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Digitalisation boosts manufacturing productivity

Digitalisation boosts manufacturing productivity

20 Dec 2023

THE pivot towards digitalisation has become a keystone for robust industrialisation, economic growth and competitiveness. Malaysia has embraced this paradigm shift in its pursuit of economic excellence, as encapsulated in the New Industrial Master Plan 2030 (NIMP 2030).

This plan, a forward-looking industrial policy for the Manufacturing and Manufacturing-Related Services sectors, spanning seven years until 2030, sets a strategic course for the nation’s industrial development, highlights the country’s position and direction, and underscores the government’s pivotal role in shaping the economy.

NIMP 2030 delineates cross-cutting strategies to elevate Malaysia’s economic complexity, drive towards a digitally vibrant nation, champion Net Zero objectives, and underpin economic security and inclusivity.

Its core ambition is to position Malaysia as a hub of competitive industry marked by high economic complexity, a high-income and skilled workforce, and robust domestic linkages.

The strategies laid out in NIMP 2030 are designed to hasten technology adoption, pivot away from a low-skilled labour model, foster technological innovation, and accelerate government digitalisation and integration.

It focuses on transforming Malaysia into a vibrant digital hub, a transformation crucial to driving innovation, boosting productivity, and unlocking new avenues for economic growth.

Particular emphasis is on the digitalisation of Small and Medium Enterprises (SMEs).

By encouraging SMEs to adopt automation and technology and nurturing a local tech solution provider ecosystem, NIMP 2030 seeks to enhance the ease of doing business, contributing to greater direct domestic investments (DDIs).

This strategy is crucial in a postpandemic world where digitalisation efforts present a competitive edge and a survival imperative.


A Licensed Manufacturing Warehouse (LMW), defined under Section 65A of the Customs Act 1967, is a premises licensed for warehousing and manufacturing approved products, primarily catering to export-oriented industries.

LMWs are directly controlled by the Customs Department through documentation and are subject to all its rules and regulations.

The facility enables Customs duty exemption to all raw materials and components used directly in the manufacturing process of approved produce from the initial manufacturing stage until the finished product is finally packed and ready for export. With this facility, LMW licensees can import duty-free raw materials, equipment, or spare parts, subjected to a given limit by tariff codes.

LMW companies can also undertake various approved activities within their premises, including value-added activity, re-manufacturing, and serving as International Procurement Centres (IPCs) or Regional Distribution Centres (RDCs).

Manufacturers must fulfil criteria such as owning a Manufacturing Licence under The Industrial Co-ordination Act 1975 (ICA), adhering to the manufacturing interpretation of Section 2 (1) of the Customs Act 1967, and exporting more than 80 per cent of the total value of finished goods over 12 months.

LMWs catalyse export-oriented industries, enabling them to operate efficiently while reducing the tax burden on imported materials. This facility streamlines manufacturing and promotes compliance with Customs regulations.


The SMARTGPB system for the LMW goods clearance approval process exemplifies the intersection of policy, industry, and digital adoption.

Digitisation enhances efficiency by streamlining the application and compliance processes in obtaining approval. It reduces bureaucratic hurdles and red tape, making it easier for businesses to focus on innovation and growth.

The SMARTGPB system epitomises the Customs Department’s dedication to facilitating efficient and effective trade and business processes for manufacturers.

The Special Taskforce to Facilitate Business or Pemudah meeting at the end of 2021 agreed to implement a regulatory experiment project to facilitate the movement of goods for companies with LMW status.

Malaysia Productivity Corporation (MPC) facilitated the regulatory experimental project, working with the Customs Department headquarters and its branch in Seberang Jaya, Pulau Pinang, and the Malaysian Semiconductor Industry Association (MSIA).


The first phase of SMARTGPB implementation started in Penang in April last year. Until December, the Customs Department processed 1,620 applications, and 517 LMW companies in Penang registered through the system.

The system is expected to reach nationwide implementation in 2024 and by the end of December 2024, all LMW companies must obtain approvals through the system. The proliferation of the SMARTGPB system is expected to benefit more than 2,000 LMW status companies.

SMARTGPB reduces approval time for low-risk applications from three days to only one minute and medium to high-risk applications to 45 minutes processing time per application.

Within this regulatory experimentation period, the Customs Department processed 696 low-risk applications for immediate approval and 924 medium to high-risk applications requiring review and approval from the Officerin-Charge.

The expansion of SMARTGPB in Malaysia is projected to reduce RM139 million in compliance cost annually . Moving towards the green economy, this improvement is expected to reduce paper consumption by at least 12 million A4 paper annually.

Source: NST