A special report by the French Trade Commission - Business France Malaysia (August 2019)
The Malaysian manufacturing industry is an important economic sector contributing about 23% to the GDP in the last five years, with nearly 50 000 companies in multiple high value-added sectors.
Industry 4.0 refers to the 4th industrial revolution relating to the digitalization of this sector. For several years the Malaysian government has shown a willingness to accelerate this digital transformation and will allocate RM 210 million from 2019 to 2021 to support the transition and migration to Industry 4.0.
The country seeks to develop new solutions to improve its competitiveness while responding to ecological challenges. This strategy prepares the country to the new age of growth and innovation according to the National Transformation Plan 2050 (TN50).
The key sectors of Industry 4.0 are:
- Electrical & Electronics
- Machinery & Equipment
- Medical Devices
Electrical & Electronics is the leading industry in Malaysia’s manufacturing sector, contributing significantly to the country’s exports and employment.
The Machinery & Equipment industry is one of the key areas for growth and development, with a focus on high value-added and high technology M&E.
The Chemical industry is one of the catalytic industries in the country with rapid growth due to the availability of oil and gas as a feedstock.
The other sectors of the Industry 4.0 are: Automotive, Transport, Textiles, Pharmaceutical, Metal, Food processing, Services.
ACCESS TO THE MARKET
The association Malaysian Plastics Manufacturers Association (MPMA) pays attention to its social responsibility towards the environment by promoting sustainable practices for the protection of the environment. This association provides technical expertise to members, particularly in the Industry 4.0 sector.
Among the leading local and international companies in Malaysia:
- Microsoft (US), Nvidia (US), General Electric (US), IBM (US), Festo (German)
- Flink Automation System Sdn Bhd (Malaysian): integrated automation systems providing Smart Home, Building IoT (BIoT) and Industrial IoT (IIoT) solutions
- Elliance Sdn Bhd (Malaysia): consulting for industry 4.0 for local industries.
- Deloitte (American): active in industry 4.0 sector
Since 2015, the Malaysian government has been aiming to make Malaysia the regional IoT hub (see National IoT Strategic Roadmap). By 2020, the IoT sector is expected to reach MYR 9.5 billion - a figure that could reach MYR 42.5 billion by 2025 - and create nearly 15 000 high value-added jobs in Malaysia.
In 2017, programs were introduced in various cities such as Cyberjaya, Melaka, and Greater Kuala Lumpur to be recognized as smart cities.
On 31 October 2018, the Ministry of International Trade and Industry (MITI) launched the National Industry 4.0 Policy (Industry4WRD): Malaysia's response to embrace the digital transformation of the manufacturing sector and its services. The aim is to stimulate Malaysia's manufacturing sector by improving productivity, industry 4.0's contribution to GDP, innovation, and the highly skilled workforce.
« Industry4WRD Readiness Assessment » is a comprehensive programme to help firms assess their capabilities and readiness to adopt Industry 4.0 technologies and processes. The assessment uses a pre-determined set of indicators to understand their present capabilities and gaps, from which firms will be enabled to prepare feasible strategies and plans to move towards Industry 4.0.
National targets for 2025, developed from 2016 baseline figures:
- Increase the productivity level of the manufacturing sector by 30% per person;
- Increase the share of the manufacturing sector in the Malaysian economy to 54% (now 23%);
- Reach the Top 30 of the most innovative companies in the world, based on the "Global Innovation Index" (now #35);
- Increase the high-skilled workers in the manufacturing industry from 18% to 35%.
The Malaysian government, through the Malaysian Investment Development Authority (MIDA) and the Malaysian Industry-Government Group for High Technology (MIGHT), offer foreign investors benefits for companies integrating the « Industry4WRD Readiness Assessment ». A company is eligible to claim tax deduction on their readiness assessment expenses of up to RM27,000 paid to the Malaysian Productivity Corporation.