KUALA LUMPUR (Oct 12): Increased participation of local companies in the electrical and electronics (E&E) industry value chain will further improve Malaysia’s trade performance and reduce the currency outflow moving forward.
Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed said more and more local companies had started their business after gaining technical expertise and know-how while serving multinational companies (MNCs).
“For the past 50 years, we have been successful in creating a comprehensive E&E ecosystem, particularly for front-end to back-end semiconductor manufacturing activities. A large number of MNCs have established their operations here, including industry giants such as Intel and ST Micro (STMicroelectronics).
“Malaysian companies, too, have been part and parcel of the industry, providing products and services required by MNCs and being very much part of the global value chain,” Mustapa said in his closing remarks at the virtual Malaysia National E&E Forum 2021 on Tuesday.
Mustapa said the exposure had allowed Malaysian players to identify emerging opportunities within the E&E value chain to create their own niche.
“Our domestic companies serve clients in the automotive, consumer, power management, industrial and medical device segments. They provide design and engineering services, customisable solutions ranging from integrated circuit (IC) design, engineering and testing, IC packaging, as well as manufacturing of modules, system devices and finished products,” he said.
However, Mustapa said, as highlighted in the recent World Bank’s Aiming High report, Malaysia needs to address several issues as the country makes the transition into a high-income country.
“These issues include a relatively slower rate of economic growth compared to many countries that achieved high-income status in recent decades.
“Malaysia has a lower share of employment in high-skilled jobs and higher levels of inequality compared to many other countries that have already graduated from middle-income status,” he said.
Compared to the Organisation for Economic Co-operation and Development (OECD) countries, Mustapa said Malaysia’s tax to gross domestic product (GDP) ratio is low, its social protection is insufficient, and it performs relatively poorly in terms of measures related to environmental management and corruption.
“Our priority is to build back better, to rebuild the Malaysian economy, to place Malaysia on a stronger economic footing and to build a more competitive economy. The global economy is experiencing material shifts in trade, services, travel, information and technology.
“In particular, global supply chains are reconfiguring with greater regionalisation and multi-shoring to support an increasing focus on resilience. Such reconfigurations present both challenges and opportunities for Malaysia, particularly in export-focused sectors such as the advanced E&E industry,” he said.
He said the 12th Malaysia Plan (12MP) will focus on high-potential industries like advanced E&E to drive the economy forward and create economic opportunities.
“E&E has been identified based on its prospects of generating high value-added activities and products, advanced technology adoption, research and development and innovation, high-skilled employment, as well as their contribution in achieving the green agenda.
“Our success in transforming the E&E sector is one of the major determinants of Malaysia achieving high-income status,” Mustapa added.
In the first eight months of 2021, Malaysia’s E&E product exports increased by 18.8% year-on-year to RM283 billion.