Surrey Business School’s Prof Tazeeb Rajwani on institutional depth, Hormuz risks, and why neutrality must be earned

Professor Tazeeb Rajwani, Chair in International Business and Strategy at Surrey Business School, University of Surrey, argues that Malaysia’s record investment figures mask a deeper story — one of ecosystem maturity, pragmatic diplomacy, and strategic indispensability that may prove to be its strongest shield in a fragmenting world.

By TENGKU NOOR SHAMSIAH TENGKU ABDULLAH

KUALA LUMPUR, May 28 – When Malaysia posted a record RM426.7 billion in approved investments for 2025, many observers focused on the headline number. Professor Tazeeb Rajwani sees something more significant behind it.

“Malaysia’s proposition rests on institutional maturity and ecosystem depth,” said Professor Tazeeb Rajwani, Chair in International Business and Strategy at Surrey Business School, University of Surrey. “With over 50 years of industrial heritage in Penang’s semiconductor cluster, Malaysia possesses a highly skilled, English-speaking engineering workforce and an established tier-1 and tier-2 supplier ecosystem that cannot be replicated overnight.”

In written responses to TNS News, Rajwani drew on the lenses of non-market strategy, geopolitical risk management, and international business to offer a sweeping assessment of the country’s competitive position and the vulnerabilities that could yet undermine it.

ECOSYSTEM STRENGTH AS A DIFFERENTIATOR

While regional peers such as Vietnam and Indonesia compete on the strength of large labour pools or natural resources, Rajwani contends that Malaysia occupies a qualitatively different tier.

“For global investors, Malaysia offers a robust legal framework, strong intellectual property protection, and a sophisticated financial services sector,” he said. “In a cautious global climate, this institutional stability lowers the risk premium for multinational corporations looking for a reliable long-term hub.”

This distinction, he argues, is not easily disrupted by short-term cost fluctuations or a single geopolitical development — which brings him to the durability of Malaysia’s China-plus-one advantage.

CHINA-PLUS-ONE: STICKY IN THE MEDIUM TERM, UNCERTAIN BEYOND

“Once a tech giant builds an advanced packaging facility or a data hub, the switching costs are immense.” — Prof Tazeeb Rajwani

Supply chain architecture, Rajwani explains, tends to be highly resistant to change once investment commitments are made.

“The China-plus-one advantage is highly durable in the medium term because supply chain architecture is sticky — once a tech giant builds an advanced packaging facility or a data hub, the switching costs are immense,” he said.

The longer-term risk, however, is contingent on the trajectory of US-China tensions. If Washington enforces strict friend-shoring mandates or sweeping secondary tariffs on Chinese-owned entities operating within Malaysia, Rajwani warns the advantage could hit a glass ceiling.

“If Washington forces a hard decoupling on critical technologies like advanced lithography or next-generation AI chips, Malaysia could find itself navigating overlapping and conflicting regulatory jurisdictions from both superpowers,” he cautioned.

THE STRAIT OF HORMUZ: ASYMMETRIC RISKS, ASYMMETRIC OPPORTUNITY

The ongoing disruption in the Strait of Hormuz has introduced what Rajwani describes as a severe maritime choke-point risk, spiking global insurance premiums and destabilising energy flows. For Malaysia, he sees the impacts as asymmetric.

On the cost side, spiking freight and energy prices will filter through to inflation over the coming months, he said. But the disruption is also accelerating a structural shift in supply chain logic.

“Multinationals are reacting by accelerating regional localised inventory strategies — keeping more buffer stock within ASEAN rather than relying on just-in-time logistics from Europe or the Middle East,” Rajwani observed, a trend that positions Malaysia as a natural regional hub.

Crucially, he sees Malaysia’s diplomatic neutrality as its greatest geopolitical asset in this environment.

“It acts as a safe-haven asset and can help build longer-term competitive advantages,” he said. “It allows Malaysia to remain a trusted, non-aligned zone for both Western multinationals and Eastern supply chains, effectively shielding its domestic economy from direct geopolitical crossfire.”

NEUTRALITY AS ACTIVE TOOL, NOT PASSIVE STANCE

“Malaysia’s ability to sustain this posture depends on its economic indispensability.” – Prof Tazeeb Rajwani

Rajwani is careful, however, to qualify his endorsement of Malaysia’s hedging posture. Neutrality is sustainable, he argues, only if treated as an active, pragmatic economic instrument rather than passive non-alignment.

“As the Hormuz crisis and Middle Eastern geopolitics polarise global statecraft, Washington and Beijing are increasingly deploying economic statecraft, carrots and sticks,” he said. “Malaysia’s ability to sustain this posture depends on its economic indispensability. If Malaysia remains critical to the global semiconductor and digital infrastructure supply chain, both the US and China will find it in their own strategic self-interest to respect Malaysia’s neutrality, rather than forcing a hard, binary choice.”

THE JS-SEZ: A POTENTIAL GAME-CHANGER, WITH CAVEATS

On the Johor-Singapore Special Economic Zone, Rajwani is optimistic in principle but measured about execution risks. He describes the JS-SEZ as having the capacity to create a powerful complementary economic engine comparable to the San Francisco-Silicon Valley dynamic or the Shenzhen-Hong Kong model.

“By combining Singapore’s global financial capital and headquarters capabilities with Johor’s land, talent, and cost efficiencies, it fundamentally shifts Malaysia’s growth trajectory,” he said. “However, success depends heavily on seamless cross-border mobility, regulatory alignment between two distinct legal jurisdictions, and ensuring that local infrastructure can sustainably handle the massive influx of industrial demand.”

TECH CAPITAL: STRATEGIC ANCHOR OR STRUCTURAL RISK?

The surge of global tech investment into Malaysia’s data centre and AI infrastructure sector is, in Rajwani’s view, a signal that major technology companies regard Malaysia as a core node for the future digital economy. But he identifies a significant structural risk that must be proactively managed.

“Data centres consume vast amounts of water and energy, but also create relatively few long-term, high-skilled jobs once constructed,” he said. “To avoid over-dependence on capital-intensive but low labour-intensity infrastructure, Malaysia must successfully transition these investments into high-value upstream activities namely AI software development, local cloud services, and advanced chip design.”

A MODEL FOR THE DEVELOPING WORLD

Looking beyond Malaysia’s borders, Rajwani identifies three elements of the Malaysian development model as particularly transferable to developing nations across Asia, Africa, and Central Asia.

The first is institutional investment facilitation — Malaysia’s highly coordinated, investor-friendly approach through agencies such as the Malaysian Investment Development Authority (MIDA) demonstrates how a unified, single-window bureaucratic process can successfully attract foreign direct investment.

The second is economic diplomacy, with Malaysia’s ability to participate actively in overlapping trade frameworks such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), while maintaining strong bilateral ties across ideological divides, serving as a masterclass for smaller nations.

The third is a structured industrial progression — Malaysia’s systematic move from agriculture to commodities, then to manufacturing, and now to the digital economy, provides a compelling case study on insulating a developing economy from commodity price shocks.

“These are not just Malaysian success stories,” Rajwani said. “They are blueprints.”

ABOUT THE EXPERT

Professor Tazeeb Rajwani is Chair in International Business and Strategy at Surrey Business School, University of Surrey, UK. He is also Visiting Professor at Cranfield School of Management, Co-Editor-in-Chief of Multinational Business Review, a member of the World Economic Forum expert network, and a Fellow of the Royal Society of Arts (FRSA). His research focuses on geopolitics, non-market strategy, and corporate political activity. He has previously held senior positions at KPMG Corporate Finance and served on multiple technology and infrastructure investment boards.

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