BYD cancels its Tanjung Malim plant and will assemble in Malaysia through a local partner — how MITI’s conditions redirected a 600,000 sq m investment

BYD promised Malaysia an answer within a week, and delivered it — see the update at the top of this article. The analysis below was written on 8 September, before the decision, and is kept as the record of how the choice was framed. Speaking to Malaysian media in Shenzhen on 5 September after an Asia-Pacific Media Forum session, BYD vice-president Liu Xueliang — who runs its Asia-Pacific auto sales division — was asked whether the company would build its own plant or work with a local partner. “Wait another week and we will announce it,” he said. “Our development in Malaysia has been progressing very well. Very soon, we will announce our approach towards sustainable development.”

As of 8 September no announcement had been made, but the choice in front of BYD was well defined, and both options are pieces of industrial property: 150 acres of greenfield at KLK TechPark in Tanjung Malim, Perak, or contract assembly at Sime Motors’ 200-acre Inokom plant in Kulim, Kedah.

Update, 11 September: Tanjung Malim is cancelled

The answer came a day earlier than promised. At BYD’s Media Appreciation Night in Kuala Lumpur on the evening of Thursday, 10 September, BYD Malaysia managing director Jacob Ma ended eight months of speculation:

“To clear the air on this, the Tanjong Malim facility will not proceed. However, this decision does not mean that BYD has cancelled its plans for local assembly in Malaysia.”

Instead, he said, “we are working with an established local assembly partner that has the capacity and the capabilities to meet BYD’s requirements. Discussions are already at a very advanced stage and we are finishing the necessary documentation.” The reason given was “a change in strategy aimed at finding the most suitable solution for the local automotive ecosystem”. His refrain, repeated through the evening: “We are here to stay.”

The partner was not named. Nor was the first model to be assembled locally or a start date; the official announcement will come “once everything is in place”. But every signal points where this article pointed on 8 September — at Sime Motors’ Inokom plant in Kulim: the May site visit, the September trip to Shenzhen, and a RM300 million paint shop opened by the trade minister three weeks before the decision. Ma also said BYD had been in talks with local vendors since last year, was planning production capacity on a 10-to-20-year horizon, and intends to bring its flash-charging technology to Malaysia. BYD has sold more than 35,000 vehicles in Malaysia since launch, over 7,500 of them in the first half of 2026.

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What it means for the land. KLK TechPark’s 150-acre phase one has lost its anchor. KLK had told analysts in February that land sales to BYD could contribute over RM65 million in profit; Kuala Lumpur Kepong has not yet commented on the cancellation, and there is no word on whether the site preparation reported complete by Chinese business press will be recovered or re-marketed. For Kulim, the demand shows up as supplier and logistics space around Padang Meha rather than a new factory — the exact outcome the section below set out as “if BYD goes to Inokom”.

BYD has not named the partner. Inokom is the overwhelming inference from every reported signal, and most outlets state it as near-fact, but until BYD or Sime Motors confirms it, we can't judge anything.

How BYD got here (the original analysis, 8 September)

August 2025 — the Tanjung Malim commitment. At the launch of the updated Seal on 22 August 2025, BYD Malaysia confirmed a 100%-BYD-owned CKD plant on 600,000 sq m — about 148 acres — at KLK TechPark, Kuala Lumpur Kepong’s new 1,500-acre freehold industrial hub (1,300 acres industrial, 200 residential; GDV RM3.5 billion over ten years). BYD was the anchor of phase one at 150 acres; production was to start in the second half of 2026. Land approval was initiated in May 2025, preliminary works began in July, construction was to start end-August, and Perak Menteri Besar Datuk Seri Saarani Mohamad was to officiate a launch in September. MITI granted an interim manufacturing licence on 29 September 2025.

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March 2026 — the conditions surface. Progress stalled, and social-media claims about BYD’s licence terms prompted MITI to publish them on 31 March. The conditions, which MITI said apply to every new CKD entrant since September 2025 (but not to projects using existing facilities), are:

• A minimum on-the-road price of RM100,000 for domestic sales (MITI corrected reports of RM200,000).
• A domestic sales cap of 10,000 units a year, defined as 20% of production — the other 80% must be exported. That arithmetic implies a 50,000-unit plant.
• Body shop, paint shop and trim must all be done in Malaysia, with fully painted body shells sourced domestically.

Minister Datuk Seri Johari Abdul Ghani was blunt about the purpose: “We have to protect our auto industry,” noting Proton sells about 150,000 cars a year and Perodua about 350,000. MITI’s statement said the conditions “preserve market space for national players like Proton and Perodua”. Chinese business press put BYD’s planned investment at about RM1.3 billion and reported that site preparation was complete.

The 80% export rule is the sticking point. BYD already has regional plants in Thailand and Indonesia; being required to export four in five Malaysian-built cars is, on the industry reading, commercially unrealistic. On 4 August Johari told Parliament MITI had “not been formally notified” whether BYD would proceed, and that any decision “is a commercial decision for the company”.

July 2026 — the import door closes. From 1 July, fully imported EVs must carry a CIF value of at least RM200,000 and 180 kW (245 PS), replacing the CBU tax exemption that expired at the end of 2025. Most of BYD’s Malaysian range — Atto 2, Atto 3, M6, Seal 6 — sits under RM200,000. Deputy Minister Sim Tze Tzin spelt out the escape route on 14 May: “If carmakers want to price EVs between RM100,000 and RM200,000, they can work together with contract manufacturers.”

Enter Inokom

That is why the Kulim plant matters. Liu visited Inokom in May 2026 straight after opening BYD’s Mansion Macalister showroom in Penang, and in early September Sime Motors’ leadership was in Shenzhen for talks on “strategic priorities and areas of mutual interest”. Sime Motors is already BYD’s Malaysian distributor; Inokom is its assembly arm.

Inokom’s facts: Lot 38, Mukim Padang Meha, Padang Serai, Kulim — view on Google Maps — a 200-acre site running since 1997, assembling seven brands (BMW, Mini, Mazda, Hyundai, Kia, Porsche, Chery) with a 100% Malaysian workforce and 370 local vendors. It already builds EVs (the BMW i5 and Chery Omoda E5). And on 11 August 2026 Johari himself opened Inokom’s RM300 million Paint Shop 3, adding 50,000 painted bodies a year at 15 units an hour on two shifts and taking total paint capacity to 100,000 bodies a year — with plastic-parts painting and multi-model flexibility built in.

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Read those two facts together. MITI’s conditions demand a paint shop and exempt “projects using existing facilities”. A RM300 million paint shop with 50,000 spare bodies of capacity opened by the minister three weeks before BYD’s announcement is about as clear a signal as the industry gets.

What each outcome means for industrial property

If BYD goes to Inokom: the 150 acres at KLK TechPark loses its anchor. KLK had told analysts BYD’s land sales alone could net over RM65 million in profit, with phase-two vendor-park launches planned for the first half of 2026 — a vendor park without the OEM is a hard sell. Kulim, on the other hand, gets an EV programme layered onto an existing 200-acre plant, and the demand shows up not as a new factory but as supplier and logistics space around Padang Meha and Kulim Hi-Tech Park, within reach of Penang’s mainland industrial corridor.

If BYD builds Tanjung Malim after all: it will be on terms it has spent six months resisting, which suggests either a negotiated softening of the 80% export rule or a much smaller domestic ambition. Either way a 50,000-unit plant on 148 acres becomes the largest single EV manufacturing site in the country and the making of KLK TechPark.

Since September 2025 Malaysia has priced a greenfield car plant — RM100,000 floor, 80% export, paint shop — at a level that pushes foreign EV brands toward existing assemblers. Chery’s RM2.2 billion, 81-hectare plant in Hulu Selangor is proceeding; BYD, Malaysia’s best-selling EV brand with 14,407 registrations in 2025 (15,607 with Denza, about 35% of the market), is the test case. The winners of that policy are the owners of licensed assembly capacity: Inokom in Kulim, EPMB in Melaka, Tan Chong, Berjaya Assembly. Their land just became more valuable than a greenfield site with an uncertain licence.

Tanjung Malim — KLK TechPark: view on Google Maps

Photos: SoyaCincau (BYD announcement) and paultan.org (Inokom plant and Paint Shop 3). Google Maps links are approximate.