Malaysia - November 2018
Malaysia launched the National Policy on Industry 4.0 (Industry4WRD) on 31 October to boost manufacturing sector through the use of technology, in its effort to attract high-tech investments into the country. Prime Minister Dr. Mahathir in his launching speech said that the policy “envisions Malaysia as a strategic partner for smart manufacturing, primary destination for high-tech industries and total solution provider for the manufacturing sector and related services in the region.” The policy is seen as a crucial step in reforming Malaysia to become a developed nation that is equitable, sustainable and inclusive by 2025 or earlier.
Industry4WRD would facilitate the adoption of Industry 4.0 by companies in a systematic and comprehensive manner, with four specific objectives to be achieved. The objectives are to increase the level of productivity in the manufacturing industry per person by 30% from MYR 106,647 (USD 25,435); to increase the absolute contribution of manufacturing sector to the economy from MYR 254 billion (USD 60.6 billion) to MYR 392 billion (USD 93.5 billion); to strengthen the country’s innovation capacity and capability as reflected in the Global Innovation Index ranking, by improving from 35th spot to 30th spot; and to increase the number of high-skilled workers in the manufacturing sector from 18% to 35%.
Primary focus areas of Industry4WRD include catalytic sectors and high growth potential sectors namely Electrical & Electronics, Machinery & Equipment, Chemicals, Aerospace and Medical Devices. Attention is also given to SMEs since they account for 42% of employment and 98.5% of manufacturing sector in the country. It is hoped that disruptive technologies and innovation brought by Industry 4.0 is hoped will be able to transform and improve SMEs so that they remain competitive in their sectors.
The launch of Industry4WRD is perceived as timely, as the country is attempting to break free from its decade-long problem of the middle-income trap. As a manufacturing economy, the country realizes that it must increase its labor productivity level to keep up with neighboring economies in attracting foreign direct investments. With its global productivity ranking becoming stagnant since 2009, Industry 4.0 might be the remedy to propel the country to become a developed nation by 2025.
In the 2019 budget, the government announced a number of measures in support of Industry4WRD. This included allocation of MYR 210 million (USD 50 million) from 2019 to 2021 to support the transition and migration to Industry 4.0 and assisting the first 500 SMEs to carry out the Readiness Assessment to migrate to Industry 4.0 platforms via Malaysia Productivity Corporation and MYR 2 billion (USD 480 million) under Business Loan Guarantee Scheme (SJPP) where the Government will provide guarantees of up to 70% to incentivize SMEs to invest in automation and modernization which forms part of the Industry4.0, the government has allocated.
(Sources: The Star; The Straits Times; Ministry of International Trade and Industry, Malaysia)