Taiwan has suspended expanded trade negotiations with Malaysia that were due in late October after Prime Minister Anwar Ibrahim told Al Jazeera he considers Taiwan “part of China, period,” according to a Malaysian government source cited by Nikkei Asia, freezing a round that was meant to deepen ties under Taipei’s New Southbound Policy.
The Ministry of Foreign Affairs earlier condemned Anwar’s remarks as a threat to regional stability and warned they could erode confidence among Taiwanese manufacturers operating in Malaysia. Anwar made the comments in an August interview that resurfaced as delegations prepared technical sessions on customs, investment protections and electronics supply chains.
What was on the calendar
The postponed talks were designed to build on years of semiconductor packaging investments in Penang and Selangor. Companies including Siliconware Precision Industries, ASE Technology Holding, Chipbond Technology and Phison Electronics have committed billions of new Taiwan dollars to Malaysian fabs and design centers since 2023.
A person familiar with Taiwan’s trade office in Kuala Lumpur told Nikkei that leaders in Taipei reacted with “pure anger” and accused Malaysia of making little effort to address the diplomatic fallout. Anwar later stressed he still wants a peaceful resolution but reaffirmed Kuala Lumpur’s one-China policy.
Investment mood
Lin Kai-min, honorary president of the Taiwan Chamber of Commerce in Malaysia, said existing plants keep running because capital is already sunk, but Anwar’s language makes boards hesitate on the next tranche of expansions. Taiwanese firms serving U.S. and European customers increasingly weigh export-control compliance and technology safeguards when picking Southeast Asian sites.
Malaysia remains attractive on cost and talent, Lin added, yet investors can shift future lines to Vietnam, Thailand or India if political trust deteriorates.
Beijing’s shadow
Anwar’s interview also asked how he would respond if Beijing used force against Taiwan; he compared the scenario to a Malaysian state trying to secede and said he would use force to preserve unity. That framing drew a sharp rebuttal from Taipei, which treats Malaysia as a key New Southbound partner since the initiative launched in 2016.
Chinese leader Xi Jinping met Anwar in Putrajaya in April 2025, underscoring Kuala Lumpur’s simultaneous courtship of Beijing. Taiwan’s trade negotiators must now decide whether to restart talks only after Malaysia offers a written clarification on how it will treat Taiwanese entities in trade and investment law.
What comes next
Neither capital has announced a new meeting date. Taiwan’s cabinet said economic security reviews of overseas fabs will continue, and lawmakers may summon trade officials to explain how Anwar’s comments affect incentive programs for Malaysian projects. For now, the expansion agenda sits in diplomatic limbo while chip executives watch for any signal that Kuala Lumpur will separate commercial ties from sovereignty rhetoric.