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Kuala Lumpur: Malaysia’s move to impose conditions on Chinese electric vehicle firm BYD’s proposed local assembly has highlighted tensions between ambitions to become a regional automotive hub and the need to protect domestic industry players.

Analysts said the reported disagreement raises questions over Malaysia’s ability to attract major foreign EV investments while maintaining protections for its national automotive sector built on local vendor networks and long-standing industrial policies.

The issue centres on conditions set by the Ministry of Investment, Trade and Industry (MITI) for the proposed assembly plant in Tanjung Malim, Perak.

Investment, Trade and Industry Minister Johari Abdul Ghani said the company has been unable to agree to terms requiring at least 80 per cent of output to be exported and the remaining 20 per cent for domestic sale to be priced above RM200,000 per unit.

MITI said its policies are not protectionist but are aimed at ensuring local assembly focuses on higher-value segments, preserving market space for national carmakers while supporting local value creation, technology transfer and sustainable employment.