Chia completed 36 holes at 13-under-par 131, which put him three shots ahead of Alexander Noren.
Noren managed a 1-under 71 and is alone in second place at 10-under-par 134. First-round leader Seung-Yul Noh stumbled to a 1-over 73 to drop into third place at minus-9.
Englishmen Nick Dougherty (70) and Simon Griffiths (66) share fourth place with Adam Blyth (70) and Wen-Chong Liang (71). That group completed 36 holes at 8-under-par 136.
World No. 11 Anthony Kim rallied Friday with a 7-under 65. That helped him make the cut on the number, 1-under-par 143. Seventy-four players moved on to the weekend.
Chia played the back nine first on Friday. He opened with a birdie on the par-4 10th, then connected on back-to-back birdie chances from the 13th to move to minus-9.
The local favorite parred four in a row around the turn. At the short par-4 fourth at Saujana Golf Club, Chia made eagle to jump into the lead at 12 under.
Chia stumbled to a bogey on the par-3 fifth to slip back to 11 under. However, he holed a wedge shot from 90 yards out for an eagle on No. 7, then parred the final three holes to secure the lead after two rounds.
'I played really good and I am very happy. I kept telling myself to be calm out there,' said Chia, who shared the 36-hole lead here last year. 'My biggest concern is to not get too emotional, but I played well on the front nine and told myself to be focused. It looks like my game plan over the last two days has been pretty good so I hope to stick to it during the weekend.'
Noren, who carded nine birdies in his opening round, was not nearly as hot in round two. He picked up his first birdie on the fourth, then birdied the par-5 seventh for the second day in a row to move to 11 under.
The Swede ran off eight straight pars from the eighth and tripped to a bogey at 16 to drop back to minus-10.