Innovation, Key to Profitability - MIDA | Malaysian Investment Development Authority
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Innovation, Key to Profitability

>Manufacturing>Innovation, Key to Profitability

Innovation, Key to Profitability

Qualities of innovative nature are essential for every country. This is important to maintain sustainability by making a continuous improvement that opens up to all kind of opportunities for potential new market and products/activities. Based on the 2019 Global Innovation Index, released by The World Intellectual Property Organisation (WIPO), it is found that Asia’s innovation index is increasing despite experiencing an economic slowdown.

Malaysia realises the importance of technology enhancement to foster the country’s socio-economic development by developing its technological resources and innovation initiatives through vivid interactions between the three main stakeholders, i.e. academia, industry and the government. This strategy called “The Triple Helix’ initiated by Etzkowitz (1993) and Etzkowitz and Leydesdorff (1995) is not only able to grow innovation but also able to increase the efficiency of manufacturing processes, improving the quality of manufactured products and services which directly benefiting the overall national economy.

The Smart Manufacturing concept has now become a global norm. A lot of changes are occurring worldwide, and people are discussing the challenges associated with this new revolution where automation and connectivity will impact the way businesses are operated today.

Malaysia, being one of the strongest producers of machinery and equipment (M&E) in ASEAN, particularly in the electrical and electronics (E&E) industry, has taken this change as a competitive advantage. Companies involved in this segment continue to strengthen its position to innovate, develop and produce higher value-added products. Its cross-cutting linkages with the primary, manufacturing and services sector have proven to be the key to accelerate Malaysia’s economic growth.

To date, there are more than 1,900 implemented projects in M&E sector in Malaysia, cutting across multiple fields such as specialised M&E for specific industries, general industrial M&E, modules and industrial parts, power generation and remanufacturing of M&E with total investmentsas at 2018, amounted to RM29.6 billion and total employment of 114,341.

Out of this number, Malaysia has more than 120 major companies that are fully capable of catering for higher applications, mainly in these industries, i.e. advanced fully-automated handling systems, robotics and factory automation systems. Some outstanding players include Vitrox, Pentamaster, UMS, Multitest, Advantest, SRM and Muehlbauer have achieved international recognition and making Malaysia a vital supply chain.

Also, MIDA noted that Malaysia’s engineering supporting industry (ESI) had proven itself a dynamic and resilient one, fully capable of providing the vital support to enhance the growth of the manufacturing and services sectors’ needs. In this regard, ESI can be regarded as the ‘mother’ of all other industries, as it serves as the fundamental base for their growth. ESI has continued to grow in tandem with the country’s economic development. Malaysia is recognised globally for its capabilities, consistent production quality, and fast and reliable delivery across a diverse range of engineering activities, especially when it comes to precision machining and fabrication. A total of 1,488 projects in this sector have been implemented and these have created 98,578 jobs.

In recent years, interests in both these segments are rising. This has provided extensive opportunities for the growth of innovation and R&D within the country. It is also an indicator that the M&E sector is growing more towards high value-added and high technology M&E.

Therefore, Malaysia needs to ensure the innovation initiatives for all industries, not just M&E, are effectively stimulated between academia, industry players and the government to drive this agenda by having pro-development economic policies for the country moving forward.

To address the issue on innovation, MIDA has recently proposed the establishment of an Innovation Manufacturing Alliance (IMA) concept. The IMA is expected to serve as an umbrella providing a dynamic Public-Private Innovation Network (PPIN) environment to manage the multi-disciplinary Innovation Centre (IC) from a diverse range of background. The anticipated role of IMA encompasses:

  • Umbrella entity managing the ICs
  • Streamlining R&D activity between each ICs
  • United voice for each ICs to the Government
  • Enhance and facilitate business access to leading edge technology and expertise
  • Data repository for all ICs established in Malaysia

The first proposed project will be an initiative between MIDA and SIRIM to establish a Machinery Manufacturing Innovation Centre (MMIC). The Centre aims to build a strong foundation of high technology and high value-added of M&E manufacturing, including ESI through innovation. MMIC main focus areas will include:

R&D, Innovation and Conformity Assessment (RDI & CA)

  • To bridge the gap from research to industrial commercialisation of high technology across the supply chain
  • To escalate innovation among industry players, especially M&Es
  • To support sustainable product development

Smart Manufacturing

  • To accelerate the adoption of the industry through the national Industry4WRD blueprint

Talent Development

  • Enhance the capabilities of the existing workforce by supporting reskilling and upskilling

All these proposed programmes under MMIC will be tailored according to the three focus areas above alongside with the industries’ demands. MMIC is designed in such a way that it shall not compete with the industry but will assist the industry in moving forward in moving up their value chain. MMIC will be leveraging on SIRIM’s existing facilities that have been positioned to embrace the Blue Ocean strategy by creating uncontested market space to capture new market demand.

The essence of MMIC is to become the key focal point in addressing the M&E sector’s challenges identified through various engagement sessions with the industry players and associations. MMIC will then link the industry to solution providers to serve M&E, E&E, Chemical, Medical Device, Aerospace, Oil and Gas, Rail and Food and Beverages (F&B) industries.

MIDA aspires that the proposed MMIC will attract more companies, particularly the local players to undertake innovation which will forge a way for them to penetrate the global market and to keep up with the worldwide industry trend. The right investments for innovation and technology will develop and spur growth in the whole technology sector. Hence, the proposed private-public partnership through MMIC will not only provide Malaysia with the extensiveness of vast opportunities for technology enhancement and innovation but also a vote of confidence in the country’s economy.