EVIDENTLY, age is just a number for semiconductor veteran turned venture capitalist Datuk Lai Pin Yong. BlueChip VC Sdn Bhd, which he co-founded, is raising US$200 million (RM956 million) to back Penang-based semiconductor companies in three promising segments — advanced packaging, integrated circuit (IC) design and niche equipment — and eventually have them listed on Bursa Malaysia.

With an initial capital of RM120 million, BlueChip VC set up shop as a specialised technology fund just a year ago, in early 2023, in George Town, Penang. It is now gunning for an annual return of more than 20% from its investments in promising investee companies seeing a spurt in growth as global supply chains are recalibrated with “friendshoring” or “China plus one” in mind amid heightened US-China trade tensions.

“The RM120 million starter fund has been fully committed to leading local electronics companies. Their names will be announced upon completion of formalities,” Lai tells The Edge in an interview.

“We are now planning to launch the US$200 million fund in view of the overwhelming response and strong requests to participate. We have met up with and received endorsement or interest from not just Malaysian sovereign wealth funds, but also regional ones. Some of these funds will be partners in our new fund as well as co-investors in our identified investee companies.”

An electrical engineering graduate of the National Taiwan University with five decades of experience in the semiconductor industry, Lai, who turns 80 in April, was among the pioneer batch of Malaysian engineers when Intel Corp set up shop in Penang in 1972 — the US chip behemoth’s first overseas manufacturing facility. There, he worked his way up to general manager, vice-president and eventually managing director of Asia-Pacific between 1983 and early 1994. In late 1994, he moved to Motorola Inc, where he was corporate vice-president and president of Motorola (China) Electronics Ltd, before being promoted to senior vice-president of Motorola Inc.

Lai says he has had a role in fostering the creation of champions in the local chip sector.

“At Intel, I initiated a then new policy to foster a local supply chain by localising the design of assembly, testing and packaging machines, and as a result building up the capability of local engineering firms.

“This was followed by encouraging promising young engineers, who had the [expertise] to set up their own companies, with contracts [from large foreign tech multinational corporations that had begun to outsource smaller jobs]. Eventually, it created many new semiconductor-related companies, of which at least eight have been listed [or are seeking to list] on Bursa Malaysia,” he elaborates without naming the eight companies.

Lai also says he fostered the deepening of the supply chain when he ran Motorola in Greater China. “I asked the suppliers of Motorola to set up operations in China. Otherwise, the contracts would not be given to them. Consequently, about 100 downstream foreign suppliers went to China.”

The experience and network helped to draw industrial leaders from China and Malaysia to be limited partners (LPs) at BlueChip VC, says Lai. Both he and BlueChip VC CEO Tim Chen Yongzheng are among the 12 LPs of the fund. Chen previously headed Motorola, Microsoft and Hon Hai Technology Group’s (Foxconn) operations in China.

“We will be able to induce the Chinese semiconductor firms to set up operations in Malaysia, which can serve as their second home to export, especially to the US. So far, the response from my China network in Suzhou, Tianjin, Wuxi and Shenzhen to invest in Malaysia has been overwhelming,” says Lai.

BlueChip VC and its partners can also be co-investors, which could then introduce new businesses to the local semiconductor firms, he adds, noting that US sanctions restrict the supply of semiconductors, associated intellectual property and equipment to China’s manufacturers — not just from the US, but also other allied countries such as Japan, the Netherlands, the UK and Germany — necessitating a response from Chinese firms.

Given that Penang has established a strong electrical and electronics (E&E) ecosystem over the past 50 years, Lai is of the view that the state should have the know-how, trained personnel and network to absorb the diverted orders from Chinese firms and to support their new factories.

“It is this realisation that crystallised the starting of BlueChip VC, if you like, as a catalyst and ‘marriage broker’ to further broaden and deepen the industry. It is our hope that a new impetus can be given to Malaysia, especially Penang’s semiconductor industry for the next 50 years,” he says.

While Penang is BlueChip VC’s initial focus, the venture capital firm has also received invitations and support to move into other states in Malaysia.

“However, we will be disciplined in establishing ourselves soundly with investments in Penang before branching out. We will work with semiconductor companies operating in Malaysia, be they locally owned or foreign owned, who are willing to work with us,” says Lai.

Apart from bringing in capital to its investee companies, BlueChip VC will also help them access the China market, he says. “Our targeted investee companies must be in targeted segments — advanced packaging, IC design and niche equipment — with strong market positioning and good growth opportunity, as well as a strong and ethical management team. To ensure a timely and fruitful exit, we would like to help investee companies get listed on Bursa Malaysia, or at least be attractive for a private placement.”

Lai goes on to say that BlueChip VC will not insist on having a representative on the board of directors of investee companies.

“What is more important to us is a good collaboration, as well as frequent and in-depth discussions on progress. Definitely, we will endeavour to use our network to add value to them,” he says.

Lai highlights that when these investee companies take root in the Malaysian economy, they will work closely with the locals. “In the so-called Semiconductor Industry 1.0, we have seen many outstanding local engineers get motivated to become entrepreneurs and set up their own businesses. We hope our efforts will bring about a positive momentum, with more high-value jobs being created. For sure, more partnerships and investments will help to elevate our country’s E&E industry.”

Semiconductor veterans assembled

According to Lai, BlueChip VC is a closed-end fund whose capital will be fully invested within three to four years, with the aim of returning all proceeds before the end of the 10th year.

“In other words, we have a high target of 20% return per year. Our LPs are all professionals and high-net-worth individuals. We will assemble a special research and investment team under Tim. They will be responsible for investment decisions,” he says.

“Meanwhile, I will provide advice and assistance in the analysis. We pride ourselves as a team with strong domain knowledge as most of us are from the semiconductor industry. Unlike other funds, we don’t have to draw our industrial knowledge from consultants.”

Apart from Lai and Chen, other LPs include the founders of three listed E&E companies in Penang who worked under Lai at Intel, a co-founder of a top 10 semiconductor company in China, an Asian chief technology officer of a global tech giant, as well as leading economists and financial experts.

“We have a good mix of global industry experts, local industry leaders and financial specialists as our LPs,” says Lai, declining to name the other LPs at the current juncture.

BlueChip VC is working to set up a complete team as soon as possible to undertake “vigorous evaluation of opportunities” coming its way. “Obviously, we will follow a sound risk-controlled investment strategy, meaning we will spread investments in all these areas without excessive concentration in any single industry or company,” he says.

Lai believes the global consumption of semiconductors will increase rapidly and spread into more areas in the coming years.

“We are very optimistic about the semiconductor sector. That is why we set up BlueChip VC and plan to launch more funds. We are seeing enhancement of many traditional operations using technology, be it artificial intelligence, green technology or energy savings. The world of technology is growing and improvements in tech are increasing efficiency, yield and greater sustainability,” he says. 

Source: The Edge Malaysia

Tech: Semiconductor veteran turned VC raising US$200 mil to back IPO-able chip firms

“The proposed industrial park, about the size of 1,000 football fields, will be one of the largest purpose-built fully integrated new industrial estates in Johor.”

Iskandar Waterfront Holdings Sdn Bhd (IWH) and PLS Plantations Bhd, two entities linked to tycoon Tan Sri Lim Kang Ho, are in talks with a China state-owned company to develop an industrial park and innovation hub in Johor.

The two companies inked a memorandum of understanding (MOU) with Shenzhen provincial government-owned Shenzhen Shenyue Joint Investment Co Ltd (SSJI) on Tuesday, for the proposed development of a 1,000-acre Johor-Shenzhen Industrial Park in Ulu Sedili, together with a 50-acre Johor-Shenzhen Innovation Development Hub in Johor Bahru, according to a statement from IWH.  

“The proposed industrial park, about the size of 1,000 football fields, will be one of the largest purpose-built fully integrated new industrial estates in Johor. It will be designed to provide companies with offices and production facilities, as well as related support services to promote industrial development and collaboration,” the property developer said.

“This will be supplemented by the Johor-Shenzhen Innovation Development Hub to be set up within the Johor Bahru central business district, which will provide resources and support for innovative activities and research and development initiatives in Johor,” the group said.

PLS Plantations is the landowner of one of the identified locations for the developments, said IWH, adding that SSJI’s parent, Shenzhen Investment Holding Co Ltd, has developed 50 industrial parks covering 8,000 acres in Shenzhen.

Lim, who represented both IWH and PLS Plantations at the signing of the MOU, said the two projects would ride on Johor’s industrial wave spurred by the Johor-Singapore Special Economic Zone (JSSEZ) and the Johor Bahru-Singapore Rapid Transit System (RTS).

“These two projects are a positive value proposition for Johor and will attract interest from businesses, both domestic and foreign,” he added.

IWH, in which the Johor state sovernment owns 37% through Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ), is one of the biggest land developers in Iskandar Malaysia. The IWH group owns more than 4,200 acres of land bank, including prime waterfront land in Johor Bahru.

Source: The Edge Malaysia

IWH, PLS Plantations in talks with China state-owned firm to develop industrial park, innovation hub in Johor

Masimo Medical Technologies Malaysia Sdn Bhd (Masimo Malaysia), a mission-based medical device and technology company, has invested RM100 million to set up a new production facility in Pasir Gudang near here.

Plant manager Jayakumar Krishnan said the plant has a maximum capacity of 100 million devices per year for the domestic and export markets.

“Our cutting-edge facility represents a significant investment in the future of healthcare, and we are excited to leverage Malaysia’s strategic location and robust infrastructure to drive innovation and growth in the region,” he told reporters after the grand opening ceremony of the plant today.

He said the opening of the new plant reaffirmed the company’s commitment to advancing medical technology and patient care in Malaysia.

“This factory is a symbol of our dedication to excellence, innovation, and growth.

“Equipped with cutting-edge technology, it positioned us to meet the challenges of the future while ensuring the highest quality in our products,” he said.

Meanwhile, Malaysian Investment Development Authority (MIDA) executive director of manufacturing development (resource) Umarani Muniandy said the medical technology (MedTech) industry in Malaysia has seen considerable growth characterised by a vibrant culture of innovation.

“Currently, Malaysia proudly hosts about 30 multinational MedTech companies, which engage in a wide spectrum of activities ranging from manufacturing to research and development,” she said.

She said last year, the medical devices industry witnessed approved investments totalling RM2.17 billion, consisting of 26 projects.

“Of this amount, foreign investments made up 54 per cent, with the balance of 46 per cent coming from domestic sources.

“This bears testament to our robust manufacturing capabilities, thriving research base and innovation ecosystem, which together serve as a strong value proposition for MedTech companies to grow their operations here,” she said.

She said the Malaysian government is steadfast in its commitment to bolstering the MedTech industry.

“In our ongoing efforts, we have streamlined regulations, creating a more welcoming environment for international investors,” she said.

She said this strategic move is designed to expand the Malaysian market, fostering a vibrant ecosystem for medical advancements.

“Central to our national strategy is the prioritisation of the medical devices industry within Mission 1 of the New Industrial Master Plan 2030.

“Our vision is clear: to elevate Malaysia as a globally recognised, innovation-driven manufacturing powerhouse,” she said.

She said the plan emphasised the development of the medical devices and pharmaceutical industries, capitalising on innovative technologies and harnessing the potential of our high-skilled talent pool.

She added that this approach is aimed at propelling our economy towards greater complexity and resilience.

Source: Bernama

Masimo Malaysia invests RM100mil to set up production facility in Johor

Sandakan has been earmarked for the development of the Palm Biomass Collection and Processing Centre (CPC).

Deputy Agriculture and Commodities Minister Datuk Chan Foong Hin said the centre, with an estimated investment of RM60 million, is a collaboration between Nextgreen Global Bhd and Kumpulan Sawit Kinabalu.

He said the project is one of the initiatives under the National Biomass Action Plan 2023-2030, which was launched on Dec 7 last year.

“The plan is designed to assist in the planning and development of the national biomass industry until 2030,” he said during the question-and-answer session in the Dewan Rakyat here.

Chan, who is Kota Kinabalu member of parliament, was responding to a question by Vivian Wong Shir Yee (PH-Sandakan) regarding the ministry’s plans to develop downstream palm oil and biomass industries in Sabah, particularly in the Sandakan region.

Last year, the Malaysian Palm Oil Board (MPOB) said that Sabah has 125 operational palm oil mills and the second-highest area of oil palm cultivation in Malaysia at 1.51 million hectares.

Sabah also has 10 palm kernel crushing factories and 11 refineries in operation.

The Sandakan region, which includes Sandakan, Kinabatangan, and Sugut/Labuk in Beluran, covers a total oil palm planting area of 742,304 ha with 34,016 ha dedicated to replanting.

There are 65 operational palm oil mills in this region.

The estimated availability of palm biomass in the Sandakan region is 13.04 million metric tonnes, comprising palm fronds (8.19 million metric tonnes), palm trunks (2.53 million metric tonnes), empty fruit bunches (0.87 million metric tonnes), mesocarp fibers (0.92 million metric tonnes), and palm kernel shells.

Source: NST

Palm biomass collection and processing centre to be built in Sandakan

Actiforce, which is part of Germany’s Hettich Group — one of the world’s largest manufacturers of furniture fittings — is investing RM50 million to set up a new manufacturing plant in Penang

Actiforce, which originates from the Netherlands, plans to have the plant serve as a hub for research and design, manufacturing and distribution of furniture fittings for the Europe and the US markets, according to a joint statement from Actiforce, InvestPenang and the Malaysian Investment Development Authority or Mida.

“It will be instrumental in Actiforce’s global expansion. The move to consolidate manufacturing capabilities in one area, creating a comprehensive one-stop centre, exemplifies Actiforce’s commitment to lean manufacturing and delivering better value to customers.

“The company aims to enhance the local economy, generate employment opportunities for the local community, and solidify its position as a key contributor to regional prosperity,” the statement read.

Penang Chief Minister Chow Kon Yeow said the state is proud to host Actiforce to showcase its capacities and capabilities in Penang, as it further supports the needs of industrial players in next generation technologies and growth strategies.  

“The opening of the new plant will pave the way towards creating employment opportunities for local talents across various categories,” Chow added.

“With the increasing technological development and advancement of high-quality components by companies like Actiforce, Malaysia’s position as a global supply chain and distribution hub is further solidified,” said Mida chief executive officer Datuk Wira Arham Abdul Rahman.

Actiforce chief financial officer Harry Slingerland said the group is thrilled to inaugurate its new facility in Penang, which reflects its commitment to pushing the boundaries of innovation and delivering quality products and services.

“Penang has proven to be an ideal location for Actiforce due to its strategic positioning, skilled workforce, and the supportive business environment provided by the local community and government,” Slingerland said.

Source: The Edge Malaysia

Furniture maker Actiforce to set up RM50 mil manufacturing plant in Penang

The global oleochemicals industry is set to expand at least until 2029 with the Asia-Pacific leading in the regional share and growth rate, according to Nikhil Vallabhan,  director of chemicals, materials, and food practice at business consulting firm Frost & Sullivan.

He said the compound annual growth rate (CAGR) of oleochemicals in the global market is expected to be maintained at around 3.5% to 4% by volume from 2023 to 2028 and around 5% to 5.5% by revenue from 2024 to 2029.

Drivers for the industry’s growth include the greater usage of oleochemicals as additives in plastics processing and their ability to offer the same functionality and performance as petroleum chemical sources, he noted.

The estimated value growth of over 5% should indicate that prices for various oleochemical products are expected to improve because of the value addition in markets such as Europe and North America, particularly in personal care, cosmetics, soaps and detergents, he said.

“We are looking at a total volume of approximately 30 million tonnes of oleochemical products by 2028 or 2029,” Vallabhan said during his presentation at the 35th Palm & Lauric Oils Price Outlook Conference & Exhibition.

He emphasised that the Asia-Pacific region would lead in market share and growth as several industries that require oleochemicals have moved there due to better economies and logistics.

“China continues to be one of the largest consumers of various types of oleochemicals. Even though the growth might not be coming from China specifically, the sheer volume of consumption required in China still makes it a very attractive market to be in. It is a market that we cannot completely neglect,” he said.

“As producers of oleochemicals in the Asia-Pacific market, countries such as Malaysia, Korea, Japan and India are your go-to countries at the moment,” he added.

On the other hand, Vallabhan said the North American market had reached a stage of maturity with its demand becoming relatively slower, while the European market could be maturing by 2030 as well.

Nevertheless, he said the margins will be greater when supplying to European customers, largely due to the growing luxury cosmetics sector in Europe, with an increase in per capita spending on luxury personal care products.

Source: The Edge Malaysia

Oleochemicals industry to grow in the near term with Asia-Pacific leading

The nation’s manufacturing sector, which is one of the key economic sectors, is expected to strengthen in the coming months owing to improvement in the export-oriented sector.

Economists are anticipating the country’s external trade to improve and exports to further improve in the near term, partly attributing to the improvement in China’s economy and in anticipation of the technology upcycle.

Malaysia’s exports grew 8.7% year-on-year (y-o-y) in January to RM122.4bil, higher than the 3% projected by 17 economists in a recent Reuters poll.

The latest export figure also reversed Malaysia’s exports downtrend, which started in March last year.

On the whole, total trade increased 13.3% to RM234.7bil in January. Trade surplus was at RM10.1bil, but this was lower than the RM18.1bil in the same month a year earlier.

Kenanga Research said it is reiterating its outlook that domestic manufacturing conditions, especially in the export-oriented sector, will continue recovering in the coming months.

This is largely driven by the expectation of a technology upcycle, which is likely to appear more imminent in the second half of this year, the research house added.

Additionally, the brokerage said China’s gradual economic recovery is expected to pick up pace, given the significant amount of stimulus from the government.

“Nevertheless, the downside risk to our outlook remains associated with external factors such as escalating geopolitical tensions in the Middle East and Eastern Europe which could disrupt the global supply chain and potentially drag global trade activity into a prolonged downturn.

“Against this backdrop, we maintain our 2024 gross domestic product (GDP) forecast of 4.5% to 5%, compared with 3.7% last year,” Kenanga Research noted.

Malaysia’s manufacturing sector continued its recovery path, with the seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) rising to 49.5 in February, up from 49 in January.

The February figure was the highest since September 2022.

Output declined at the slowest pace since August 2022 with signs of recovery in both new orders and exports orders. The index has remained in contraction (below the neutral threshold of 50) since August 2022 due to subdued global trade.

Manufacturing PMI is a measure of the prevailing direction of economic trends in manufacturing. A reading above 50 signals expansion while below 50 indicates contraction.

TA Research said, traditionally, it draws correlations between PMI figures and official statistics such as real manufacturing sector data, real GDP and real exports.

“Notably, there exists a significant correlation of 62.2%, 60.4%, and 44.2%, respectively.

“Upon a more detailed analysis of the ongoing trend, there is a sense of optimism for a potential improvement in the first quarter (1Q), even if it remains below the growth threshold.

“This aligns with our maintained perspective, anticipating a positive momentum in the manufacturing segment’s contribution to real GDP, in contrast to the 0.3% contraction observed in 1Q23 (1Q24 real manufacturing forecast: 2% y-o-y).”

Moreover, the research house said as per insights from S&P Global, the historical relationship between PMI and official data indicates an upward trend in both GDP and manufacturing production, pointing towards improvement in 1Q24.

Looking ahead, the brokerage said optimism for the year-ahead outlook in terms of output slightly decreased to a six-month low in February, but confidence remains buoyed by the expectation of an improved demand environment and stabilised price conditions.

Source: The Star

Manufacturing sector predicted to strengthen

Lotte EM Malaysia Sdn Bhd plans to expand its operations in Sama Jaya Free Industrial Zone.

According to a press release from Datuk Amar Awang Tengah Ali Hasan’s office, a delegation led by newly-appointed chief executive officer Park Jae Chel briefed the Deputy Premier during a courtesy call today.

The meeting was also to introduce Park to Awang Tengah, who is also International Trade, Industry and Investment Minister.

Also present were Deputy Minister of International Trade, Industry and Investment Datuk Dr Malcolm Mussen Lamoh, Ministry of International Trade, Industry and Investment deputy permanent secretary Lo Sheau Sia, and InvestSarawak chief executive officer Timothy Ong.

Lotte EM Malaysia Sdn Bhd is a company that manufactures Elecfoil (Electrodeposited Copper Foil) in Kuching with foreign investment from its parent company in South Korea.

Elecfoil is an essential basic material of the electronic business and it is used as a major component for lithium-ion batteries.

Source: Borneo Post

South Korea’s Lotte EM Malaysia to expand operations in Sama Jaya

China-based information technology company GDS Holdings Ltd is set to expand its business in Johor.

Johor Menteri Besar Datuk Onn Hafiz Ghazi said GDS Holdings, which is a leading data centre operator, had invested RM14.33 billion in the state, with the opening of two data centres in the Nusajaya Tech Park and Kempas Tech Park.

“I’m happy that GDS Holdings has stated its readiness to expand its business in Johor, and is confident Johor is capable of becoming a competitive artificial intelligence hub,” he said in a post on Facebook on Sunday.

Onn Hafiz, who is currently on a working visit to the Shenzhen Special Economic Zone, China, from March 2-7, said the Johor government’s delegation held a meeting with GDS Holdings, and gained valuable insights into the company’s business framework.

“I’m amazed to [be able to] learn about their vision and business model in developing data centres, which have successfully contributed to making China a smart nation and digital economy powerhouse,” he said.

He added that as a global giant company, GDS Holdings had more than 100 data centre projects across Asia, and is ranked ninth out of the top 250 data centre companies in the world in 2024.

“With the establishment of the Johor-Singapore Special Economic Zone, I am confident that Johor can attract more investors to the state and create high-impact investment packages, besides emulating Shenzhen as a leading global investment hub,” he added.

Source: Bernama

China-based GDS set to expand business in Johor, says MB

Analysts are still positive about semiconductor company Inari Amertron Bhd’s prospects, despite the group’s lower core net profit of RM175.9mil in the first half of financial year 2024 (1H24).

The 14% drop was largely due to higher electricity tariffs and some production losses owing to power surges from the grid, while its top line grew 2% on a decent year-end shopping season.

Kenanga Research said it liked Inari for being the closest proxy to 5G adoption and also, for being highly responsive to market demands with the roll-out of new technologies such as double-sided moulding and system-on-module (SOM).

Furthermore, the group has made significant expansion in China, capitalising on the country’s aggressive push for semiconductor self-sufficiency.

On Inari’s outlook, the research house said the group has defied the odds despite the market initially anticipating weaker sales of US smartphones in the year-end period weighing on the company’s results.

“We believe this was possible thanks to the fact that Inari’s ability to continue to enhance its customer’s stickiness as well as its ability to mitigate any unforeseen circumstances in a short period to ensure production efficiencies were upheld,” it added.

Inari is also making encouraging strides in its newer product offerings, including power module packages, memory chips, optical transceivers, and the building of a new factory in China.

“Many of these products are currently in advanced qualification and sampling stages and poised to make a positive impact in financial year 2024 (FY24) and FY25 as production is gradually ramped up,” Kenanga Research said.

The research house maintained its forecasts for Inari and kept its target price (TP) of RM4.17, adding that the companys also has the ability to preserve an impressive net margin of over 20% versus other outsourced semiconductor, assembly and test (Osat) peers that are still struggling at single-digit net margins, while continuing to grow its already large revenue base of more than RM1.5bil.

This further underlines its exceptional capability, especially in the face of rising labour and utility costs, added Kenanga Research.

According to Hong Leong Investment Bank Research (HLIB Research), Inari continues to work on new opportunities coming to the Malaysia Osat ecosystem, while focusing on strategies to improve production capacity and utilisation efficiently.

The research house, which has a “buy” on the stock with a lower TP of RM3.61 strongly believes that the iPhone 5G super cycle will continue while the optoelectronics division is expected to improve with more customer diversifications and partnerships.

Meanwhile, RHB Research has cut its FY24 earnings forecast for Inari by 4.9% on weaker margins, resulting in a lower TP of RM3.58.

Despite the unexciting smartphone market and sales, Inari’s stickier earnings profile is expected to contribute positively in FY24, said the research house.

This is due to its premium-product exposure that fared relatively well and diversification strategy with products and clients.

MIDF Research on the other hand maintained a “neutral” call on the stock with an unchanged TP of RM3.04 following the 2Q24 results.

“Inari’s 1H24 financial performance has been in-line with our expectations thus far. Nonetheless, we view that the group has performed relatively well to minimise the impact of the slowdown in the industry,” it added.

Source: The Star

Inari in position to capitalise on new products

The government needs to introduce value-added and transformation in the rubber industry to ensure the competitiveness of the commodity, said Tenom Member of Parliament Riduan Rubin.

Riduan lamented that the current drop in rubber prices to around RM2.80 has resulted in many rubber tappers refusing to continue and shifting to other crops, causing the country to incur losses of about RM2.3 billion due to the lack of rubber output from 425,000 hectares of extensive plantations.

According to him, the problem stems from rubber prices influenced by middlemen and the difficulty for the government to control world market prices.

“Therefore, the government should focus on strengthening the local rubber manufacturing sector, especially in the production of local brand tires, similar to what the government has done through the implementation of the national automotive policy that has successfully produced Proton.

“Efforts need to be made to produce local brand tires to ensure a ‘game changer’ or transformation in the rubber industry to keep it globally competitive,” he said when debating the Royal Address in the Parliament last week.

According to Riduan, a mechanism that the government can implement is through injecting funds or loans from the government to industrial entrepreneurs and rubber-based product manufacturers.

He said this was implemented by the Thai government in 2016 through a loan of 15 billion baht or around RM1.78 billion at the prevailing exchange rate at that time for the glove, tire and rubber product manufacturing sector.

“This loan is given with the condition that rubber industry entrepreneurs must use four tons of rubber each year for one million baht (RM119,000) in an easy loan.

“I believe initiatives like this can increase the use of domestic rubber and indirectly raise rubber prices to a more competitive level,” he emphasized.

He expressed concern that if immediate action is not taken by the government, the industry will eventually be buried due to rubber planters shifting to more profitable crops.

Source: Borneo Post

Government urged to strengthen rubber manufacturing sector

Zhejiang Sinopont Technology Co Ltd, a China-based manufacturer of encapsulant film, has established its inaugural manufacturing facility outside China in Ipoh, Perak, through its Malaysian subsidiary, Sinopont Everthriving (Malaysia) Sdn Bhd.

The newly inaugurated manufacturing facility, situated in Tasek Industrial Park, Ipoh, will commence operations immediately. 

It is dedicated to producing solar cell encapsulant film with an initial production capacity of 85 million square metres, sufficient to cater to about 10 gigawatts (GW) of demand, the company said in a statement.

Sinopont’s investment in Perak will be executed in phases, with projections to scale up the production capacity to 300 million square metres of encapsulants, covering an estimated demand of 30 GW. 

The collaboration between Perak and Sinopont extends beyond this initial phase, with plans for potential expansion projects and the establishment of a comprehensive solar industry ecosystem in Perak.

Datuk Seri Saarani Mohamad, Menteri Besar of Perak, lauded Sinopont’s decision to invest in the state, emphasizing its endorsement of Perak’s business environment and joint commitment to driving economic growth while preserving the environment for future generations.

Perak’s appeal to local and foreign investors has been steadily increasing, attributed to its enhanced infrastructure, skilled workforce, and government support. These developments align with the “Pelan Perak Sejahtera 2030” agenda, which prioritises initiatives aimed at attracting investment.

Recognising Perak’s strategic importance, InvestPerak will expedite approvals for strategic projects by issuing a ‘fast-track letter’, ensuring smooth implementation. 

Mohamad Hashim Abdul Ghani, chief executive officer of InvestPerak, reiterated their commitment to working closely with MITI and MIDA to position Perak as Malaysia’s preferred investment destination.

Sinopont’s investment is expected to generate about 300 employment opportunities for Malaysians once the facility reaches full operational capacity. Moreover, it will bolster the solar panel manufacturing ecosystem in Malaysia, particularly in the Northern Region, fostering further economic growth and development.

Source: NST

China manufacturer Zhejiang Sinopont Tech establishes first solar plant in Malaysia

Facing a significant labour shortage in its booming semiconductor industry, Penang is setting ambitious goals to attract and train a new generation of highly skilled workers, Buletin Mutiara reported.

Deputy Chief Minister II Jagdeep Singh Deo expressed optimism about filling the talent gap, aiming to recruit at least 10,000 high-skilled employees by next year.

During a visit to the ASE Electronics plant in the Bayan Lepas Free Industrial Zone on Feb 26, Jagdeep highlighted the critical role that both multinational corporations and small and medium-sized enterprises play in training the youth for future challenges. He commended the company for its efforts in evolving business practices and its dedication to nurturing young talent through internship and technical, vocational education and training (TVET) programmes.

“This initiative is crucial for preparing our future generations and addressing the workforce shortage in the semiconductor industry,” Jagdeep said.

ASE Electronics, known globally as a leading provider of semiconductor manufacturing services in assembly and testing, operates five plants and five business units across Malaysia, employing a workforce of 3,500. The company’s skill development initiatives were shown during the Deputy Chief Minister’s visit.

With many multinational companies in Penang already taking significant steps to mitigate the talent shortage, the state’s strategic initiatives aim to strengthen its position as a key player in the global semiconductor industry.

Source: NST

Penang to tackle semiconductor industry labour crunch with 10,000 skilled workers by next year

HAVING fallen short of its target of installing 1,000 charging stations for electric vehicles (EV) by 2023, Selangor government has now extended the timeframe by two years.

Public health, environment, climate change and green technology committee chairman Jamaliah Jamaluddin said that according to records, only 681 EV charging bays (EVCB) had been built in the state so far.

This is below the target announced in July 21, 2023.

The state government had aimed to build 1,000 EV charging stations by the end of 2023 via collaboration with private companies.

Jamaliah said the state government in early 2021 had initially targeted to develop EV infrastructure with a goal of installing 10,000 EV chargers by 2025.

However, this figure was reviewed in response to increasing battery capacities.

Jamaliah said Selangor government was looking at providing more incentives to encourage EV use in the state, including a free parking scheme for users.

She was responding to a question by Dr Afif Bahardin (PN-Taman Medan), during the State Assembly sitting in Shah Alam, on incentives provided by the state government to encourage the use of EVs and encourage service providers to instal charging stations throughout the country.

Jamaliah said the state government was in the final stages of discussions on a proposal to implement a free parking scheme for EV users by local authorities to be implemented this year.

“The state government also fully supports the incentives given by the Federal Government, which comprise exemptions from import duty, excise duty and sales tax, and EV motorcycle charger cash rebate subsidy,” said Jamaliah.

Dr Afif, noting the increasing number of EVs on the road, asked if the state would compel all new developments including low-cost housing like SelangorKu and high-end condominiums to include EVCBs and EV parking.

Jamaliah said, “In September 2023, the Federal Government issued guidelines on setting up EVCBs.

“Now, the state government has a few plans on how to improve and encourage EV usage.

“Shah Alam City Council (MBSA) is doing a pilot project to streamline comprehensive guidelines for installation of such charging stations, and after carrying out focus group discussions, MBSA is preparing to implement these guidelines.”

She said this would also depend on the situation under the local council areas or areas under the state government’s jurisdiction.

“After we receive feedback and understand the complications and issues on EVCBs, then we will discuss incentives,” she added.

Source: The Star

Selangor to come up with more incentives to push EV adoption

Minister of Investment, Trade and Industry (Miti) Datuk Seri Tengku Zafrul Abdul Aziz today said that Malaysia’s electrical and electronics (E&E) sector is poised to emerge as a powerhouse.

He said the optimistic outlook is attributed to the rising local and regional demand, fueled by the expansion of sectors like electric vehicles (EVs), renewable energy (RE), aerospace, and the digital economy.

“All these will collectively improve Malaysia’s export competitiveness, while providing higher paying skilled jobs for our people,” he said during his speech during the Malaysian Investment Development Authority (Mida) annual media conference here.

He also said that the advent of Industry 4.0 and the ascent of the digital economy play pivotal roles in the increasing need for chips and semiconductors as industries are adopting technologies like artificial intelligence (AI), automation, robotics, and data analytics to streamline their operations, boost efficiency, and elevate productivity.

He further emphasised that sustainability serves as another significant catalyst for E&E products, particularly in transforming industries such as automotive.

“Sustainability is another major driver for E&E products as industries such as automotive continue to transform. The increased demand for the production of EVs, for example, has also increased the demand for electronics that support battery management systems (BMS),” he said.

He added that substantial investments were drawn to other industries, with machinery and equipment (M&E) securing RM22.6 billion, chemicals and chemical products receiving RM8.9 billion, non-metallic mineral products obtaining RM8.8 billion, and transport equipment attracting RM7.1 billion.

He highlighted the creation of over 30,000 jobs in the managerial, technical and supervisory category, with 91.7 per cent of these positions filled by Malaysians.

“In addition to providing employment opportunities for the people, these investments have spillover effects that can bolster and develop our domestic SME supply chain, advancing towards innovation, knowledge-intensive and higher-value-added activities and products,” he said.

Tengku Zafrul said, as of now, Malaysia has garnered interest from potential investors, primarily through our flagship initiatives, accumulating to RM88.82 billion with over 1,710 projects currently in the pipeline, with projected investments reaching RM87.8 billion.

He said there are ongoing substantial discussions between the ministry and Mida with a significant Chinese institution, aiming to solidify a mutual agreement to promote two-way foreign investments (FI).

“We are in the advanced negotiations stage, aiming to cement a cooperative agreement focused on FI promotion enhancement, to bolster investment flows, encouraging Chinese firms to explore opportunities in Malaysia while similarly facilitating Malaysian enterprises to expand into China,” he said.

Tengku Zafrul said that the prospective collaboration aims to encourage investments in high-value sectors, carefully selected to align with the strategic priorities of both nations.

This initiative, he said, holds the promise of strengthening economic ties and fostering mutual growth.

“We aim to conclude a comprehensive cooperative agreement focused on FI promotion enhancement, to bolster investment flows, encouraging Chinese firms to explore opportunities in Malaysia while similarly facilitating Malaysian enterprises to expand into China.

“We are targeting this potential partnership to foster investments in high-value sectors, meticulously chosen to reflect the strategic priorities of both nations, thereby promising to fortify economic ties and promote mutual growth.

He further added that Malaysia’s economy is currently at a crucial turning point, presenting an opportunity to capitalise on key factors such as the restructuring of supply chains for greater resilience and the implementation of the China Plus One strategy.

He said the goal is to effectively position the country as a contemporary regional industrial powerhouse and a gateway for those seeking access to the expanding Asean and Asian population.

Last week, Tengku Zafrul encouraged EV automakers with facilities here to consider making Malaysia their hub to supply and service the fast-growing EV market in Asean.

He said this is because the EV market in Asean is expected to grow at a compound annual growth rate of about 33 per cent from around US$500 million (RM2.4 billion) in 2021 to US$2.7 billion (RM11.77 billion) by 2027.

Source: Malay Mail

Tengku Zafrul: Malaysia’s E&E sector set to soar driven by demands in EVs, renewable energy, aerospace and digital economy

Malaysia’s medical devices industry registered approved investments totalling RM807.6 million for the first nine months of 2023 (9M 2023), said the Malaysian Investment Development Authority.

Chief executive officer Datuk Arham Abdul Rahman said domestic investments contributed over two-thirds at 73.7 per cent of the sum, while the remaining 26.3 per cent originated from foreign sources.

“This considerable investment not only accelerated the industry’s growth expansion but also laid the groundwork for the generation of 1,363 new employment opportunities for Malaysians,” he said in his speech at the exclusive distributorship agreement signing ceremony between Duopharma Biotech Bhd and Owen Mumford Sdn Bhd.

He said the alliance between Duopharma Biotech and Owen Mumford integrates two pivotal sectors of healthcare, namely pharmaceuticals and medical devices.

Meanwhile, Duopharma Biotech group managing director and executive director Leonard Ariff Abdul Shatar said Duopharma Biotech, via its subsidiary Duopharma Marketing Sdn Bhd, has signed an exclusive distributorship agreement with Owen Mumford Sdn Bhd, a subsidiary of UK-based medical device company, for the distribution of medical devices in Malaysia, Singapore, and Brunei.

“The total market for needles itself is between RM20 million and RM25 million.

“We hope to ramp up as fast as possible as we have the largest number of medical detailers in the country, and our penetration rate at pharmacies and hospitals is the highest in the industry,” he said at the press conference.

Duopharma Biotech expects to generate a 25 per cent increase in its earnings from the current total market value for needles.

In addition, he said the collaboration is also in line with the group’s environment, social, and governance focus on improving access to healthcare in terms of affordability.

On the impact of fluctuation in the exchange rate, Leonard Ariff said the depreciation of the ringgit would have an impact on Duopharma Biotech as 70 per cent to 75 per cent of its raw material is imported.

Source: Bernama

Medical devices industry nets approved investments of RM807.6 mln in 2023

The Ministry of Investment, Trade and Industry (MITI) has presented a proposal for a one-time subsidy for electric vehicle (EV) ownership to boost the growth of the industry in the country.

Deputy Investment, Trade and Industry Minister Liew Chin Tong said the proposal was presented to the Ministry of Finance (MoF) during the National EV Steering Committee (NEVSC) meeting.

“It has been observed that this one-time subsidy can encourage people to switch from using internal combustion engine vehicles to EVs and further help the country reduce petrol subsidies for the long term.

“This suggestion is being fine-tuned by the MoF,” he said during the question and answer session in the Dewan Rakyat, today.

Liew was responding to a supplementary question from Datuk Iskandar Dzulkarnain bin Abdul Khalid (PN-Kuala Kangsar) who asked whether there would be incentives to attract the M40 group who can afford to own EVs.

The Low Carbon Mobility Blueprint 2021-2030 announced by the government in 2020 outlines a target to have 10,000 EV charging stations by 2025 whereby 9,000 units are AC (alternating current) chargers and 1,000 units are DC (direct current) chargers.

In 2023, the annual sales volume of new Battery EVs (BEVs) in the country increased by over 400 per cent to 13,257 units compared to 3,127 units in 2022.

As at Dec 31, 2023, 2,020 charging stations have been installed in 750 locations across the country, of which 1,591 units are AC type, and the remaining 429 units are DC type.

Liew said the proposal to review the target of 10,000 EV charging stations was also raised in the NEVSC Meeting No. 1/2024 and MITI together with related agencies, namely the Malaysia Automotive Robotics and IoT Institute and Malaysian Green Technology and Climate Change Corporation are studying and fine-tuning the need to increase the DC charging stations target.

“The outcome of the study will be debated in the NEVSC Meeting which will be held in the second quarter of this year,” he said.

Meanwhile, in response to an additional question from Jimmy Puah Wee Tse (PH-Tebrau) who asked if the government plans to consolidate EV charging system service fees in one application, Liew said the government has the intention to merge all applications for EV charging payments.

“But it requires the cooperation from charging point operators (CPOs) and the government is planning to hold discussions with the CPOs to create ‘interoperability’ with all companies,” he added.

Source: Bernama

MITI proposes one-time subsidy for EV ownership

Cenergi SEA Berhad (Cenergi), a subsidiary of UEM Group Berhad, and Kwantas Corporation Berhad (Kwantas), a Sabah-based integrated palm oil producer involved in the entire palm oil supply chain business with presence in Malaysia and China, have entered into a joint venture (JV) partnership to undertake the development, construction and operations of a Bio Compressed Natural Gas (BioCNG) plant in Lahad Datu.

Cenergi and Kwantas will jointly undertake the development, construction, operations and maintenance of the BioCNG plant which is located at Kwantas’ Pintasan Palm Oil Mill in Lahad Datu, expected to be operational by second quarter of 2025.

The plant will generate biogas through anaerobic digestion of POME (Palm Oil Mill Effluent) and through a process of purification and compression of the biogas, convert the biogas into BioCNG.

BioCNG has gas composition similar to that of natural gas, enabling it to be used in the same way for heating and power.

The BioCNG produced by this facility will be compressed into cylinder tubes and supplied to industrial off-takers in Lahad Datu via trailers that transport the cylinder tubes.

BioCNG is considered an environmentally friendly renewable gas derived from wastes of palm oil mills, and it will enable users to reduce their carbon emissions towards their Net Zero goals.

This development enables the start of an ecosystem which further supports the greening of the palm oil industry.

Cenergi Group CEO, Hairol Azizi Tajudin said Cenergi has a portfolio of a total of 33 biogas to electricity plants in West Malaysia, including those under construction, which harness biogas from Palm Oil Mill Effluent and convert it to electricity for injection into the grid through Sustainable Energy Development Authority (SEDA)’s Feed-in-Tariff programme.

“This partnership marks Cenergi’s inaugural venture into biogas development in Sabah, and we are excited to play a part in enhancing the renewable energy options available to the industry.

“Our goal is to deliver sustainable BioCNG for industrial players in Sabah, meeting the rising energy demand, particularly in the East Coast region.

“This investment will contribute to a new path for the harnessing of wastes from the palm oil industry into environmentally friendly products,” he said.

Meanwhile, Kwantas Group CEO, Alvin Kwan said Kwantas is excited to announce the partnership with Cenergi to launch the BioCNG plant as it marks Kwantas’ first biogas renewable energy project in Sabah.

“Our ultimate goal is to reduce carbon footprint and tackle climate change issue by capturing gas emissions from the POME and converting into sustainable BioCNG to fulfil gas and energy demands in the East Coast region of Sabah.

“With the availability of BioCNG, the wide applications of BioCNG could potentially expand to applications in the transportation and manufacturing sector,” he said.

Source: Borneo Post

Biogas renewable energy plant to be built in Lahad Datu

Air filter and sokution provider Camfil Malaysia Sdn Bhd celebrates its manufacturing plant expansion in Bemban Industrial Park, here today. 

Camfil Malaysia head of plant and vice president of Camfil supply chain in Asia Pacific Karunagaran Krishnan said the strategic move emphasises the company’s unwavering commitment to sustainability, growth, innovation, and addresses the increasing demands of the Asia Pacific market.

The facility costs about RM60 milion and boasts a new showroom and an auditorium specifically designed to facilitate customer visits, product showcases, product launches, training and industry events. 

“The plant also incorporates advanced laboratories dedicated to research and development. These labs are crucial in driving continuous innovation, ensuring that Camfil remains at the forefront of technological advancements in air filtration. 

“The new plant’s initiatives prioritise sustainability. With a dedicated commitment to ecofriendly practices, the facility focuses on producing energy-efficient products, aligning seamlessly with Camfil’s dedication to a greener future,” said Karunagaran.

He said the company is targeting a return on investment within the next five to seven years. 

The operation of the Swedish company’s factory provides as many as 200 new job opportunities for locals, with the total number now approaching 600 people.

“I’m proud to say 100 per cent of workers here including the staff engineer are Malaysians,” he said.

The launch were attended by Swedish ambassador to Malaysia Dr Joachim Bergström; Camfil president of Asia Pacific Alan O’ Connel and Perak Customs director Datuk Abdul Ghafar Mohd.

Source: NST

Camfil Malaysia expand manufacturing plant

Sarawak aims to start exporting renewable energy, particularly hydrogen, by the end of 2027, says Premier Tan Sri Abang Johari Tun Openg.

He said the state was working with industry players, as well as Japanese and South Korean investors, to explore the potential for developing hydrogen in Sarawak.

“The infrastructure will be completed by 2027, when we will have a plant to produce hydrogen.

“At the moment we have confirmed off-takers from South Korea and Japan.

“If we were to scale up our production, there is a possibility to export to other countries.

“Sarawak may one day become a green energy supplier for the whole region,” he told reporters after opening the Borneo Energy Transition Conference yesterday.

In his speech earlier, Abang Johari said Sarawak planned to set up a hydrogen hub in collaboration with Gentari Sdn Bhd.

He said the hub would be the sole supplier of green hydrogen for downstream facilities in the state.

“This hydrogen hub concept is separated between upstream or hydrogen production, and downstream hydrogen derivatives to illustrate that it can cater to multiple investors,” he said.

Abang Johari said the hub would be managed and operated by SEDC Energy Sdn Bhd (SEDCE), a subsidiary of the Sarawak Economic Development Corporation, and Gentari subsidiary Gentari Hydrogen Sdn Bhd.

“I hope this understanding between the players will send a signal that we are serious in producing clean energy for the world,” he added.

Abang Johari also witnessed a document exchange between Gentari Hydrogen and SEDCE for the joint development of a centralised hydrogen production hub in Bintulu, to be known as the Sarawak H2 Hub.

SEDCE also exchanged documents for a joint development agreement with Samsung Engineering, Lotte Chemical and Korea National Oil Corporation as well as an initiative with Sarawak Metro to develop the Rembus hydrogen plant in support of the Kuching urban transportation system project.

Source: The Star

Sarawak aiming to be hydrogen hub

A major grouping of players in the Malaysian durian industry has pledged to bring the industry to greater heights.

Celebrating its first anniversary yesterday, the Durian Manufacturers Association (DMA) has renewed its commitment to bringing global recognition to a diverse variety of Malaysian durians, while promoting fair trade practices for the so-called “king of fruits”.

DMA president Eric Chan said the association has 11 members comprising durian farmers and durian product manufacturers, with a local market share of 75%.

“Coming together under the association is a realisation of a long-held dream, a truly momentous occasion in our history,” said Chan, adding that the effort to bring every significant player on board had been painstaking.

“Uniting hasn’t been a simple journey, but we’ve persevered.

“We grasp the significance of nurturing our durian sector not only for personal gain but for our nation’s advancement.

“Former rivals among our members have evolved into trusted allies, united in advancing the industry over the last decade,” he said at the association’s inaugural anniversary dinner here recently.

Guests of honour included Deputy Agriculture and Food Security Minister Datuk Arthur Joseph Kurup and other ministry officials.

Moving forward, Chan said DMA wants to make the Malaysian durian a global icon and has laid out five key pillars to achieve it.

Among the focuses were to empower durian growers with knowledge, resources and sustainable practices, ensuring high-quality produce and fostering industry excellence; advocating environmentally sustainable durian farming practices; and championing the global recognition of Malaysian durians.

Chan said DMA also called for the promotion of fair trade practices and consumer awareness worldwide while driving innovation and research.

“We are also focused on expanding the export market for Malaysian durians.

“Leveraging their unique taste and quality, we aim to reach international consumers and establish Malaysian durians as a preferred choice worldwide,” he said.

The dinner also saw the signing of a memorandum of understanding (MOU) for the Kuala Lumpur-Zhengzhou Durian Exclusive Chartered Air Cargo Route.

Chan said the MOU was a significant step forward for the durian industry, opening up new avenues for trade and collaboration between Kuala Lumpur and Zhengzhou, China.

“With the establishment of this exclusive chartered air cargo route, we are not only enhancing the accessibility and efficiency of durian transportation but also strengthening the economic ties between Malaysia and China.

“This initiative underscores DMA’s commitment to driving innovation, fostering collaboration, and unlocking the full potential of the industry,” he said.

In his speech, Kurup said the impact of the durian industry extends beyond agriculture, serving as a driving force in various sectors such as logistics, light industry and more, and contributing significantly to the national economy.

He said the upcoming collaboration for air cargo routes between Malaysia and China represents a groundbreaking development that will “revolutionise how we export durians” by ensuring the delivery of the freshest and highest quality fruit to one of Malaysia’s largest markets.

Kurup also lauded the establishment of DMA and its achievements.

“The association marks a significant milestone in achieving the collective vision of making Malaysia the top exporter for durian,” said Kurup, adding that realising the full potential of the durian industry requires collaboration, innovation and strategic partnerships.

“The government and industry players have a collective responsibility to drive growth, promote sustainability, and uphold the highest standards of quality and integrity.

“By sharing knowledge, best practices and market insights, we can strengthen our competitive advantage and position Malaysian durians as the preferred choice in the global marketplace,” he said.

Statistics showed that Malaysia exported 455,458 metric tonnes of durians in 2022, reaching a value of US$259mil (RM1.2bil), with expectations to reach 505,853 metric tonnes by 2025.

“This growth is a clear indicator of the potential and vitality of our durian industry. This represents a growth of 168% compared to 2019, signaling rising global demand and Malaysia’s emerging significance as a key exporter,” he added.

Source: The Star

Industry players pledge to bring durian to new heights

Premier Datuk Patinggi Tan Sri Abang Johari Openg foresees Sarawak leading the charge on renewable energy exports for the country by the year 2027.

He expressed optimism that within three years’ time, the state would have the facilities and technologies required to produce renewable energy, particularly hydrogen.

“By 2027, we will have a plant to produce hydrogen together with South Korean companies namely Lotte Chemical and Samsung Engineering, which have become offtakers to the production of hydrogen.

“At the same time, we will also retain around 7,000 tonnes of hydrogen for domestic use, and this will be the energy for industries that have base in Sarawak,” he told reporters when met after officiating the Borneo Energy Transition Conference (BETC) 2024 here today.

The Energy and Environmental Sustainability Minister said Sarawak is on the right track towards its transition to renewable energy as the state eyes to export renewable energy specifically hydrogen to foreign countries.

“This will increase our Gross Domestic Product (GDP) while at the same time provide new job opportunities for the new generation because this depends on the latest technology.

“Sarawak has all the resources and if we combine these with technology, therefore the state’s potential is very vast especially in terms of the National Energy Transition Roadmap (NETR) policy.

“It is possible that we can become the decisive factor in us transitioning from the old into the new energy,” he said.

He said at the moment, the state has two confirmed offtakers through Japan and South Korea.

“If we were to scale up our production, there is also a possibility for other countries because they would have to comply with green energy.

“What I’m saying here is that Sarawak may one day become a green energy supplier for the whole region depending on the technology that is used in the production of hydrogen,” he said.

Earlier in his speech, Abang Johari said Sarawak is fortunate to have partners from overseas who were willing to invest in the state’s renewable energy ventures.

“However, the question now is that the banks are still undecided. Even through there has been a lot of pressure for us to transition towards green energy, the banks are afraid that we might no be able to pay because there is no guarantee that this will work.

“But to me, it will work because if the transition from coal to fossil fuel worked, don’t tell me that the transition from fossil fuel to renewable energy cannot work,” he said.

The Premier hoped to see the exchange of landmark documents between SEDC Energy (SEDCE) and Gentari Sdn Bhd on Sarawak Hydrogen Hub; joint development agreement with Samsung Engineering, Lotte Chemical, Korea National Oil Corporation, as well as a groundbreaking initiative with Sarawak Metro on the Rembus Hydrogen Plant at BETC today serve as a signal to industry players that the Sarawak government is serious in its mission of producing clean energy for the world.

“Sarawak would like to become a hub, if possible, together with Gentari Sdn Bhd and to be the sole supplier for clean hydrogen for any downstream facilities in the state such as ammonia and methylcyclohexane (MCH).

“This hydrogen hub concept is separated between upstream hydrogen production and downstream hydrogen derivatives.

“This illustrates that the hydrogen hub is able to cater to multiple investors through a plug-and-play concept for investors especially the electrolyser modules and other facilities that can be shared with the hub and managed and operated by SEDCE and Gentari Sdn Bhd,” said Abang Johari.

Also present were Deputy Premier Datuk Amar Dr Sim Kui Hian, Deputy Energy and Environmental Sustainability Minister Datuk Dr Hazland Abang Hipni, Deputy International Trade, Industry and Investment Minister Datuk Dr Malcolm Mussen Lamoh, Sarawak Economic Development Corporation (SEDC) chairman Tan Sri Datuk Amar Abdul Aziz Hussain, and SEDCE chief executive officer Robert Hardin.

Source: Borneo Post

Premier foresees Sarawak’s lead in country’s renewable energy exports by 2027

Entries by international EV companies signal a significant move towards EV transition, and longstanding local players also play pivotal roles 

Malaysia’s automotive sector is embarking on its next revolutionary phase with the introduction of electric vehicles (EVs).

EV companies such as Tesla Inc and BYD Auto Co Ltd entered Malaysia’s market with a big statement towards the transition, aligning with a mission to champion the cause for environmental sustainability. 

Noma SWO Consult associate partner and Gerson Lehrman Group’s (GLG) council member Nik Zafri Abdul Majid, alongside Proton Holdings Bhd deputy CEO Roslan Abdullah, shared perspectives on recent partnerships, government initiatives and Malaysia’s position in the global shift towards EVs. 

Nik Zafri emphasised the pivotal roles of longstanding industry players, highlighting DRB-Hicom Bhd’s position through Proton. 

“DRB-Hicom has been a long-standing player, in which Proton is the branding and monument for its success,” he told The Malaysian Reserve (TMR). 

He said the collaboration with international brands like Suzuki, Honda and Mitsubishi has propelled DRB-Hicom to a leadership position in domestic production. 

“Most importantly, the car parts are imported and (then) assembled locally (complete knock-down [CKD]) which promotes domestic production, job creation and vendor development,” he said. 

He also believed that broad experience, domestic production, job creation and vendor development are four key elements of how DRB-Hicom influenced the market trends, making it more competitive with appealing local vehicles. 

UMW Holdings Bhd, synonymous with Toyota, offers diversified options to consumers. 

“The influence of UMW on consumer choices and market trends are diversified options and established international brands,” he added. 

Nik Zafri also noted that Tesla’s entry into Malaysia signals a significant milestone in the government’s push towards Sustainable Development Goals (SDGs), particularly in the EV domain. 

“Tesla’s presence with EVs raises awareness and interest, which may influence the future direction of market trends, where the plan is to establish supercharger networks and service centres, which will boost the EV ecosystem,” he said. 

Strategic Initiatives and Partnerships

Proton’s collaboration with DRB-Hicom and Zhejiang Geely Holding Group Co Ltd, as shared by Roslan, plays a crucial role in shaping Malaysia’s automotive trajectory. 

Proton has recently made progress with the development of the Automotive High-Tech Valley (AHTV) project in Tanjung Malim, Perak. 

“The project is a major initiative which is expected to energise the Malaysian automotive industry and attract RM32 billion in investments over the next 10 years, while creating job opportunities and helping Malaysia become a regional leader in the production of next-generation vehicles (NxGVs),” Roslan told TMR. 

He also said that Proton’s transition into battery electric vehicles (BEVs) positioned the company at the forefront of Malaysia’s EV revolution, gaining valuable insights and contributing to the digital transformation journey associated with EVs. 

“Proton started its BEV journey with the introduction of the smart model, distributed through its subsidiary, Proton New Energy Technology Sdn Bhd (Pro-Net), in 2023,” he said. 

In regards to AHTV, Nik Zafri resonated with Roslan’s statement, adding that it will boost domestic production. 

“We can expect transfer of technology in the future which will encourage the localisation of EV technology and components, hence reducing imports,” he said. 

DRB-Hicom’s partnership with Geely further emphasises Malaysia’s commitment to boosting domestic production, localising technology and fostering a sustain- able automotive ecosystem. 

“As at the end of 2023, the company has introduced 31 models and cumulatively sold 4.98 million units, so we are approaching another milestone in 2024,” said Roslan. 

Meanwhile, Nik Zafri said the Malaysian Investment Development Authority’s (MIDA) collaboration with Perusahaan Otomobil Kedua Sdn Bhd (Perodua) would lead to the launching of the MIDA-Perodua Digital Transformation Ecosystem Programme. 

“The aim is to upgrade the local automotive suppliers with state-of-the-art technologies and advanced machinery, digitising manufacturing processes (upgrade of the prevailing material requirements planning [MRP]/enterprise resource planning [ERP] system) and for a more affordable vendor development programme for Perodua,” he noted. 

Investments in research and development (R&D), coupled with digitisation efforts, underscore the industry’s dedication to modernisation and innovation. 

NAP2020 and Tax Initiatives

Government initiatives and incentives, crucial catalysts for growth, play a vital role in Malaysia’s automotive sector. 

The government’s launch of the National Automotive Policy 2020 (NAP2020) was aimed at enhancing Malaysia’s automotive industry in the era of digital industrial transformation. 

The goal is to cultivate the NxGV technology ecosystem to position Malaysia as a regional hub for NxGV production, enhancing the involvement of the domestic automotive industry in the sector. This initiative not only emphasises technology advancement but also encompasses the overall transport ecosystem. 

The policy aimed to modernise the domestic automotive industry in line with the Industrial Revolution 4.0 (IR4.0) and ensure that consumers, domestic industry and the government benefit from NxGV implementation. 

Furthermore, the policy was also aimed to reduce carbon emissions from vehicles by improving the fuel economy level in Malaysia by 2025 in line with the Asean Fuel Economy Roadmap of 5.3 litres of gasoline equivalent (Lge)/100km. 

Concerning fuel economy level, it was reported in October 2023 that Malaysia’s refined fuel consumption is projected to grow at a much slower pace than anticipated over the next 10 years, averaging at around 1.5% from 2023 to 2032. 

Hence, it is a good time for Malaysia to transition towards the government’s Environmental, Social and Governance (ESG) goals with the usage of EVs, and the development of Kulim Hi-Tech Park in the northern region of Malaysia. 

Nik Zafri said the commitment to attracting investments, promoting technological advancement via grants and funding programmes, developing infrastructure, foster- ing workforce competencies, encouraging localisation and supporting vendor development created an enabling environment for industry players to thrive. 

For example, tax exemptions offered by the government, such as investment tax allowances and pioneer status, would attract more foreign direct investors (FDI) into the automotive industry. 

It will reduce the initial investment costs for companies, making Malaysia a more attractive destination for establishing or expanding their manufacturing operations. 

“For individuals, income tax relief of up to RM2,500 on EV charger rental, purchase, and installation; and for companies, this applies to the tax deductions on EV rental, in which both of these incentives will be extended until 2027,” he said. 

Training More Skilled Workers

Nik Zafri also touched upon the government’s initiative to introduce the National Dual Training System (NDTS). 

“Initiatives like NDTS combine classroom learning with on-the-job training, providing graduates with practical experience and improving their employability in the automotive sector,” he said. 

Subsequently, Investment, Trade and Industry (MITI) Minister Tengku Datuk Seri Zafrul Abdul Aziz said during his speech at a recent BYD launching ceremony that MITI would collaborate with other ministries to fulfil the industry’s demands. 

“MITI will continue to collaborate with the Human Resource, Education and Higher Education Ministries to ensure that the industry’s requirements for skilled workers will be fulfilled,” he said. 

Last year, MITI set up the National EV Steering Committee, which is a Cabinet committee comprising key ministries to address top concerns in the industry. 

“This 400% increase in BEV adoption signifies our strong policy push that has generated a strong trend in the shift from internal combustion engine (ICE) to EV among Malaysian consumers,” Tengku Zafrul added while complimenting BYD for achieving the highest number of units of EV cars brought into Malaysia. 

Meanwhile, Roslan said Proton’s alignment with government aspirations and its focus on connectivity, autonomous, shared mobility and electrification (CASE) technologies echoed this commitment. 

He also noted the government’s active participation in the promotion of EVs, which aligned with the Net-zero Carbon Mobility blueprint. 

“The government must make the policies clear to the public to address the various concerns regarding the usage of EV cars such as range anxiety, financing facilities, as well as the second-hand value of EV cars,” he said. 

Malaysia’s Position in the EV Revolution

Nik Zafri said although Malaysia is still in the early stages of the EV revolution, there is significant potential for growth. 

Challenges such as limited EV production and infrastructure gaps exist, but strong government support through initiatives like tax breaks and subsidies signals a promising future for EV adoption and production. 

With these challenges, he said Malaysia is likely to face tough competition for at least one to two years, given the head start in EV development and production enjoyed by countries like China and South Korea. 

However, he was hopeful about Malaysia’s trajectory in its EV development. 

“Partnerships and investments with Geely and Tesla can bring in expertise and technology, accelerating Malaysia’s EV development,” he said. 

Nik Zafri believed that leveraging expertise, partnerships and financial support, Malaysia, including Proton, is poised to emerge as a key player in the regional EV market by 2025. 

As for Roslan, he supported the government’s targets towards transitioning to EVs, notably achieving 15% EV of new car sales by 2030. 

“Proton views these targets to be in line with the ICE-to-EV transition period as it may require some time to convince consumers and stabilise the industry,” he noted. 

However, he said that ICE and hybrid EV (HEV) cars are expected to prevail until 2030, followed by the decline of volumes for ICE vehicles. 

Source: The Malaysian Reserve

Unlocking Malaysia’s global automotive potential

Contributed about 5.8% to the GDP in 2023, the sector is targeting RM120b by 2025 in GDP growth and RM495b in export earnings 

Malaysia’s major involvement in the electric and electronic (E&E) sector, especially the semiconductor industry, is propelling new growth areas, as more companies are moving into more knowledge-intensive, hi-tech, innovative and higher-value-added activities.

In the region, Malaysia is among the major players in the expanding E&E market, acts as the catalyst for the development of other industries and enhances the supply value chain. 

Malaysian Industrial Development Finance Bhd (MIDF) head researcher Imran Yassin Md Yusof said the semiconductor industry is projected to remain a key driver of the E&E sector in Malaysia which will intensify through the advancements in technology as its driving force. 

New growth areas the E&E manufacturers are currently exploring include e-commerce, automation, Internet of Things (IoT) and artificial intelligence (AI), accelerating the move towards IR4.0 both at industrial and societal levels. 

Today, IoT is pushing demand for more advanced semiconductor devices such as sensors, resistors and transceivers, to help the industry to adopt digitisation and digitalisation aimed at improved productivity, profit and competitiveness. 

“In one particular area, the rise of IoT and connected devices has significantly influenced the E&E sector, leading to increased demand for smart and interconnected solutions,” he told The Malaysian Reserve (TMR). 

He believed that AI is now seen as a new supporting ecosystem as the possible future trend in the semiconductor industry evolves across electronics manufacturing services, communication technologies and smart devices. 

“Moving forward, we expect the demand for advanced semiconductor products for applications like 5G, IoT and AI is expected to drive growth,” he said. 

It is noted that the E&E industry is producing 13% of global back-end semiconductors, driving 40% of the nation’s export output and contributing about 5.8% to the GDP in 2023. 

With ambitious targets set at RM120 billion by 2025 in GDP growth and RM495 billion in export earnings, the industry is a catalyst for Malaysia’s economic progress. 

“Looking at global trends, the development of AI and the need for advanced chips is expected to drive development going forward. 

“Although some would say it is still in its infancy stage, we could witness a breakthrough in this field soon,” Imran added. 

However, given the nation’s E&E sector still very much relies on the external chain and global influence, Imran said the sector needs a resilient supply chain as it faces challenges related to global supply chain disruptions, affecting the production and distribution of electronic components. 

“Last year saw the E&E sector performing weakly from an export perspective. We believe that this was due to slower demand, particularly in consumer electronics, where our local E&E is part of the value chain. 

“We also saw lower demand coming out of China. All of this could be due to either slowing end consumer demand or the draw-down of inventories by companies, or both,” he said. 

Despite that, Imran expects the situation to recover due to better demand and restocking activities this year. 

Investment and Building More High-Tech Facilities

In developing the sector, a balance between attracting investments and ensuring sustainable growth is pivotal, without neglecting the interests of the community of investors and workforce in line with the evolving industry trends and global economic shifts. 

At this juncture, Malaysia is also recognised as being an investment-friendly nation with the policy implementation, on top of providing investment incentives, and research and development (R&D) grants which saw a success in creating an environment that fosters competitiveness and innovation. 

As it gears toward high technology, Malaysia also elevates itself as the hub for manufacturing growth with the establishment of industrial parks and zones specifically tailored for the sector that contributes to the development. 

This includes the development of high-tech parks such as Kulim Hi-tech Park in Kedah as a hub in creating a robust industrial economy focusing on high-tech manufacturing, advanced technologies and R&D activities, as well as the rise of Cyberjaya as the global tech hub. 

The government through the Malaysian Investment Development Authority (MIDA) has been encouraging manufacturers to establish more R&D, and design and development centres; centres of excellence; global procurement centres; logistic centres and operational headquarters in Malaysia. 

Not only that, through the New Industrial Master Plan 2030’s mission-based champions, Malaysia is also set to explore more high-end segments of the semiconductor supply chain namely integrated circuit design and wafer fabrication. 

At its core, this vision seeks to create an abundance of high-value job opportunities, transforming Malaysia’s reliance on relatively low-cost foreign labour. 

Growing Presence and Friendly Investment Policy

Many multinational semiconductor companies have established a presence in Malaysia, chosen over our infrastructure, skilled workforce, competitive costs and strategic location in the Asia-Pacific region. 

The E&E sector is also diverse, encompassing various subsectors such as semiconductors, electronic components, telecommunications equipment and consumer electronics which allows Malaysia to participate in multiple aspects of the global supply chain. 

Bosch Malaysia MD Klaus Landhaeusser said Malaysia has built up an unparalleled eco-system for semiconductors which has assembled important players in the value chain. 

“For example, it brings the Bosch semiconductor manufacturing network much closer to the upstream processes of packaging companies, such as outsourced semiconductor assembly and test vendors, and customers in the important Asian market,” he told TMR. 

Apart from Malaysia’s geographical location, backed by a well serviced by all primary air and shipping lines, the country’s economy remains resilient and rests on strong fundamentals, while implementing investment-friendly policies. 

“These are the factors attracting foreign investors, giving rise to Malaysia being an essential player in the E&E ecosystem. This is also the main reason why Bosch remains committed to the Malaysian market,” Landhaeusser added. 

As of Dec 31, 2022, Bosch has made a total of €86.2 million (RM446.52 million) investment in Malaysia and in August 2023, recently launched a new plant, the Bosch semiconductor backend site, which reflects the evolution of the E&E sector over the years. 

Landhaeusser said currently, only one-fifth of the plant is built at a cost of some €65 million and Bosch intends to invest a further €285 million at the site by the middle of the next decade. 

In short, a total of €350 million is planned for this facility until 2035. 

Through its new and existing manufacturing plants in Penang, Bosch — as a key player — will continue to strengthen its position, inventing E&E-related products such as producing mobility electronics, power tools and semiconductors to enhance the quality and efficiency of living. 

“With the new plant addition, Penang is now home to the largest number of manufacturing facilities in a single country for Bosch in South-East Asia. 

“This facility is one of Asia’s most advanced test centres to perform final testing of automotive chips and sensors,” Landhaeusser added. 

Landhaeusser also believed that the future integration of AI will present numerous business potentials in new growth areas for the E&E manufacturers including smart manufacturing and smart energy efficiency solutions, connected devices and IoT, autonomous systems and more. 

“AI-powered predictive maintenance systems can help E&E manufacturers anticipate equipment failures before they occur, enabling proactive maintenance activities and reducing costly downtime,” Landhaeusser said. 

R&D and Retaining Tech Talent

As investors continue to come in and intensify competitive situations regionally, human capital readiness is equally important to ensure a skilled workforce to meet the need for technological advancement. 

This requires close coordination among the private sector, the Human Resources Ministry and the Higher Education Ministry to bridge skill gaps effectively. 

In this regard, another important player in the manufacturing sector, ams OSRAM Malaysia, believed that deeper involvement in research is needed to fast-track the evolution, which subsequently helps semiconductor companies to retain top talents aggressively. 

“As the research accelerates, there will be more engagement with local semiconductor eco-systems to source materials and equipment technologies for advanced manufacturing,” its spokesperson said in response to an inquiry from TMR. 

This will also allow the local institutes and universities to supplement scientific and technical knowledge. 

“To prepare better, the industry must work closely with national and local governments to motivate the youths to consider science, technology, engineering and math careers and at the same time work with local companies to operate at world-class levels to support the semiconductor ecosystem,” it said. 

The group believed that Malaysia should learn from the pandemic and current geopolitical tension by renewing its focus on building a balanced supply chain that balances between local and regional or global suppliers. 

“Malaysia must seize this opportunity to build upon its 50-year history and encourage entrepreneurship or start-ups to support and participate in the whole semiconductor industry,” it added. 

Technically, it opined that Malaysia is reaching the end of “Moore’s Law” and the industry is rapidly adopting “advanced packaging” where multiple chips are combined in single packages that go into phones, cars, drones, watches and other applications. 

“Malaysia’s strength in semiconductor packaging can be leveraged to thrust Malaysia to the forefront of this fast-growing sector,” it added. 

Source: The Malaysian Reserve

 

E&E sector presents new key growth areas with the rise of tech and high-value sectors

A shift from quantity to quality employment and emphasis on local talents is imperative to foster progressiveness 

The manufacturing sector, despite a marginal rebound of 0.1% growth in the last quarter of last year (4Q23), faces challenges to continue its momentum into 2024 due to the expected moderation of the export-oriented segments. 

According to the Department of Statistics Malaysia (DoSM), while certain sub-sectors such as vegetable and animal oils and fats experienced growth, declines in electrical, electronics and optical products restrained the overall sectoral performance. 

Private economists and analysts, however, are more optimistic of 2024’s brighter outlook as the 4Q23 economic performance indicated a growth rebound in the manufacturing and mining and quarrying sectors, as well as expansion in agriculture. 

Kenanga Investment Bank Bhd reported that Malaysia’s 4Q23 GDP figures (at 3.4% is a slight uptick from the preceding quarter’s 3.3%) offers invaluable insights into the countr y’s economic landscape against the backdrop of global certainties and domestic challenges. 

The impact of expanding sectors were softened marginally due to the weaker growth in the services and construction sectors.

The manufacturing sector individually experienced a slight rebound, growing by 0.1% compared to a marginal contraction in the previous quarter, supported by activities such as manufacturing of vegetable and animal oils and fats, non-metallic mineral products, and basic metal and fabricated metal products. 

However, the growth momentum was limited by declines in electrical, electronics and optical products, and petroleum, chemical, rubber and plastic products. 

The report also states that the performance of growth in 2023 was primarily hindered by a weak manufacturing export-oriented sector, influenced by China’s fragile post-pandemic recovery.

It was exacerbated by extended global supply chain disruptions resulting from escalating geopolitical tensions, notably the Russia-Ukraine war and the Israel-Gaza conflict.

Of which, evidence was seen in the subdued Manufacturing Purchasing Managers’ Index (PMI) in December, which remained in contraction since August 2022. 

Additionally, exports experienced a decline throughout the year, with full-year growth contracting by 8%. 

Despite these challenges, the expectation is that domestic demand will continue to support GDP growth. 

This is supported by projected improvements in the unemployment rate for 2024 and sustained growth in distributive trade sales due to increased tourist arrivals and spending. 

Furthermore, the anticipated recovery in the manufacturing sector, potentially driven by an electronics and electrical (E&E) upcycle particularly in the second half of 2024 (2H24), coupled with China’s gradual recovery, bodes well for the domestic growth outlook. 

Consequently, the GDP growth forecast for 2024 is maintained at 4.9%, falling within the Finance Ministry’s projection range of 4%-5%. 

DoSM in its latest quarterly GDP release said, the overall growth for 2023 moderated to 3.8%, marking a significant decline from the previous year’s robust 8.7%. 

The figure fell short of initial projections, with the housing forecast standing at 3.7% and Bloomberg’s consensus at 4.1%. 

On a positive note, the mining and quarrying sector witnessed a notable rebound of 3.7% in 4Q23, primarily fuelled by expansions in natural gas and crude oil and condensate production, contributing positively to GDP growth after a previous quarter of contraction. 

The agriculture sector also showcased resilience with a consecutive expansion of 1.2% in 4Q23, driven by improved palm oil production amid fluctuating economic conditions. 

For the service sector, while it sustained overall growth momentum, it witnessed a slight moderation to 4.7% growth in 4Q23. Contributions from sub-sectors such as wholesale and retail trade, transport and storage, and business services played a crucial role in sustaining growth. 

The construction sector, however, witnessed a sharp moderation to 2.5% growth in 4Q23, notably in civil engineering and residential building sub-sectors. 

Government’s Role 

While approximately half of Malaysia’s GDP originates from the services industry, manufacturing retains significant importance for the Malaysian economy, particularly due to its concentration in key areas such as Penang; Kulim, Kedah; the Klang Valley; and Johor, where high-value manufacturing hubs are situated. 

Global data and business intelligence platform Statista anticipated that this year, the manufacturing market would witness substantial growth across various key metrics. 

The value added in the sector is forecasted to reach US$118.5 billion (RM560.51 billion), with a projected compound annual growth rate (CAGR) of 6.05% from 2024 to 2028. 

Similarly, the output in the manufacturing market is expected to amount to US$726.9 billion in 2024, demonstrating a significant CAGR of 23.68% during the same period.

Moreover, the number of enterprises operating within the manufacturing market is projected to reach 246,500 by 2024, with an anticipated CAGR of 61.62% from 2024 to 2028.Additionally, the number of employees in the sector is expected to reach 4.87 million in 2024, reflecting a CAGR of 19.22% over the forecast period. 

The government in the New Industrial Master Plan (NIMP) 2030 seeks to reform industries and achieve broad-based growth. 

Emphasis is placed on integrating small and medium enterprises (SMEs) into both domestic and global value chains, ensuring equitable distribution of manufacturing benefits across all states. 

As Malaysia attracts more hi-tech and innovation-driven investments, particularly in green manufacturing and renewable sectors, the plan aims not only to enhance labour productivity but also to support Environmental, Social and Governance (ESG) goals. 

This strategic approach ensures continued access to ESG-sensitive markets for Malaysian exports. 

Central to the NIMP 2030 are clear missions aligned with the Madani Economy, positioning Malaysia as Asia’s economic leader through knowledge-based innovations and prioritising the wellbeing of its citizens. 

The plan addresses challenges across sectors and leverages existing and upcoming government policies to ensure alignment and coherence. 

Projections under the NIMP 2030 anticipate significant growth in Malaysia’s manufacturing sector, with manufacturing GDP expected to surge by 61% to RM587.5 billion by 2030. 

Employment opportunities are set to expand, providing livelihood for 3.3 million Malaysians, driven by the creation of high-skilled jobs and advancements in automation. 

Moreover, median salaries in the manufacturing sector are projected to increase by 9.6% to RM4,510, reflecting a shift towards higher value-added activities and the creation of high-skilled job opportunities. 

In pursuit of these ambitious goals, Malaysia aims to attract foreign direct investment (FDI) from global leaders in wafer fabrication, leveraging targeted investment strategies and incentive packages. 

For instance, the US government’s CHIPS Act provides a 25% investment tax credit for semiconductor manufacturing investments in the country. 

Furthermore, the NIMP 2030 places significant emphasis on smart manufacturing, integrating physical and digital processes to optimise operations and enhance efficiency. 

Technologies such as the Internet of Things (IoT), data analytics, artificial intelligence (AI), robotics, cloud computing and cyber security are pivotal in this transformation, facilitating informed decision-making and streamlined production processes. 

The 2024 Budget revealed on Oct 13, 2023, allocated an initial budget of RM200 million for the rollout of the NIMP 2030 programmes and initiatives — which showed the government’s commitment in bolstering the manufacturing sector. 

Key Risks Impacting Growth 

Looking ahead to Malaysia’s economic growth this year, economist Dr Nungsari Radhi was hopeful for a stronger momentum into 2024. 

While 2023 concluded with weaker economic performance compared to the overall annual rate, there is optimism for stronger momentum in 2024. 

He said there were some positive signs in 4Q23, particularly concerning investments, which grew at a faster pace than the overall economy. 

If the trend continues into 2024, it bodes well for overall growth prospects. 

Investments play a crucial role in building capacity, which in turn has positive implications for future economic growth. 

However, it is essential to note that sustainable growth cannot solely rely on consumption expenditures. 

Challenges persist in the tradeable side of the economy, particularly in commodities and manufacturing exports.

While the term “recovery” may not accurately reflect the current situation, Nungsari said it is evident that Malaysia’s economy is experiencing growth. 

However, to sustain the growth trajectory, he believed a focus on increasing investments is crucial, even if certain sectors are not growing as rapidly due to subdued demand. 

The emphasis should be on developing new capacities and capabilities to enhance competitiveness, particularly in the tradeable part of the economy. 

“I believe that both better quality jobs and higher paying jobs depend on us expanding our competitiveness in international trade. That is the only way to do that. 

“To also increase demand for the ringgit and therefore strengthen it fundamentally,” he said in a written reply to The Malaysian Reserve (TMR). 

In considering how domestic demand will persist in supporting GDP growth despite external challenges, Nungsari said it is important to acknowledge the factors that define and constrain domestic demand, namely income growth and credit growth. 

Historically, there has been a significant reliance on domestic demand to fuel economic growth. 

However, looking ahead, there is a shift in focus towards investments as the primary driver of long-term and structural growth. 

Although there are concerns about short-term growth, the focus is on closely monitoring investments, acknowledging their crucial role in fostering long-term economic growth. 

While demand and trade are expected to recover over time, he said it is imperative to enter this cycle by implementing improved strategies and initiatives. 

When considering the primary risks or uncertainties that might affect the GDP growth projection for 2024, he emphasised that Malaysia’s capacity to cultivate new capabilities via enhanced investment is pivotal to unlocking brighter prospects for the future. 

This encompasses not only private investments, both domestic and FDI, but also public investments aimed at fostering new capabilities. 

“As long as we build new capabilities, we are looking at better prospects ahead,” he added. 

Therefore, he said it is imperative to prioritise the proportion of the developmental budget within the overall budget, emphasising the need for more optimal spending rationalisation. 

Conversely, a non-resident senior fellow at the Malaysian Institute of Economic Research (MIER) Prof Geoffrey Williams projected a slowdown in Malaysia’s economic growth during the forecasts conducted by economists and analysts in November 2022. 

This outlook was reiterated in the early months of 2023, suggesting that Malaysia would not achieve the earlier forecasted growth target of 4%-5%. 

Recent data suggests that the Malaysian economy is on a path to a modest recovery in 2024, with an expected growth rate of around 3.5%. 

However, he said there is a caveat to this outlook, as there exists a tangible risk that the growth rate could dip even lower than anticipated. 

Furthermore, he said the official estimate of 4%-5% growth depends on higher domestic activity in consumer spending and investment, and stronger international growth — which are all facing significant downside risks. 

Apart from the electricity and plantation sector mentioned in the report, he also highlighted that the gig economy is anticipated to play a significant role in bolstering incomes for millions of individuals across various fields – not just p-hailing but also professional freelance work. 

Williams commented on the expected resilience of domestic demand in sustaining GDP growth despite external challenges, highlighting several factors to consider. He noted that while domestic demand could bolster growth at a modest rate, it is unlikely to propel it to the targeted 4%-5% range unless there are policy adjustments in the short term. 

These adjustments might involve rationalising subsidies and reallocating savings to income support and tax restructuring. An example would be postponing the Sales and Service Tax (SST) increase, similar to what occurred in the traditional and complementary medicine (TCM) sector. 

In terms of consumer spending, he said it remains weak due to higher employment in low-paying jobs, barely keeping pace with the rising cost of living. 

Meanwhile, investment showed some positive improvements but there is a long-term decline in the percentage of GDP devoted to investment. 

On international trade, Williams said it is also weak, with recession and stagnation in major markets and significant geopolitical risk holding back real investment. 

Furthermore, China is facing challenges in returning to its full potential, which serves as a significant growth driver in Asia, upon which Malaysia relies. 

“Government spending and development investment is not forecast to rise very much to compensate. All these factors point to slower than normal growth in 2024 similar to 2023,” he told TMR. 

Regardless, he believed the key risk that could potentially impact the GDP growth forecast for 2024 include the existing geopolitical risks which have held back global growth through 2023. 

There is also a risk that the subsidies rationalisation programme will be delayed and that overconfidence in the official narrative and forecasts will make the government too cautious on reform. 

Geopolitical Conflicts 

On the other hand, MIER senior research fellow Dr Shankaran Nambiar said that events unfolding in Ukraine or Gaza will exert additional pressure on the Malaysian economy beyond its current impact. 

“The global scenario is not particularly optimistic. On the more pessimistic side, China may not post very vibrant figures, too. 

“I think the rather muted global economic environment will surely be a factor that will impact Malaysia’s export-oriented manufacturing sector,” he told TMR. 

Furthermore, Shankaran said the main impetus for the sector will come from the E&E sector, particularly from the semiconductor industry. 

“The semiconductor cycle, according to some accounts, is not set to pick up until the latter part of the year. 

“Given this, it is unlikely that we can expect spectacular outcomes from the manufacturing sector for some time,” he added. 

Expanding on this, Socio-Economic Research Centre (SERC) ED Lee Heng Guie said the manufacturing sector contracted further by 0.3% year-on-year (YoY) in 4Q23 from -0.1% in 3Q23. 

The decline was driven by continued decreases in the production of electronics, machinery and equipment, textile and wearing apparel, and wood products. 

He also noted that output growth in food processing, beverages, basic metal products, fabricated metal products, non-metallic mineral products, and leather products has increased. 

Additionally, he mentioned the continued growth in domestic demand, albeit at a slower pace. 

“Growth in construction-related materials, such as basic metal and fabricated metal products, as well as non-metallic mineral products, was supported by the ongoing, albeit slower, growth in the construction sector (3.6% YoY in 4Q23 against 7.2% in 1Q23), ongoing public infrastructure spending and housing development,” he told TMR. 

Moreover, Lee commented that the export-oriented manufacturing industry was largely dragged down by weak global demand and oversupply of electronics demand, leading to inventory adjustments in the PC segment, consumer electronics and server sectors. 

“This is in tandem with an 8.3% decline in global semiconductor sales, with chip sales falling across different parts of the world, namely in the US (-5.2%), Japan (-3.1%) and China (-14%). 

“Meanwhile, the Red Sea conflict-induced shipping disruptions and higher freight costs have impacted importers in the chemicals, machinery and automotive industries due to delays in supply chain and production timelines, while exporters face minimal disruption amid freight cost increases,” he said. 

However, he expected the manufacturing sector to recover in 2024, gaining higher growth traction to an estimated 3.9% in 2024 from +0.7% in 2023. 

Several current and forward indicators suggest improved growth in the sector. 

“In January 2024, global manufacturing PMI returned to 50 points after 16 consecutive months below the threshold separating between expansion and contraction, signalling an improvement amid persistent challenges in the manufacturing sector. 

“Global semiconductor sales have bottomed out and marked positive growth in January 2024. The tech upturn cycle is seen with global semiconductor sales expected to increase by about 13% in 2024 (-8.3% in 2023),” he said. 

Lee also said Malaysia’s exports increased by 8.7% YoY in January 2024, with exports of E&E products showing a smaller rate of decline. 

“Manufacturers and exporters must be mindful of cost and supply chain management, as well as logistics, to safeguard against the risks of disruption from a wider escalation of the ongoing conflicts in Ukraine-Russia and (between) Israel-Hamas, which could hamper the global economy,” he added. 

Source: The Malaysian Reserve

Manufacturing sector: Mixed trends, brighter outlook for 2024