By Collins Chong Yew Keat

KUALA UMPUR, Malaysia: As Taiwan celebrated its National Day on Oct. 10 the occasion carries far greater meaning than a national commemoration.

It represents the endurance of a structure and society pillared on freedom, democracy, rule of law, and innovation, the core principles that have catapulted Taiwan to be as one of the most dynamic and technologically advanced economies.

It stands as both a bastion of democracy and a leading economic and technological basis, anchoring stability, prosperity, and shared progress across the Indo-Pacific and the world. 

Taiwan’s rise is built on decades of disciplined governance, future driven foresight and institutional accountability.

These advanced the nation to be an unparalleled  leader in the global semiconductor industry, producing over 60 percent of the world’s chips and more than 90 percent of the most advanced processors, led by TSMC (Taiwan Semiconductor Manufacturing Company).

A total of 92 percent of the world’s most advanced (under 10nm) capacity is in Taiwan.

This dominance places Taiwan as the most pertinent player, powering everything from electric vehicles to artificial intelligence and defense systems, and serving as the base for quantum advancement.

The importance lies not in chips alone, Taiwan is now leading toward green energy, biotechnology, and advanced manufacturing, with green energy and energy transition playing a bigger role in driving supply chain resilience and environmental sustainability, with spillover impact on developing economies across Asia.

Geostrategic Importance in East Asia and the Maritime Trade Arteries

Taiwan’s strategic advantage extends far beyond its economic and technological potential, it lies at the geopolitical and maritime crossroads of East Asia, Southeast Asia and the Pacific.

Sitting at the intersection of the East China Sea, the South China Sea, and the Western Pacific, Taiwan commands one of the world’s most critical sea lanes, through which nearly 40 percent of global trade and over US $5 trillion worth of goods transit annually.

The waters of the east and south of Taiwan serve as the lifeline connecting Japan, South Korea, and the Pacific Rim with the ever critical energy sources and markets of Southeast Asia, the Middle East, South Asia and beyond.

Disruption of these maritime corridors or violations of the international maritime law and norms in these areas would reverberate across the stability and sanctity of the global supply chains, energy flows, and food logistics, directly affecting the security of both East and Southeast Asia, deeply intertwined by geography, security and economy and trade.

Taiwan’s position is thus acting as the strategic hinge of the first island chain, providing a natural buffer in safeguarding open sea-lane access from the South China Sea to the Pacific.

A stable and autonomous Taiwan, therefore, not only protects the freedom of navigation in the region, but also the continuity and security of global commerce linking ASEAN with Japan, Korea, and the United States. 

For East Asia and Southeast Asia’s prosperity and maritime stability, Taiwan is the gateway of the Pacific and a cornerstone for regional peace and economic connectivity.

Democracy, Rule of Law, and Human Capital

The niche standout area is not merely its technological achievement, but the systemic integrity underneath it.

It must be based on a robust and healthy democratic institutions, independent judiciary, and transparent governance, which enabled a culture of innovation, intellectual freedom, and respect for human rights.

These fundamentals are must-haves for scientific progress and economic resilience.

In Taiwan, innovation thrives because the system permits it and supports it, and accountability exists.

Start-ups and enterprises operate within a rules-based environment that protects intellectual property rights, rewards merit, and supports open competition.

In a period when erosion in democratic trust is prevalent, Taiwan remains a living testament that democracy and high technology can coexist and reinforce one another.

The Strategic Importance of Taiwan to ASEAN and Malaysia

For decades, Taiwan-Malaysia and Taiwan-ASEAN relations have been underpinned by trade, tourism, education, and cultural exchanges.

The new geopolitical shifts and demands will need a new partnership that transcends conventional ties and embraces strategic interdependence in technology, supply chain security, energy, and human capital development.

Malaysia and Taiwan have maintained a strong trade relationship, with total trade exceeding USD 40 billion annually in recent years.

Taiwan is among Malaysia’s top 10 trading partners, particularly in electronics, petrochemicals, machinery, and precision engineering.

Malaysia–Taiwan trade in 2024 totalled RM176.1 billion and Taiwan overtook Japan as Malaysia’s fourth trading partner.

Malaysia’s exports to Taiwan surged by 54.4 percent, led by electrical and electronic, optical and scientific equipment, and machinery and parts. 

With Malaysia advancing its key trajectory as a semiconductor and electric vehicle manufacturing hub under the National Semiconductor Strategy, future strategic collaboration with Taiwan’s chipmakers and their expertise offers mutual strategic benefits where Malaysia benefits from technology transfer and skilled workforce training, while Taiwan strengthens its regional production network and diversification efforts, in line with its New Southbound Policy.

ASEAN and Malaysia serve as the new platform in helping Taiwan in the efforts to de-risk and diversify its supply chains amid ongoing tensions.

Malaysia’s new strategic focus to reinvent its economic base through high technology and manufacturing and the emphasis on digital and green economy with enlarged industrial base, logistics infrastructure, and educated workforce, especially under the current administration, make it a natural partner for Taiwanese firms seeking reliable sources and partners in semiconductor packaging, electronics assembly, and renewable energy technology.

This partnership has the eventual means to synergise the regional capacity into a strategic triangle linking Taiwan’s innovation ecosystem, Malaysia’s manufacturing capacity, and ASEAN’s growing market base, in thus creating a resilient and solid regional supply chain.

Energy, Food Security, and Talent Development

Taiwan’s green drive toward net-zero emissions by 2050, is in line with Malaysia’s National Energy Transition Roadmap (NETR).

Joint ventures in green efforts including clean hydrogen, battery storage, and smart energy systems enhance capacity building in the trajectory towards carbon management and a green economy transition, with greater fallback options on this drive away from the traditional dependence on key existing powers in the field. 

Both Malaysia and Taiwan face challenges in food supply vulnerability and risks due to climate change and land constraints, and resources’ scarcity now and in the future. 

Taiwan’s advances in agro-tech, vertical farming, and biotechnology, among others, provide practical and proven models for ASEAN’s food resilience, and also offer Malaysia access to sustainable farming systems and agricultural research and development cooperation, boosting the quest to secure food security.

Malaysia has historically been a top source for Taiwan in foreign students for higher education, creating strong human-capital links for co-research and development and industry placements.

Over 17,000 Malaysian students have chosen Taiwan for their studies under the Taiwan Scholarship and New Southbound Policy initiatives, reflecting Taiwan’s long-term efforts to educational exchange and talent cultivation, creating the knowledge and workforce for both parties in boosting the technological and economic advancement efforts. 

In the wider Indo-Pacific sphere, Taiwan’s continued success is strategically important not only economically but in values and essence.

It represents the triumph of democracy over authoritarianism, innovation over suppression and stagnation, and freedom over fear.

Protecting Taiwan’s peace and autonomy is a matter of universal imperative for maintaining the rules-based order, freedom of navigation, and economic stability and openness. 

As the world becomes dependent on advanced chips, the health of Taiwan’s democracy directly affects global innovation.

A stable and democratic Taiwan ensures that the global technological ecosystem remains open, trusted, and transparent, securing supply chain integrity and maritime security.

Malaysia and ASEAN’s Strategic Choice for a Shared Future

For Malaysia and ASEAN, engaging Taiwan deeper is a matter of strategic prudence.

ASEAN’s long-term resilience depends on diversified partnerships pillared in technology, education, and sustainability.

Taiwan offers just that: a partner that blends technological excellence and democratic values.

By embracing stronger ties with Taiwan, both ASEAN and Malaysia can strengthen their transition to embrace high-tech ecosystems through a multifaceted cooperation in chips, artificial intelligence (AI), and renewable energy, and build mutual supply chain resilience against external shocks.

Both can also advance food and energy security through innovation sharing.

Taiwan stands today as the new symbol of the global economy, not only confined to silicon and circuits but the deeper axis of democratic strength and human ingenuity.

Its journey from a developing island to the core of global innovation is proof that freedom fuels the basis of progress.

As the world grapples with the twin challenges of technological development and challenges to the democratic and rules based ideals, Taiwan’s story offers hope that prosperity and liberty can coexist.

*Collins Chong Yew Keat is a foreign affairs and strategy analyst and author in University of Malaya.*