Chin Tong: Malaysia still depends on low-skilled foreign workers, resistant to adopting automation in semiconductor industry - MIDA | Malaysian Investment Development Authority
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Chin Tong: Malaysia still depends on low-skilled foreign workers, resistant to adopting automation in semiconductor industry

Chin Tong: Malaysia still depends on low-skilled foreign workers, resistant to adopting automation in semiconductor industry

23 Dec 2023

Many Malaysian companies, especially small and medium enterprises, continue to depend on low-skilled foreign workers and are resistant to adopting automation, said Deputy Minister of Investment, Trade and Industry Liew Chin Tong.

In an opinion piece published by the East Asia Forum yesterday, Liew said that some are sceptical about Malaysia’s capacity to manufacture advanced automated machines or precision tools comparable to those in Germany or Japan.

“Many do not believe that Malaysia has the capability to produce automated machines or precision tools at the level of Germany or Japan.

“But the global semiconductor industry in Malaysia has also created a number of successful local companies specialising in automation solutions, such as Greatech, Pentamaster and Walta,” Liew said.

He said these companies have garnered recognition for their adept handling of precision tooling and engineering processes.

Taking the collaboration with ViTrox as an example, Liew said the key player in automated optical inspection systems tailored for semiconductors which enhances Malaysia’s capabilities in the industry.

He then went on to say that salary disparities are driving skilled workers, particularly engineers and technicians, to seek employment across the border in Singapore where compensation is more lucrative.

“The semiconductor industry often complains that there is not enough talent in Malaysia. But Malaysia ultimately has a salary problem, not a talent problem.

“Many of Malaysia’s skilled workers, such as engineers and technicians, pursue employment in Singapore where the pay is better,” he said.

Liew explained that the problem lies in a systemic challenge of low pay, creating a detrimental cycle that hampers the creation of skilled jobs.

In Malaysia’s context, he said the median monthly wage in manufacturing stands at RM2,205, notably lower than the overall median monthly wage of RM2,424.

Citing a 2022 report by the Board of Engineers Malaysia, Liew said over a third of engineering graduates started with less than RM2,000 per month in 2021, with 90 per cent earning below RM3,000.

He said this amount of income is especially challenging for single adults in Kuala Lumpur.

He further added that the problem extends to the electrical and electronics sector, dissuading students from pursuing STEM education or careers.

Liew said Malaysia’s engineer-to-population ratio, at 1:170 in late 2022, falls short of the target 1:100 ratio.

“Those who decide to pursue STEM careers often end up pursuing other forms of employment to supplement their incomes, such as gig work.

“Many of Malaysia’s engineering graduates also choose to work in Singapore, where they can expect to make around S$2,800-S$3,400 (approximately RM9,750-RM11,840) per month as an entry-level engineer,” he added.

Admitting that this is a chicken-and-egg issue, he said Malaysia must prioritise increased investment in STEM education at all levels and enhance technical and vocational training to build a stronger talent pool.

He said that the solution revolves around improving the compensation for skilled workers, tackling persistent challenges like brain drain and underemployment in the sector.

He also said Malaysia should progressively develop more robust policy leadership through partnership with relevant parties.

“Beyond treating the semiconductor industry as an investment, Malaysia should gradually build up stronger policy leadership.

“With stronger collaboration among key stakeholders, including industry players, policy thinkers and the government, Malaysia can begin to think more strategically about the most interesting and important industry of our time,” he added.

Additionally, Liew said the National Industrial Master Plan 2030 (NIMP 2030) has unveiled an ambitious goal which is to double the median wage in the manufacturing sector from the current RM2,205 per month (2022) to RM4,510 per month by the year 2030.

Source: Malay Mail