"It's not an issue ... of dismantling, it's the issue of refocusing areas, which [are] important," Anwar said.
"For example, the issue of affirmative action — which extends from being race-based to need-based — we cannot talk about pure meritocracy."
Tesla's exemption from the 30% equity requirement is not the only time that Malaysia has granted such incentives.
"This is not new. There has been exceptions ... given for digital transformation, for IT-related activities or investments," the prime minister said. "We have done that in the past — very selective. So the issue's not just Elon Musk, which I think is much required in this country to give this confidence and the participation of our players."
The Telsa announcement was preceded by Chinese automaker to expand its operations in Tanjong Malim in Perak state, and German chipmaker ' 5 billion euros ($5.46 billion) of its in Kedah state.
The Anwar government has been the spike in foreign investments as it has brought to the table.
Malaysia recorded a lower net inflow of 3.1 billion ringgit ($666.9 million) in foreign direct investment in the quarter that ended June 30, compared to the 12 billion ringgit in the preceding quarter, according to .
"Incentives should be given," Anwar said, "but what is more important to my mind, as compared to the equity, is [the] training," Anwar said.
"It's a — is there preparedness to continue to transfer and also to train our personnel and to the terms change in accordance to our set of priorities for the present?"
Still, Anwar was hesitant to say a full electric vehicle assembly line is in the pipeline.
Asked if Malaysia is aiming to be the "end game assembly" and climb up the supply chain, he said: "Well, it's a bit too premature for me to commit," he said. "But what is important is we do have the capacity to produce parts of battery ... required in the car."
Drawing on the example of the deepening partnership between Geely and Malaysia's national automobile brand Proton over time, Anwar alluded to the lack of readiness currently.
But Malaysia is more than ready to manufacture EV batteries.
"Yes, the understanding is of course, buy our batteries," Anwar said. "And it's cheaper is produced locally. And it is the advantage."
Meanwhile, neighboring Indonesia has been courting Tesla for years, but that has yet to yield any tangible partnerships with Elon Musk for its electric vehicle ambitions.
Indonesia is an "important neighbor to us and [we have] a lot in common," Anwar said.
"We're working very well together, both in government and private sector. And I think instead of being in a game of fierce competition, we should be able to complement each other," he told CNBC.
"That has been the spirit of my government's series of conversations with President Jokowi and followed through by the industry."
