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Key Highlights of the
Manufacturing Sector in 2021

702

1,049 (2020)

Approved Projects

RM195.1 bil

RM91.3 bil (2020)

Total Approved Investments

74,575

80,190 (2020)

Job Opportunities

For more statistics, please click here.

7.9%

38% (2020)

Domestic Investments

(RM15.5 bil)

RM34.7 bil (2020)

RM195.1 bil

RM91.3 bil (2020)

Total Approved Investments

40%

92.1%

62% (2020)

Foreign Investments

(RM179.6 bil)

RM56.6 bil (2020)

RM195.1 bil

RM91.3 bil (2020)

Total Approved Investments

7.9%

38% (2020)

Domestic Investments

(RM15.5 bil)

RM34.7 bil (2020)

92.1%

62% (2020)

Foreign Investments

(RM179.6 bil)

RM56.6 bil (2020)

Vibrant Manufacturing
Ecosystem

Malaysia’s manufacturing sector continues to play a vital role in the country’s economic transformation. Its contributions to the nation’s export revenue and job creation ensured the country’s growth despite global economic uncertainties. The priority will remain on producing more high value-added, diverse and complex products, particularly in the catalytic sub-sectors, namely electrical and electronics (E&E), machinery and equipment (M&E), and chemicals and chemical products. The other two high potential growth sub-sectors, namely aerospace and medical devices will also be pursued.

Talent pool development and Industry 4.0 stay on as the main focus areas of Malaysia’s manufacturing sector, revitalising many mature industries and opening new opportunities for other sectors. Companies are encouraged to increase their productivity by accelerating automation and innovation, undertaking research, development and commercialisation (R&D&C), implementing green and sustainable production practices, and leveraging industry associations in sharing best practices.

Industry4WRD – Manufacturing the Future

Malaysia has made strides towards embracing the Fourth Industrial Revolution (4IR) to ensure that the manufacturing sector continues to be competitive in terms of productivity, innovation, and talent while creating the jobs needed for sustained growth. The Industry4WRD initiative was launched in 2018 as a catalyst to support the manufacturing and manufacturing-related services sectors transition into Industry 4.0 successfully.

To accelerate the adoption of automation in 2021, the Government has allocated RM100 million for the Smart Automation Grant (SAG) under the PENJANA stimulus package and RM50 million under the PEMERKASA aid package. The SAG encourages small-medium enterprises and mid-tier businesses to adopt automation and digitalisation in production processes and operations. MIDA also offers assistance and facilitation for businesses to accelerate the adoption of digital technologies and become the catalyst in driving the nation’s digital economy. One of the initiatives is the Industry4WRD Intervention Fund, a financial support facility for Malaysian SMEs in the manufacturing and related services sectors to embrace Industry 4.0.

Moving forward, the Malaysian Government foresees an increasing trend of companies adopting digital business models. The country’s aspiration to be a digitally-driven, high income nation and a regional leader in digital economy is encapsulated in MyDIGITAL – Malaysia Digital Economy Blueprint. Among other main initiatives are the National Fourth Industrial Revolution (4IR) Policy, Industry4WRD, a Digital Investment Office, National Digital Network (JENDELA) as well as Malaysia’s Lighthouse Programme. These aim to accelerate digital transformation and advance industry transition towards the future of manufacturing by deploying technology, transforming the workforce and scaling an end-to-end supply chain.

We continue to welcome investors who can contribute in the areas of 4IR-enabling technologies such as artificial intelligence (AI), robotics, virtual reality, big data analytics (BDA), Internet of Things (IoT), and software engineering. MIDA looks forward to facilitating these companies in the implementation of their projects in the country.

Another Magnificent Year

Malaysia’s manufacturing sector continued to be resilient throughout the year despite the various headwinds in its way. For instance, of the RM98.7 billion worth of approved investments in the first quarter of 2021, the manufacturing sector accounted for RM59.4 billion, or a noteworthy 60.2 per cent of the total. Foreign Direct Investments (FDI) inflows remained strong at 89.1 per cent of total investments into the sector.

 

Malaysia’s strong performance and improvement in rankings demonstrate the nation’s competitiveness as the preferred location for high-value-added manufacturing and global services hubs, buoyed by its strong presence in the ASEAN region and its vibrant, sustainable post-pandemic economic recovery.

Robust Performance of Foreign Investment

Foreign investments continued to contribute capital, technology, and knowledge transfers to the country. Despite the pandemic’s effects, Malaysia’s fundamentals remain sound, attracting quality FDI investments. Throughout 2021, foreign investors contributed mostly to the total new investments of RM153.4 billion while the remaining RM41.7 billion went towards expansion/diversification projects.

Foreign investors concentrated on the high-value-added E&E industry, bringing in RM146.3 billion, or 81.5 per cent of total FDI. Other industries with high levels of FDI were basic metal products (RM19.2 billion), food manufacturing (RM3.8 billion), chemicals and chemical products (RM3.5 billion), scientific and measuring equipment (RM2 billion) and transport equipment (RM1.2 billion).

The Netherlands topped the list of foreign investing countries at RM74.9 billion, followed by neighbouring Singapore (RM46.6 billion), Austria (RM18.9 billion), the People’s Republic of China, PRC (RM16.6 billion), and Japan (RM7.5 billion). These five countries jointly accounted for RM164.5 billion (91.6%) of total foreign investments approved in the manufacturing sector for 2021.

Resilient Domestic Champions

While FDI formed the vast majority of investments into the manufacturing sector in 2021, domestic direct investment (DDI) also played a crucial role in Malaysia’s economic growth.

In 2021, DDI in the manufacturing sector was worth RM15.5 billion spread across mainly new projects. The three industries that attracted the most DDI were rubber products at RM4.9 billion, followed by chemicals and chemical products (RM2.3 billion), and E&E (RM1.7 billion). These industries made up 57.4 per cent of total approved domestic investments. This was followed by the food manufacturing (RM1.6 billion); fabricated metal products (RM1.2 billion); transport equipment (RM992.1 million); M&E (RM576.9 million); plastic products (RM488.6 million); paper, printing and publishing (RM329.8 million); non-metallic mineral products (RM311.3 million); basic metal products (RM264.7 million); and furniture and fixtures (RM203.4 million) industries.

Policies

Manufacturing sector policies include local company incorporation and Manufacturing Licence application for manufacturing projects under the Industrial Coordination Act (IICA), 1975. There are no restrictions on foreign equity ownership and policies feature a liberal expatriate employment policy. Manufacturing sector policies encourage free movement of funds for foreign investments in Malaysia. There is strong protection of Intellectual Property (IP) rights. Company tax is 24% while individual tax rates are from 0%-30%. Minimum conditions of employment under the Employment Act 1955 must be met. Manufacturing sector policies encourage responsible trade unions for harmonious industrial relations. Policies include double taxation agreements and a controlled environmental management policy.

  • Local company incorporated
  • Manufacturing Licence application
  • No restriction on foreign equity ownership
  • Liberal expatriate’s employment policy
  • Free movement of funds for foreign investments in Malaysia
  • Protection of intellectual property rights
  • Company tax rate 24%
  • Individual tax rate from 0% – 30%
  • Minimum conditions of employment under the Employment Act 1955
  • Responsible trade unions and harmonious industrial relations
  • Compulsory contributions are:
    • Employee Provident Fund (EPF)
    • Social Security Organisation (SOCSO)
    • Human Resource Development Fund (HRDF)
  • Investment Guarantee Agreements (IGA)
  • Double taxation agreements
  • Controlled environmental management policy

Facilities

  • Comprehensive system of vocational and industrial training 
  • Financial assistance for training of workers
  • Well-developed financial and banking sector providing credit to industry
  • Export credit refinancing
  • Export credit insurance
  • Active and efficient stock exchange for raising capital
  • Fully developed industrial parks for industry
    • High-tech parks
    • Free zones for export industries
    • MSC Malaysia
  • Ample electricity and water supply at reasonable costs
  • High quality telecommunications network and services
  • Well-equipped seaports and airports connected to the world
  • Network of well-maintained highways and railways

Get Started

MIDA provides comprehensive support to your business as you consider the competitive and comparative advantages Malaysia has to offer for your investment. Explore our dedicated resources, wide range of facilities or consultation services to assist you in expanding your operations here.
Find out more about the policies, incentives and facilities in the manufacturing sector.
Company can submit application and track the application status online via MIDA InvestMalaysia portal at investmalaysia.mida.gov.my
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