Swedish retailer H&M moved its Southeast Asia headquarters from Singapore to Kuala Lumpur this week. Seventy-eight Singapore positions affected. It is the most visible recent example of a shift that has been building for three years — and that most Finnish companies still haven't registered.
I've lived and worked in Malaysia for over 10 years, the last three on the board of the Malaysian-Finnish Business Council. From that seat you watch Finnish business move in and out of Malaysia in cycles. This time is different. Here's why.
Three years, three trend lines
Looking back across the past three years, Malaysia's investment landscape has changed in ways that only become obvious now that the factories are coming online. Three things have converged:
A semiconductor sector pushing hard up the value chain. A cross-border economic zone with Singapore that is actually executing, not just announcing. A data-centre build-out reshaping Johor faster than most outside observers realise.
Each alone would be notable. Together they create an opening that maps unusually well onto Finnish industrial strengths. And the most underrated signal: Finnish and Nordic companies are already breaking ground here. That matters more than any government brochure.
Where the money is going
Malaysia just posted its highest investment year ever — €92.8 billion in approved investments in 2025, up 11% year-on-year (MIDA, March 2026). Foreign investment grew 20.9%. Singapore and China are the two largest source countries, both around €12.7 billion. The geographic split tells the real story:
- Johor: €23.9 billion — by far the leader, driven by JS-SEZ momentum and data centres
- Selangor: €18.2 billion — the established advanced manufacturing base
- Kuala Lumpur: €13.8 billion — services, HQ functions, and increasingly a relocation magnet
- Penang: €7.2 billion — recovery on top of the 2023 base
- Kedah: €6.0 billion — the northern corridor coming online
These five states pulled 74.5% of all approved investment.
Reading Penang correctly
A word on Penang, because the numbers can mislead. Penang booked an extraordinary 2023 — €13.8 billion in manufacturing investment, 42% of Malaysia's total — when Intel committed to its €6.5 billion advanced packaging facility, Micron expanded its memory operations, and AMD, Lam Research, Bosch, and Infineon all moved. 2024 fell sharply as the big commitments shifted into construction. 2025 recovered to €4.9 billion — solid, but still around a third of the 2023 peak.
Those numbers tell the cycle story. Factories take 18 to 24 months to build — MIDA's own benchmark. Penang in 2026 is in the construction-to-production phase. The output ramp is starting now and accelerates through 2027.
For Finnish suppliers this is the most interesting window in the cycle. Once a fab or advanced packaging line goes live, the supplier roster is largely locked. The decisions on equipment, automation, process technology, and services are being made this year, while the buildings are being commissioned.
The 2023 commitments matter for a second reason that takes longer to play out: anchor tenants drag ecosystems behind them. When Intel commits €6.5 billion to advanced packaging, that does not just create an Intel factory. It creates a 10-15 year demand signal for specialty chemicals, process equipment, metrology, cleanroom services, automation, software, training partnerships — and the second-tier OSAT, EMS, and materials players who want to be near the anchor.
Penang has run this playbook before. Intel arrived in 1972, and AMD, Bosch, Osram, Broadcom, Dell, HP, Renesas all followed — not because they coordinated, but because the ecosystem made each subsequent move cheaper than going greenfield elsewhere. The 2023 round is the same dynamic at a higher tier: advanced packaging, design, front-end aspirations.
The ecosystem build is starting now. Finnish specialist suppliers who arrive while it is forming have a structural advantage over those who arrive five years from now, after the supplier rosters have settled.
It isn't only industry
The cost arithmetic that pulls factories north across the causeway also pulls regional headquarters. H&M is the most visible example this month, but far from alone. Singapore is too expensive, too talent-constrained. KL offers an English-speaking workforce, mature expat infrastructure, lower property and salary costs, and a short flight when you need to be in Singapore.
For Finnish service companies, software businesses, and trading houses currently running ASEAN from a Singapore office: the Nordic precedent now exists. Take a serious look.
Semiconductor: moving up the value chain, fast
Malaysia's electronics sector pulled in €6.2 billion in approved investments in 2025, and the country already holds roughly 13 percent of global semiconductor assembly, testing, and packaging capacity. The National Semiconductor Strategy is explicit about moving beyond assembly and test into design, advanced packaging, and innovation-driven manufacturing.
The honest part of the story: Malaysia needs 50,000 skilled engineers to meet current demand. Universities produce around 5,000 engineering graduates annually. That's a tenfold gap.
This is exactly where Finnish industrial automation becomes the answer. Malaysia's engineer gap will not close by graduating more engineers in the time frame the industry needs. It will close by automating around the gap. Robotic cells, flexible manufacturing systems, lights-out production — Finnish automation has spent decades building precisely this capability.
Companies are already moving. There is real Finnish factory automation activity arriving in Penang right now, with more to follow. If your company is in machine-tool automation, robotics, MES/digital factory, or industrial AI — the window is open.
The data-centre and construction boom
Johor has become Southeast Asia's data-centre overflow valve. StepEast inside Ibrahim Technopolis alone has secured more than €6.5 billion in investments from 11 international operators, including Microsoft. Data centres alone contributed €3.1 billion to Malaysia's economy in 2025. By 2028, Malaysia and Indonesia are predicted to overtake Singapore in share of total data-centre capacity in Southeast Asia.
The driver is brutal arithmetic: Johor's power tariffs stand at 13.5 cents per kWh, almost half of Singapore's 23.9 cents, and Singapore is land-constrained. The bottleneck — insufficient electricity supply has already forced deferment of nearly 30% of 2024 data-centre proposals in Johor — is itself the opportunity.
Johor is running the same anchor-and-ecosystem playbook as Penang, with different anchors. Where Penang's 1972 anchor was Intel, Johor's 2024-25 anchors are the hyperscalers — Microsoft, Oracle/ByteDance, the regional operators. The ecosystem they pull behind them is different too: power, cooling, networking, construction, and managed services. The companies that arrive while the supplier roster is still forming will be there for the next 20 years.
Every announced data centre is also a massive construction project, a grid project, a cooling project, a network project, and a services contract. The Finnish opportunities here are concrete:
Construction and structural engineering. Peikko Group opened its €10 million Johor Bahru factory in 2023 as its ASEAN manufacturing and distribution hub — serving Malaysia, Singapore and Australia. Peikko is openly planning extensions. If you can manufacture in Johor and ship across the causeway to Singapore at a fraction of the cost, the model works. Construction overall — not just data-centre buildings, but housing, logistics parks, RTS Link supporting infrastructure — is one of the biggest non-tech opportunities in the region.
Data-centre cooling, heat recovery, and energy efficiency. Finnish district-heating and cooling engineering, closed-loop cooling, water-efficient designs — directly relevant to the ESG-constrained capital looking at Johor.
Grid technology and renewables. Every Johor data-centre commitment depends on power that does not fully exist yet. Finnish grid engineering, smart-grid software, and renewables integration have a clear opening.
Network infrastructure and data-centre services. Nokia has a long-standing presence in Malaysia, but the data-centre services layer — operations software, automation, security, managed services — is wide open. The hyperscalers bring their own stacks; the regional and second-tier operators are buying.
Semiconductor process technology. Atomic Layer Deposition was invented in Finland by Tuomo Suntola in the 1970s and is now standard in chip manufacturing — every leading-edge logic and memory chip uses ALD layers somewhere in the stack. Beneq is the continuing Finnish ALD company. As Malaysia pushes into wafer fabrication and advanced packaging, this kind of specialist process know-how is exactly what is being shopped for.
The defence dimension
One theme worth flagging because it is moving everywhere globally: defence. Malaysia is no exception. Procurement budgets are rising across ASEAN, dual-use technologies are increasingly part of industrial policy, and Finland's defence industry — Patria, Nammo, Sako, Insta, Bittium, and a growing tier of specialists in armoured vehicles, ammunition, secure communications, and ISR — has reputation and product fit. This is a sector where introductions and the right framing matter more than in commercial sectors, and where Finland's accession to NATO has changed how Finnish defence offerings are received. Members exploring this space should talk to MFBC directly.
JS-SEZ: the structural multiplier
The Johor-Singapore Special Economic Zone, signed in January 2025, has moved from announcement to execution faster than most bilateral initiatives ever do. The zone covers 3,288 km² across nine flagship areas — nearly five times the size of Singapore and almost double the size of Shenzhen. The RTS Link cross-border rail opens in December 2026 and will cut Johor Bahru–Singapore travel to six minutes — seven months from now.
The model is being executed deliberately: Singapore provides capital, R&D, and headquarters functions; Johor provides land, power, and scale. Nomura expects Malaysia's economy to grow by 5.2% next year, sustained by strong investment-led growth and progress in the JS-SEZ.
For Finnish exporters this is the more important point: the JS-SEZ is not just a Malaysian story. It is a way to access Singapore's customer base, financing, and regulatory environment without paying Singapore's land and labour costs. Finnish companies already using Singapore as an ASEAN base should be looking north across the causeway now, not in 2027. Peikko's model — Singapore sales office, Johor factory — is becoming the template. H&M's move shows the same logic now applies to services.
What I'd tell any Finnish company asking
The capital flows are real — €92.8 billion in 2025, a record. The bilateral political alignment between Malaysia and Singapore is unusually strong. The timing of Finland's industrial strengths against Malaysia's stated needs is genuinely close. And most importantly — Finnish and Nordic companies are already breaking ground, which is the signal that matters most.
The door is open. The questions on the Malaysian side are specific. The value of being on the ground — even at a small scale — increases sharply once the RTS Link opens at the end of this year.
If your company is in semiconductor process or design, industrial automation, construction, data-centre infrastructure, energy and grid, network services, regional services HQ, or defence — get in touch. MFBC has been the permanent Finnish business institution in Malaysia for nearly 25 years. We make introductions, share intelligence, and host visiting delegations. As a founding EuroCham member, the network extends considerably.
Which sectors do you see Finnish companies best-placed to enter? Comments welcome.