What’s in store for the E&E industry - MIDA | Malaysian Investment Development Authority
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What’s in store for the E&E industry

What’s in store for the E&E industry

02 Aug 2023

MALAYSIA has continuously demonstrated its strength as a leader in the manufacturing and electrical and electronics (E&E) industry in South-East Asia as it has long been the backbone of the country’s economy.

In the first quarter of 2023, the country’s overall economy expanded by 5.6% (compared with last year’s 4.8% growth), outperforming regional growth rates such as those of Indonesia (5%), China (4.5%), and Vietnam (3.3%).

This growth performance, along with the government’s whole-year gross domestic product (GDP) forecast of 4% to 5% as recorded by the Ministry of Finance, underscores the potential of the country’s manufacturing sector.

This continued resilience can be attributed to the broad-based expansion that has been happening across all sectors, especially in services and manufacturing, which grew by 7.3% and 3.2% respectively as a result of 1,265 approved projects that are expected to generate 23,977 new job opportunities.

With investments and exports being vital components for our country’s GDP, the government remains confident in achieving its GDP growth forecast of 4% to 5% for 2023.

In 2022, the E&E industry was identified as a pivotal industry in determining the growth rate of the country’s economic conditions, when E&E products accounted for 38% of Malaysia’s merchandise exports and experienced a remarkable 30% year-on-year growth.

This surge was due to the robust global demand for semiconductors, driven by technological trends such as the rollout of 5G, cloud computing, and the implementation of Internet-of-Things (IoT).

Within the same year, the amount of integrated circuits that were exported grew by 33%, while the exports of parts for integrated circuits soared by 120%, collectively accounting for 58% of Malaysia’s total E&E product exports.

However, it is important to acknowledge these results were amid the volatility that the global electronics manufacturing industry faced during the second half of 2022 due to weakening economic conditions in the United States, European Union, and China.

Moving forward, I am optimistic that the E&E segment will remain as a driving force for growth within the manufacturing sector.

With an 18% growth in 2021 and an impressive 30% growth in 2022, the E&E segment has been expanding significantly in recent years as the country has successfully fostered an active ecosystem for E&E manufacturing, attracting substantial investments. In 2021, the E&E industry recorded investments amounting to RM148bil, and from January to September 2022, 83 E&E projects with investments were approved, accumulating its total value to RM22.5bil.

Notably, E&E products contributed 39.8% (RM57.41bil) of total exports during this period, and according to the 12th Malaysia Plan, the E&E industry is expected to contribute a total of RM120bil to the GDP by 2025.

A vital component of the E&E sector is the semiconductor industry, which in itself is projected to reach US$1 trillion (RM4.5 trillion) in global revenue in 2023.

This industry plays a key role in enabling various technological applications, such as IoT, medical devices, industrial automation, transportation systems, aerospace technology, and renewable energy solutions, among others.

In recent years, multinational corporations have been upgrading their semiconductor operations by establishing integrated manufacturing centres that can combine manufacturing processes with those of research and development, product design and development, as well as marketing, and distribution.

This shows that the country is striving to establish a robust and well-developed manufacturing sector within the country by getting the necessary industrial infrastructure to support its growth, which will in turn attract both local and international businesses. As the global economic landscape evolves, developers in the country must adapt to develop more innovative industrial parks and facilities that can effectively cater to the needs of modern manufacturing companies.

I believe that fully integrated industrial parks incorporating fourth industrial revolution technologies to improve production efficiencies will become essential in the years to come.

Additionally, facilities that support sustainability principles, fostering clean, healthy, and productive social and environmental ecosystems, will become the norm as the sector continues to evolve.

In the near future, the prospects of the industrial infrastructure will transition into a new model, striking a balance between efficient and productive output and environmentally and socially conducive elements.

The good news is that this transition aligns with global initiatives aimed at meeting the increasing demand for consumer goods while safeguarding the well-being of our social systems and natural resources.

In conclusion, the manufacturing sector, particularly the E&E industry, has demonstrated resilience and potential in driving the country’s economic growth.

Despite the challenges posed by global economic conditions, the country remains committed to fostering a conducive environment for the growth of the E&E sector. As we navigate the evolving landscape, Malaysia will continue to adapt and invest in the necessary infrastructure, technologies, and talent to position itself as a leading player in the global manufacturing and E&E industry.

Jason Tham Kien Wai is managing director of Powerwell Holdings Bhd. The views expressed here are the writer’s own.

Source: The Star