years of commercial collaboration to advance the relationship.

Second, consistency with urgency. AMCHAM would urge the government to lock in clear, stable policies that champion free, fair and open trade, and then move much faster on the reforms needed to make those policies work on the ground.

That means investing in modern, digital public-service platforms and streamlining procedures so businesses experience predictable and efficient execution rather than friction at every interface. It also means updating regulations to reflect the high-value, high-complexity reality of today’s manufacturing and technology industries, not the economy of 25 years ago.

Done well, these reforms would not only give investors confidence but would pull even more Malaysians into the country’s growth story, broadening participation in the very economic engine they help power. A truly sustainable, resilient and adaptive economy will emerge only if companies, the government and the rakyat move in sync. The government’s role is to set the rules and rhythm clearly, then keep them steady enough for everyone else to build on.

The American Malaysian Chamber of Commerce (AMCHAM) is an international, non-profit, private-sector business association with more than 1,600 members representing more than 300 American, Malaysian and other international companies with strong ties to American business 

By Syed Saggaf Syed Ahmad

President of the Malaysian Oil, Gas & Energy Services Council (MOGSC)

The Edge: After a year marked by uncertainty on the external front mainly as a result of US President Donald Trump’s tariffs as well as geopolitics in Ukraine and the Middle East, what are your expectations for 2026?

MOGSC: In Malaysia, the outlook for the OGSE (oil and gas, services and equipment) sector remains constructive, supported by sustained upstream and midstream activities as well as the national priority to ensure long-term energy security. While investment decisions are expected to remain disciplined amid global uncertainties, activity levels will be underpinned by PETRONAS’ commitment to maintaining production at roughly two million barrels of oil equivalent per day. This will continue to drive demand for both capital expenditure programmes to develop new fields and brownfield projects, as well as operating expenditure to enhance reliability, efficiency and asset-life extension across existing facilities.

At the same time, the Malaysian OGSE landscape is undergoing a structural shift, with new growth segments increasingly complementing traditional service offerings. Decarbonisation-related activities are expected to play a more prominent role, particularly in areas such as methane management, carbon capture and storage (CCS), energy-efficiency solutions and digital technologies to improve asset performance and emissions transparency. These emerging segments not only support PETRONAS’ net-zero ambitions but also create opportunities for local OGSE players to move up the value chain, build new capabilities and enhance their regional competitiveness.

What downside risks are you watching out for? What competitive threats worry you the most in 2026?

Trade agreements

For local OGSE players, trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is expected to come into effect by 2027, present legitimate concerns, particularly given the limited clarity at this stage on its detailed implementation and full implications for the domestic supply chain. While there is a strong desire to protect and nurture local industry players, increased market openness is largely inevitable. As such, proactive and targeted measures must be undertaken to ensure Malaysian OGSE companies remain resilient and competitive. This includes strengthening capabilities, improving cost and productivity performance, enhancing technology adoption and enabling strategic partnerships so that local players are not only protected but also positioned to compete effectively in a more liberalised and competitive environment.

Regional issues

Ongoing uncertainties between the federal government and Sabah and Sarawak continue to weigh on the broader progress of the industry, affecting investment confidence and long-term planning. It is therefore hoped that these issues can be resolved amicably through constructive engagement and alignment of interests, enabling all stakeholders to shift their focus towards unlocking growth opportunities, accelerating project execution and advancing the sustainable development of the industry for the benefit of the nation.

Cost pressure in relation to volatility of oil price

The oil and gas industry has undergone multiple cycles of uncertainty in the past, underscoring the need for industry players and stakeholders to work collectively to build long-term resilience. Historically, during periods of oil price downturns, cost pressures have disproportionately fallen on OGSE players, often becoming a significant burden on the sustainability and competitiveness of the sector. In navigating future cycles, it is critical to avoid business models and offerings that are overly burdened by prolonged low-cost pressures. An equitable and balanced contracting mechanism is therefore essential to ensuring the competitiveness and sustainability of the sector, while preventing value erosion and cost-driven practices that ultimately prove detrimental to the industry as a whole.

What role will AI and/or automation play in your business operations? Are you investing in these in your business? What do you find most challenging when it comes to AI and automation?

At present, AI and automation are already reshaping the OGSE landscape. It has been widely used in many segments, especially in predictive maintenance, reservoir and production optimisation, automated drilling analytics, workflow digitalisation, safety automation and risk prediction, and robotics for inspection and intervention.

Malaysia’s OGSE players are investing in building digital techs, engaging their current offering using digital solutions, integrating machine learning and automating routine tasks. The adoption of technology in Malaysia’s oil and gas sector is challenged by a conservative, risk-averse industry culture, high capital costs with uncertain returns, and a shortage of digital and advanced technology skills. These issues are compounded by a reliance on legacy systems, fragmented and poorly integrated data, and strict regulatory and compliance requirements that slow implementation. In addition, the maturity and commercial viability of emerging technologies such as digitalisation, automation and CCUS (carbon capture, utilisation and storage) remain uncertain, while volatile oil prices and energy transition pressures further constrain investment decisions.

Do you face challenges in hiring the right people for your business? For those reliant on foreign labour, are there plans to automate to reduce manual labour?

Talent development and deployment remain among the most critical challenges facing the industry. Competition from other economic sectors that are perceived to be more attractive to younger generations has widened the talent gap, creating an urgent need for intervention to prevent further talent drain. While the industry is progressively adopting automation and digitalisation, a significant portion of the value chain continues to rely heavily on traditional roles, particularly skilled technicians, whose availability remains essential to sustaining operational reliability and long-term industry resilience.

This reinforced the importance of close collaboration between PETRONAS and MOGSC, via programmes such as Vista iPlus, in strengthening the talent pipeline. It plays a pivotal role in ensuring the availability of competent, job-ready local talent to support operational reliability, supply chain sustainability and long-term industry resilience.

If you could ask the government for one thing, what would it be?

MOGSC respectfully requests greater government focus on strengthening the OGSE ecosystem through enhanced support for local industry players. In particular, increased access to financing and improved fiscal incentives are critical to enabling OGSE companies to remain competitive and resilient. This support should include targeted incentives for research and development (R&D) and technology ownership, as well as fiscal mechanisms that actively reward innovation, digitalisation and decarbonisation initiatives. Such measures will accelerate technology adoption, strengthen local capabilities and support alignment with national energy transition objectives. In addition, MOGSC urges the government to consider enhanced funding assistance for OGSE companies expanding into international markets, recognising the higher capital requirements, risk exposure and working-capital demands associated with competing in regional and global offshore environments.

Established in 2003, MOGSC has more than 500 corporate and associate members from every segment of the oil, gas and energy supply chain

By Roslin Azmy Hassan

Chief executive of the Malaysian Palm Oil Association (MPOA)

The Edge: After a year marked by uncertainty from tariffs and geopolitics, what are your expectations for 2026?

MPOA: Despite a tough external environment this year, we are heading into 2026 with cautious optimism. Most analysts at the MPOB International Palm Oil Congress and Exhibition (PIPOC) 2025, including CIMB, Fastmarkets and Glenauk, expect CPO prices to stay fairly stable next year, trading at RM4,000 to RM4,600 per tonne.

Dr Julian McGill of Glenauk Economics sees prices recovering to between RM4,300 and RM4,400 by the first quarter of 2026. Dr Sathia Varqa of Fastmarkets expects RM4,500 to RM4,600 on seasonal recovery.

A few positive factors going into 2026:

On the regulatory front, the European Union’s decision to delay and simplify the EU Regulation on Deforestation-free Products (EUDR) requirements removes the Jan 1 compliance shock many had feared. This gives everyone more breathing room.

Overall, we expect a more balanced year, with firmer prices and better clarity on global policies.

What downside risks or competitive threats worry you most for 2026?

There are several:

Policy uncertainty — the biggest factor

Weather risks

La Niña may create uneven yields across the region.

Indonesia’s structural issues

Land seizures, reclassification issues and slow replanting could put three million to 3.5 million tonnes of Indonesian supply at risk, which can cause volatility.

Competition from soy and canola

Malaysia’s replanting backlog

Our replanting rate is only 1.5% versus the required 4%, with 650,000ha of old palms. This depresses yields and competitiveness. So, while demand is stable, supply, policy and weather remain key watchpoints for 2026.

What role will AI and automation play in planters’ operations? What is challenging about adopting AI and automation?

AI and mechanisation are increasingly part of plantation operations. We are seeing:

These tools improve efficiency and decision-making and, importantly, reduce dependence on manual labour.

The challenges:

As one speaker at the MPOB PIPOC 2025 said: “The turnaround is an operational discipline, not a technology problem.”

Do you face challenges in hiring the right people? Are there plans to reduce reliance on foreign labour?

Yes, labour remains one of the biggest constraints, especially for harvesting. Even with improved recruitment flow, the sector is still heavily reliant on foreign labour.

This is why mechanisation and automation are critical. Growers are actively adopting:

Over time, these methods will reduce dependency on manual labour.

In the meantime, we are also trying to attract more locals into technical and supervisory roles as estates digitalise.

If you could ask the government for one thing, what would it be?

A consistent long-term policy framework is essential, especially on labour, sustainability and mechanisation.

But if we could ask for one specific thing, it would be for the Windfall Profit Levy (WPL) to be channelled back to the industry as replanting support.

Malaysia urgently needs to ramp up replanting to between 200,000ha and 228,000 ha per year to clear the backlog of old trees. Replanting costs typically range from RM18,000 to RM25,000 per hectare, which remains prohibitive, particularly for mid-sized estates.

Incentives sought include:

These measures would:

Currently, smallholders receive replanting grants totalling about RM100 million per year through the Malaysian Palm Oil Board, which has helped support replanting efforts among independent and organised smallholders. However, this allocation covers only a fraction of the national replanting requirement and does not adequately address the widening backlog of old palms, particularly in the estate sector.

Using WPL funds for replanting would ensure that windfall revenues are reinvested into productivity and structural reform, rather than short-term consumption.

A few other notable updates

All this reinforces our conviction that 2026 will be shaped by policy clarity, replanting discipline and smart adoption of technology.

MPOA members comprise individuals and corporate bodies involved in plantation tree crop agriculture, with at least 40ha 

By Jacob Lee

President of the Federation of Malaysian Manufacturing (FMM)

The Federation of Malaysian Manufacturing (FMM) expects the economy to grow by 4%-4.5% in 2026, driven by resilient domestic demand, stable employment and proactive fiscal measures like cash assistance programmes and a public sector wage hike.

Strong private consumption and investment will anchor the expansion, bolstered by tourism-related sectors. The manufacturing sector, vital to FMM members, is expected to sustain at least 3% growth, led by the electrical and electronics (E&E) cluster amid the global artificial intelligence (AI) and digitalisation demand. The boom in AI investments, particularly in infrastructure like data centres, can be expected to drive business expenditure.

From an FMM perspective, the outlook remains cautiously positive. We anticipate the government will prioritise export-oriented manufacturing, enhance Asean supply chain coordination and support small and medium enterprises (SMEs) in innovation, positioning Malaysia as a resilient regional hub.

We see downside risks chiefly from US trade policy and geopolitical fragmentation. The high effective US tariff rate (estimated in the 16%-20% range) is a major concern as it is expected to weigh on trade volumes and contribute to US inflation in early 2026 as companies struggle to absorb costs.

FMM is primarily monitoring external shocks that create volatility and undermine export stability. Chief among them is the risk of a global trade slowdown, driven by softening growth across major partner economies (the US, China, Europe), which translates directly into weaker external demand for Malaysian goods.

There is concern about the recurrence of a US-China conflict, expressed through economic tensions. Geopolitical fragmentation, especially through US-China strategic competition, will drive supply chain instability and volatility in commodity and energy prices, forcing businesses to incur higher costs for diversification.

The most pressing competitive threats are structural and internal, mainly revolving around the need to maintain Malaysia’s attractiveness as an investment hub. A major challenge is the persistent talent and human capital shortage, specifically a lack of skilled workers and engineers required for high-tech sectors, making upskilling for Industry 4.0 crucial.

This is compounded by fierce competition from regional rivals, namely Vietnam, Indonesia and Thailand, which are aggressively attracting foreign direct investment (FDI), forcing Malaysian manufacturers to constantly reappraise their cost and efficiency advantage.

To mitigate these risks and threats, FMM’s core strategy for 2026 is twofold. First, it involves pushing the government for fiscal breathing room, actively advocating against the introduction of any new taxes or levies that would immediately strain profit margins.

Second, FMM is calling for structural support to enhance domestic and regional competitiveness. This includes government funding for automation and digitalisation initiatives to bridge the productivity gap and the establishment of an Asean supply chain coordination council to foster regional integration, ultimately aiming to solidify Malaysia’s position against aggressive regional rivals and navigate external uncertainties.

FMM sees AI and automation as the definitive path to reshape Malaysia’s manufacturing sector, shifting it from reliance on low-cost labour to a high-value, high-tech and productive powerhouse. These changes should be applied across diverse functions, including predictive maintenance, production optimisation and quality control, ultimately increasing productivity and improving resource management.

The bigger companies and E&E subsector are better equipped to manage the transition to secure long-term competitiveness against regional rivals through AI and modern manufacturing. They are also able to address the structural challenge of dependence on foreign workers. The government supports this transformation through grants and the National Policy on Industry 4.0 (Industry4WRD).

However, FMM’s surveys indicate that local players’ investment in and adoption of AI are not at a mature stage. The biggest practical challenges hindering widespread adoption are structural and financial. First, the high capital cost for integrating advanced technology and the long payback period pose a significant barrier, particularly for SMEs. Second, there is a persistent talent and skills shortage, especially in crucial areas like data science, robotics and AI, which prevents companies from fully leveraging the technology.

FMM is actively lobbying for government assistance and incentives to alleviate these cost pressures and for funds to be channelled to workforce training programmes to bridge the critical skills gap. FMM recognises that there is difficulty securing the right talent, identifying it as a structural threat. There is a persistent shortage of skilled workers, particularly engineers and technicians required for high-tech sectors and those adopting Industry 4.0 standards. This gap exists despite high graduate numbers, indicating a mismatch between industry needs and available skills.

For manufacturers heavily dependent on foreign labour, automation is being increasingly considered as a necessary strategy to offset labour intensity and dependency. FMM views automation and the adoption of AI-driven technologies as the primary solution to mitigate the costs and compliance burden associated with foreign workers.

If FMM could prioritise one policy request to the government in 2026, it would be to provide fiscal breathing space for manufacturers by refraining from introducing any additional new taxes or levies. This request is paramount because it addresses the immediate and widespread pressure of rising operational costs and is seen as the most direct way to maintain the sector’s competitiveness amid global economic uncertainties and trade volatility.

With escalating costs for raw materials, energy and labour, any new tax would severely strain profit margins, particularly for SMEs. By not imposing new financial burdens, businesses can then channel the respite into crucial areas like automation, upskilling and digitalisation to meet the long-term goals of the New Industrial Master Plan (NIMP 2030). This will help maintain Malaysia’s advantage against competitors like Vietnam and Indonesia, thus safeguarding the attractiveness for FDI.

While there are proposals for targeted grants in areas such as AI adoption and environmental, social and governance (ESG) compliance, the request for no new taxes, coupled with targeted sales and service tax (SST) reforms, remains the single most fundamental policy of non-intervention. FMM welcomes the government’s Jan 5, 2026, announcement introducing key tax reforms that provide additional relief, particularly for SMEs, including the reduction of the service tax on rental and leasing services from 8% to 6%, the raising of exemption thresholds for SME tenants, the extension of e-invoice interim relaxation for Phase 4 taxpayers until Dec 31, 2026, and the implementation of a six-month voluntary stamp duty disclosure programme.

Nevertheless, FMM continues to emphasise that SST relief should also extend to raw materials and intermediate inputs used in the production of non-taxable goods, as the current framework limits input tax exemptions only to manufacturers of taxable finished products, creating an uneven cost structure across sectors. Correcting this distortion would reduce embedded tax costs for affected manufacturers, freeing up resources for automation, upskilling and productivity improvements, while further strengthening Malaysia’s competitiveness and attractiveness as an investment destination.

FMM has been the voice of the Malaysian manufacturing sector since 1968, representing over 13,000 member companies along the manufacturing supply chain

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