Manufacturing Sector Requires Improvement


Although the local manufacturing industry has seen certain developments over the years, MITI assures that these improvements have only had a very minor impact on the level of economic complexity.

According to Tengku Datuk Seri Zafrul Abdul Aziz, this shortcoming impedes the nation’s aspirations to develop into a high-income nation.

He went on to say that because of Malaysia’s persistent focus on relatively low-value portions of the industrial value chain, the country is not performing as well as other sophisticated countries like Japan, South Korea, Taiwan, and Singapore. An illustration would be the electrical and electronic sector, such as the semiconductor industry, where testing and assembly are given precedence over design.

Because it restricts our capacity to record greater value-added actions, this presents a challenge for us.

Similar to this, he claimed that Malaysia mostly produces crude palm oil in the business, missing out on the potential advantages of downstream processing.

Related link: Manufacturing & Servicing Companies in Malaysia To Obtain MIDA Approval via Xpats Gateway

He remarked yesterday at the roundtable discussion on the New Industrial Master Plan (NIMP) 2030: Curating Malaysia’s Sustainable Investments and Growth, “There are efforts to move up the value chain for both sectors, but I think there is still a lot of room for improvement.”

In terms of labour productivity, the country trails other countries like Singapore, Vietnam, Thailand, and the Philippines, claims Tengku Zafrul.

He asserted that this is as a result of the manufacturing sector’s failure to upgrade over time due to its reliance on low-skilled foreign personnel.

“Investments in technology and innovation are essential if we want to buck this trend. We want to make it possible for modern manufacturing processes and methods to be used.Graduate underemployment is another effect of the lack of high-skilled jobs available. We want to be inclusive in the NIMP 2030 while also acknowledging some of the problems we are currently dealing with.

The high-income generating industries must be disseminated more fairly across all states, he said, adding that there are differences in manufacturing activity between states in Malaysia. To close the wealth and knowledge divide, he said.

The potential of small and medium-sized businesses (SMEs) is still substantially unrealized, according to Tengku Zafrul.

Only 6% of micro, small, and medium-sized businesses currently work in the manufacturing sector, which accounts for 8% of the GDP and 9% of all exports.

“This is quite tiny. We must empower SMEs in order to be inclusive, and doing so is essential. We are devoted to growth for SMEs as well as throughout all states geographically.

Strong SMEs and the domestic supply chain ecology must both be fostered.

“This is because when multinational corporations come to Malaysia, they look at the strength of our domestic players as well to be part of the ecosystem for them,” the speaker said.

The government has proposed allocating RM200 million in Budget 2024 to carry out the programmes and projects outlined in the NIMP 2030.

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