Malaysia launches new industrial policy to boost manufacturing

  • Malaysia on 31 Oct 18 unveiled a plan to boost its manufacturing sector through technology, hoping to attract investment in high-tech industries to counter slowing economic growth.
  • The National Policy on Industry 4.0, named Industry4WRD, will support industry’s efforts to rely more on technology and less on capital and labour, to increase productivity.
  • However, the Malaysian government, which is expected to unveil a “budget of sacrifice” on 2 Nov 18, said it will not be offering any financial subsidies or incentives to companies.
  • According to the industrial policy blueprint, government support will instead come in the form of collaboration via public-private partnerships and investment-friendly taxes.
  • The policy aims to address a decades-old problem – how a country like Malaysia can break out of its middle-income trap and emerge as a First World nation.
  • Plans to propel the economy forward by attracting skilled talents via job creation, upping productivity and raising innovation are not new. During his first tenure as prime minister from 1981 to 2003, Tun Dr Mahathir had put forward Vision 2020, a road map for Malaysia to achieve developed nation status by 2020.
  • Malaysia’s skilled labour as a proportion of the workforce has declined since 2010, dropping by 1% to 18% in 2018. For skilled workers within the manufacturing sector, the government intends to nearly double the number from 18% to 35% by 2025.
  • This new industrial policy hopes to raise the manufacturing industry’s contribution to the economy by 54% to reach MYR392bn by 2025. That also means productivity needs to increase by 30%.
  • Malaysia’s labour productivity has increased by less than 4% in the past few years, and its global productivity ranking has stagnated since 2009.
  • Other recommendations in the policy report include digitising government processes, sourcing government-led and private funds and introducing high speed broadband nationwide – especially in industrial areas.

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