TAIWAN became the spotlight again this week as China's President Xi Jinping's latest remarks on its neighbor went viral recently. In his speech earlier this week, President Xi vows never to renounce the use of force in its efforts to ''reunify'' with neighbor Taiwan, reiterating that complete reunification of our country must and will be realized. This has brought severe concerns to investors globally, as Taiwan is a preferred investment destination by advanced and developing countries.

In 2020, Taiwan was Malaysia's 5th largest global trading partner, 8th largest export destination, and 5th most significant source of imports. Tenaga Nasional Bhd, via the New Energy Division, TNB Renewables Sdn Bhd, is looking to explore new markets, which include Taiwan. TNB Power Generation could be the country's largest IPO in a decade, where TNB could be valued at about $4 billion with a potential listing of $1 billion by next year. In 2021, TNB was said to have contributed RM31bil to Malaysia's GDP, and with these ambitious plans of further expansion, TNB may be the country's second primary source of revenue after Petronas. Petronas, our country's leading source of income for federal coffers, has contributed up to RM 59 billion this year. What do both countries' top contributors have in common? Strategic investments in Taiwan. TNB owns a 39% stake in Sunseap, which recently announced five new renewable energy projects in Taiwan, and Petronas has a downstream business in Taiwan focused on petrochemicals and lubricants.

Why is this crucial?

Well, firstly, numerous events that have taken place recently have shown that Taiwan is in China's crosshair. Despite multiple articles claiming otherwise, I would like to draw your attention to the Russia-Ukraine Crisis. One week before Russia invaded Ukraine, the BBC and the Foreign Post all published articles stating five reasons Russia would not invade Ukraine, and the rest is history.

Nancy Pelosi, the Secretary of State of the United States, visited and offered support to Taiwan, which triggered a whole new discussion of China's invasion of Taiwan, with military drills taking place at an unprecedented scale close to the island. Following the visit of the Congress Delegation to Taiwan, China has increased its military drills in Taiwan. Bloomberg reported that many investors are on their toes, and market sentiment only recovered after the military exercise ended.

What does it mean for Malaysia?

We have to be proactive in safeguarding our investments in Taiwan, as we have significant interest there, by instructing both GLCs to look at business continuity measures and to urge a diplomatic solution to the ongoing tensions between China and Taiwan. A conflict in Taiwan will significantly impact two of our most significant GDP contributors. We should also implement a mitigation plan for extracting our Malaysian citizens from Taiwan should the geopolitical issue escalate further.

Not to forget, the PM/Jihad Committee should also anticipate another round of supply chain disruption and concerns that increasing tensions may put downward pressure on China's trade with Southeast Asia and dampen the growth prospects in the region. This can also impact the already rising inflation level.

Malaysia could also take advantage of the positive spillover from the geopolitical tension in Taiwan to enhance efforts in attracting investment into the country. The trade and investment diversion to the ASEAN countries is already happening, with most ex-pats and locals in Taiwan and Hong Kong now moving to Singapore and Malaysia. The semiconductor, telecommunication, and technology industries will be the key beneficiaries. We should drop the archaic investment benefits of MIDA and come up with attractive packages to divert investment into the country to offset the attractiveness of Vietnam, Singapore, and Indonesia as investment destinations.

It might seem too early to jump to conclusions about this China-Taiwan tension, but as the saying goes, failing to plan is planning to fail. It's no use to shut the stable door after the horse has bolted.

* Rahman Hussin interests is in public affairs, politics, tech and stakeholder managements. He runs his own firm that serves a wide range of clients focusing on strategy and government affairs.

** The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of Astro AWANI.