Malaysia is strengthening its position as a preferred industrial centre for advanced manufacturing in Southeast Asia. According to a Mordor Intelligence report, the growth of the local plastics market is linked to the country’s role as a regional feedstock hub and a downstream manufacturing base serving the automotive, packaging, electronics and other industries across the region. The report forecasts that the Malaysian plastics market will grow from USD 4.19 billion in 2026 to USD 5.07 billion in 2031, representing a compound annual growth rate of 3.86%. It also indicates that the global shift towards a circular economy is reinforcing demand for recycled materials and bio-based feedstocks, as well as for investments in advanced processing technologies and recycling systems. In practice, this means an inflow of industrial projects related to packaging, electronics, medical products and e-mobility, increasing demand for high-quality polymers, processing solutions and stable local supply chains.
This is particularly visible in the packaging industry, where manufacturers serving the food and beverage market must meet stringent food safety requirements in both domestic and export markets. Tightening halal certification requirements and expectations for convenience packaging are translating into growing demand for specialised solutions. This applies, among others, to films, pouches, PET bottles and containers, the production of which requires high-performance materials and appropriately advanced processing technologies.
Packaging, rPET and new production capacity
One example of an investment supporting more sustainable packaging operations is the project of FE Green PET, a subsidiary of Taiwan’s Far Eastern New Century Group. The company secured RM150 million, approximately USD 35.5 million, in green and sustainability-linked financing for its rPET resin production plant in Melaka. The facility has been designed to produce 50,000 tonnes per year of food-grade rPET from post-consumer plastic waste. The plant is intended to support Malaysia’s green transition, sustainability-oriented development path and low-carbon development. The bottle-to-bottle system is meant to meet the packaging requirements of FE Green PET’s global clients, including major beverage brands.
New investments are also appearing in specialised packaging segments. Colorcon opened a new film coating manufacturing facility in Malaysia. The site is intended to serve as an important production hub for the company’s operations in the Asia-Pacific market, supplying film coating systems, speciality excipients, controlled release formulations and controlled atmosphere packaging solutions for the pharmaceutical and nutraceutical industries.
Colorcon opened its new film coating manufacturing facility in Johor, Malaysia. (Image: Colorcon)
Electronics drive demand for packaging operations
The strong electronics sector remains one of the pillars of Malaysia’s industrial ecosystem, with semiconductor production playing a major role. The country is seen as an attractive location for electronics packaging operations. One example is Azure, the Chinese supplier of lithium batteries and LED chips, which announced an investment of USD 83.9 million to build an LED chip packaging plant in Malaysia. The project is intended to serve demand from overseas customers and reduce the impact of international trade and tariff tensions. The plan includes LED chip testing, sorting and chip-scale packaging, with monthly production capacity of 700 million units. The company has also integrated its backlight chips, including mini LEDs, into the supply chains of international customers.
Intel is also an important player. The company previously announced a plan to consolidate part of its overseas chip packaging operations in Costa Rica with facilities located in Vietnam and Malaysia. It reported an investment of USD 208 million in Malaysia to expand its chip packaging operations in response to rising demand. The funds are intended to increase Intel’s packaging and testing capabilities and further expand the company’s presence in the country.
Medical devices and protective packaging
The production of medical devices and supplies is one of the stronger sectors in the Asia-Pacific region, and Malaysia has been successful in attracting international companies establishing manufacturing operations there. The country’s growing role as a medical manufacturing hub is translating into higher demand for high-performance materials and advanced manufacturing technologies. The segment of medical and protective packaging is developing particularly dynamically.
Amcor has completed the construction of a coating facility in Selangor, expanding its existing healthcare packaging operations in Malaysia. The facility offers solutions for local and regional customers. The plant has been equipped with advanced systems such as water-based coatings and online inspection technologies supporting growing demand for sterile packaging.
Amcor has completed the construction of its coating facility in Selangor, expanding its healthcare packaging operations in Malaysia. (Image: Amcor)
Another example is Oliver Healthcare Packaging, which opened a 120,000 square foot manufacturing facility in Johor, Malaysia. Located in i-Tech Valley in Iskandar Puteri, the facility joins a growing group of companies operating in the Johor-Singapore Special Economic Zone and is intended to serve the company’s growing customer base across Asia-Pacific. The site is equipped with modern machinery and cleanrooms compliant with ISO13845, ISO-7 and ISO-8, intended for the production of medical-grade packaging such as pouches, lids and roll stock.
Rosti Group also operates a plastics processing plant in Malaysia specialising in injection moulding. The facility achieved ISO13485 certification, enabling medical device manufacturing. In addition to injection moulding, the 5,000 sq m site also offers printing, assembly, process development, tooling and supply chain management. According to the information provided, this has enabled Rosti Malaysia to strengthen its expertise in the production of complex products such as the 15-minute COVID-19 saliva test.
Automotive and e-mobility
Malaysia’s automotive industry is becoming an attractive base for electric vehicle manufacturers thanks to investment incentives and developed infrastructure. Proton Malaysia has launched its first assembly plant dedicated exclusively to electric vehicle production in Tanjung Malim, Perak. In addition to producing the country’s first domestic EVs, the plant is intended to start assembly of the Proton e.MAS 7, followed by the e.MAS 5. The facility uses advanced automation supported by highly skilled operators and has annual production capacity of 20,000 vehicles, scalable to 45,000 units. The company is supported by Zhejiang Geely Holding Group in technology transfer, local talent development and strategic investments.
XPENG will start assembling electric vehicles in Malaysia together with local automotive parts supplier EP Manufacturing Bhd by March 2026. The cooperation, with mass production scheduled to begin later this year, marks XPENG’s third project globally and its second in the Asia-Pacific region. Through the partnership with EP Manufacturing Bhd, the company is expected to leverage local manufacturing expertise, proven production capacity and market knowledge to produce advanced intelligent EVs tailored to the needs of customers in ASEAN.
XPENG will start assembling electric vehicles with local auto parts supplier EP Manufacturing Bhd in Malaysia by March 2026. (Image: XPENG)
Audi, meanwhile, is increasing production of the second-generation Q7 SUV at the DRB-Hicom plant in Malaysia. This is Audi’s first fully localised assembly project in Southeast Asia and marks the brand’s return to vehicle manufacturing in Malaysia since the 1990s. The Q7 is a mild hybrid electric vehicle, MHEV, demonstrating the facility’s ability to handle electrified vehicle technologies such as battery systems and hybrid integration.
In the context of the further development of plastics and rubber processing and demand from advanced industrial sectors, Chinaplas 2026 is also relevant. At the trade fair, more than 4,900 exhibitors are expected to present technologies, solutions and materials addressing the needs of Malaysia’s advanced manufacturing industries.
