Manufacturing - MIDA | Malaysian Investment Development Authority
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Key Highlights of the
Manufacturing Sector in 2022


Approved Projects

RM84.3 bil

Total Approved Investments


Job Opportunities

For more statistics, please click here.


Domestic Investments

(RM18.3 bil)

RM84.3 bil

Total Approved Investments



Foreign Investments

(RM66.0 bil)

RM84.3 bil

Total Approved Investments


Domestic Investments

(RM18.3 bil)


Foreign Investments

(RM66.0 bil)

Fostering Antifragile

The period of post-pandemic growth which saw Malaysia’s manufacturing sector investment reach its zenith in 2021 had stabilised into equilibrium in 2022, albeit with more job creation and wider participation by domestic investors. Major contributors to the high-value projects are the sub-sectors of machinery and equipment (M&E), transport equipment, and petroleum products. Three other subsectors that show substantial promises of growth moving forward are chemicals and chemicals products, pharmaceuticals, and aerospace.

The ongoing conflict in Europe brings with it economic reverberations, highlighting the need for an antifragile approach that not only helps withstand external economic challenges, but also benefits from them. Besides developing a skilled talent pool and embracing Industry 4.0 technologies like automation and the Internet of Things (IoT), adopting ESG principles for companies becomes crucial. This entails predicting climate risks, acknowledging social changes, and driving ongoing innovation, thus bolstering resilience during downturns and supporting adaptable growth in changing conditions.

New Investment Policy (NIP) – Aligning Growth Potentials

In line with the Malaysian government’s aims to achieve sustainable economic growth by providing high-value and high-skilled employment opportunities, support for the advancement is encapsulated in the New Investment Policy (NIP).

Functioning within the framework of the National Investment Aspirations (NIA), the NIP streamlines all national policies related to investment and promotes high-quality investments for equitable growth. It’s based on clear target outcomes and strategic planning at national and sectoral levels. At the national level, the NIP addresses systemic challenges to achieve the NIA by unlocking investments across sectors and enacting fundamental reforms within the investment ecosystem. On a sector level, the NIP’s initiatives aim to unlock specific investment opportunities aligned with the NIA, involving targeted interventions for tangible on-ground impact.

The NIP had identified E&E, pharmaceuticals, digital economy, aerospace, and chemicals subsectors as priorities for investment due to comparative advantage and their alignment with the NIA as well as the 12th Malaysia Plan (12MP) and Sustainable Development Goals (SDG) 2030. Under 12MP, Kedah, Sabah, Sarawak, Kelantan, Terengganu and Perlis were identified as Less Developed States (LDS), and in line with the NIP’s inclusivity pillar, RM23 billion worth of investments were approved in LDS, generating 11,163 employment opportunities in the states. Furthermore, approved projects related to the NIP subsectors made up 48.3% (RM11.1 bil) of the approved investments in the LDS.

The NIP targets to achieve a sustained GDP growth of 4.5% to 5.5% per year, a sustained gross national income growth of 5.5% to 6.5% per year, and an invigorated investment ecosystem with 4% to 5% Gross Fixed Capital Formation (GFCF) per year. MIDA gladly invites investors to capitalise on the growing potential of the key subsectors. Get in touch and begin your investment journey today.

Stable Year, Steady Performance

Malaysia’s manufacturing sector continued to be antifragile throughout the year due to various headwinds, catalysing transformation – invaluably delivering tangible returns. For instance, while growth in the manufacturing sector slowed in the second quarter of 2022, with investments of RM15.6 billion, it continued to gain momentum in the third quarter, bringing in an additional RM21.1 billion worth of investments, totaling the amount of investment for 2022 to RM84.3 billion. Foreign Direct Investments (FDI) inflows remained strong at 78.3% of total investments in the sector.


Malaysia’s solid performance and unabated improvement in rankings demonstrate the nation’s competitiveness as one of the global growth investment areas for high-value-added manufacturing, buoyed by its strong presence in the ASEAN region and its vibrant and interconnected economy.

Profitable Ground for Foreign Investment

Foreign investment continues to lead the way in terms of contributing capital, technology, and knowledge transfers to Malaysia—an effort amounting to RM66 billion in 2022. This further illustrates that the country’s pro-business policies and initiatives have been successful in laying a profitable foundation for foreign direct investors. Out of the RM66 billion in investments in 2022, RM25.2 billion went to the development of new projects, while the remaining RM40.8 billion went towards expansion and diversification projects.

Foreign investors concentrated on the high-value-added E&E industry, bringing in RM27.9 billion, or 42.3% of total FDI. Other industries with high levels of FDI were transport equipment (RM6.6 billion), chemicals and chemical products (RM5.7 billion), petroleum products (RM5.6 billion), non-metallic mineral products (RM5.3 billion), M&E (RM5.3 billion), and scientific and measuring equipment (RM4.6 billion).

Singapore led the list of foreign investing countries at RM9.6 billion, followed by the People’s Republic of China, PRC (RM9.6 billion), Japan (RM9.2 billion), The Netherlands (RM8.8 billion, and Germany (RM8.8 billion. These five countries jointly accounted for RM46 billion (69.7%) of total foreign investments approved in the manufacturing sector for 2022.

Critical Domestic Players

While FDI constituted three-quarters of the investments into the manufacturing sector in 2022, domestic direct investment (DDI) also played a critical role in contributing to Malaysia’s economic growth.

In 2022, DDI in the manufacturing sector was worth RM18.3 billion spread almost evenly for new projects and expansion/diversification projects. The three industries that attracted the most DDI were rubber products (including rubber gloves) at RM3.2 billion, followed by M&E (RM3.1 billion), and food manufacturing (RM2.1 billion). These industries made up 46.4% of total approved domestic investments. This was followed by the chemicals and chemical products (RM1.6 billion); transport equipment (RM1.4 billion); E&E (RM1.4 billion); basic metal products (RM1.1 billion); fabricated metal products (RM900 million); plastic products (RM800 million); and textiles and textile products (RM500 million) industries.

Adopting the Triple Helix of Innovation in the Electrical and Electronics (E&E) Industry

The triple helix model of innovation involves collaborative efforts between academia, industry, and government to boost economic and social development through R&D. Coined by Henry Etzkowitz and Loet Leydesdorf in the 1990s, this approach is now a vital policy tool for fostering innovation and economic growth worldwide.

To boost Malaysia’s E&E industry, the Economic Council created ‘Collaborative Research in Engineering, Science and Technology (CREST)’ in 2012. This platform, following the triple helix model, fosters academia, industry, and government collaborations in R&D for innovation and economic development.

CREST propels industry-focused R&D for Malaysia’s E&E NKEA. EPU, MITI, and MIDA coordinate CREST, offering grants and fostering collaborations. The platform connects project leaders, overseen by a Board chaired by MIDA’s CEO, Yang Berbahagia Datuk Wira Arham Abdul Rahman.

MIDA drives CREST’s success through its industry network, identifying vital R&D for E&E. It aligns funding with industry needs, promoting collaborations among local and foreign players and university researchers. Such collaborative R&D projects benefit MNCs, SMEs, and startups, contributing to positive E&E industry development.

The world’s first
AI-enabled stethoscope

AI assisted system for
RFID antenna design

The GaN-on-GaN programme,
the first LED integrated facility
in Malaysia which has attracted
FDI worth RM4.88 billion
and DDI of RM15 million

CREST’s R&D initiatives have enabled MIDA to attract local investors. As per a PwC study, CREST has completed 129 successful R&D projects spanning seven key E&E technology areas: advanced materials, autonomous vehicles, embedded systems, IC design, smart manufacturing, opto-electronics, and more. Among these, 100 projects are at Technology Readiness Levels (TRL) 3-6, with level 3 involving effective R&D and validation, and level 6 requiring prototype production and simulation-based demonstration.

Beyond facilitating industry R&D collaborations, CREST has nurtured skilled local talents in E&E technology. Many of these talents have found positions in E&E companies, highlighting the success of the triple helix model in boosting graduate employability.

MIDA envisions CREST’s triple helix model expanding to other industries, driving innovation through collaborations with foreign institutions like CETIM and Interuniversity Microelectronics Centre, as well as local partners.

MIDA will continue its efforts to facilitate these collaborations, in harmony with the country’s aspirations and guided by NIAs and ESG practices.

Triple Helix Model Elevates Employability

From 2012 to 2020, collaborative R&D programmes produced:

Master’s graduates

PhD graduates

Approximately half of the graduates were subsequently employed by the E&E industry. The others pursued interests in the academic sector, R&D and other industries.

Ensuring Malaysia’s Food Security Well into the Future

Malaysia prioritises food security within its commitment to the UN’s SDGs. Global food demand is projected to increase substantially. Post-COVID-19, most of the governments worldwide are increasing trade barriers for food security while emphasising domestic social security amid economic slowdowns.

Ranked 41st on the 2022 Global Food Security Index, Malaysia heavily relies on food imports and has lower agricultural productivity. Imports of agricultural goods exceeded exports in 2022. Shortages in items like chicken and eggs compound food security concerns. Limited fertilisers and agricultural supplies due to global conflicts and climate effects further contribute.

Historically focused on cash crop exports, Malaysia’s agricultural sector faces challenges like land scarcity and low technology adoption. The National Food Security Framework aims to improve food availability, accessibility, utilisation, and sustainability through policy analysis and coordination, incorporating technologies like automation and AI.

Enhancing agriculture through ‘smart farming’ and reclaiming abandoned land are priorities. Government collaboration with approved companies in agriculture and food manufacturing drives modernisation and fosters new entrepreneurs, strengthening Malaysia’s food security strategy.

Relevant Agencies Rally Support

  1. Agrofood financing scheme with low-interest rate for agrifood entrepreneurs to increase production by Bank Negara Malaysia.
  2. Agrovest investment programme for agriculture startups by Agrobank.
  3. Funding assistance for smallholder farmers by Khazanah Nasional.
  4. Digital Agtech programmes for smallholders’ farmers by MDEC.
  5. Agrifood SMEs to undertake automation and digitalisation through Skim Jaminan Pembiayaan Perniagaan Berhad.
  6. Ministry of Agriculture and Food Security (MAFS) extending tax facilitation for the production of agrifood and controlled environment agriculture activities.
  7. Automated Capital Allowance for agriculture-based companies.
  8. Bionexus status facilitation by Bioeconomy Corporation.


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


  • 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