Malaysian Investment Development Authority (MIDA), the country’s investment promotion agency, has turned 50. Having driven Malaysia to be one of the most attractive profit centres in Asia, MIDA now stands at the cusp of a high income nation whose economy will be supported by a strong and smart manufacturing base and a manpower recognised for the high skills.
NST Business speaks with its chief executive officer Datuk Azman Mahmud on the outlook and challenges in maintaining the momentum in investor interest.
MALAYSIA recently launched the world’s first Digital Free Trade Zone (DFTZ), with the presence of Chinese billionaire and entrepreneur Jack Ma having rekindled interest in Malaysia’s investment ecosystem which has been recognised as one of the most attractive in the region over the decades.
The DFTZ positions Malaysia ahead of the e-commerce curve and fits in well with the country’s emphasis on smart manufacturing to drive innovation.
Manufacturing will continue to be a mainstay of the economy, although with the rapid changes in the landscape — the players, both large and small — will need to be continuously proactive, said Mida chief executive officer Datuk Azman Mahmud.
As in the past, manufacturing activities will continue to have a multiplier effect on activities and growth, he said.
“There is this impression that investment in manufacturing is not so exciting but it is this sector which has provided the biggest multiplier effect — industrial properties, job creation, transportation and logistics which have enabled increased consumer spending.”
From assembly-type manufacturing, the vista has now included smart manufacturing. With the Fourth Industrial Revolution (Industry 4.0), there would be more innovation to provide employment opportunities.
The manufacturing projects approved last year are expected to create employment opportunities for 64,120 people.
Major industries which require the most skilled manpower are transport equipment, electrical and electronics (E&E), fabricated metals, machinery and equipment, plastic products and non-metallic mineral products.
There will be job opportunities for plant maintenance supervisors, tool and die makers, machinists, information technology personnel, quality controllers, electricians and welders.
Azman, who has helmed the agency since early 2014, is pleased with the initiatives undertaken by some homegrown companies such as ViTrox and Tiong Nam Logistics Holdings, which have transitioned these players to positions of strength today.
“It is no longer a matter of choice for manufacturers out there. They have to switch to smart manufacturing, they have to improve their processes to more modern equipment, incorporating the Internet of Things applications,” he said in an interview.
Without technology, manufacturers will not be able to maximise production and efficiency.
Regionally, Singapore, Vietnam and Thailand have also announced their plans for Industry 4.0.
“It is a wake-up call for everybody, that you have to be on board.”
Azman has been travelling around the country and found that many have taken the step of not relying on manual operations.
“So, something is developing, things have changed as businesses recognise that this is a matter of survival,” he said, adding that a study is being undertaken on the future of manufacturing development in Malaysia.
On the multiplier effect, Azman said although manual jobs may decrease, there will be high-skill jobs to manage the smart machines, with the support of software engineers and developers.
“Machines talk to each other as data is being transferred and you need people to manage that, so new jobs will be created. There are some talks that with automation and robots, jobs will be replaced but people don’t talk about the new jobs to manage and maintain these robots.”
Mida is doing its part to get more of the smaller companies to generate their own resources instead of depending on the government for facilities. One of its recent moves was to identify those which can seek listing on Bursa Malaysia.
The agency, under the purview of the International Trade and Industry Ministry, is well-recognised for providing business opportunities and jobs — the spillover effects of investments — in the country.
Last year, a significant portion of approved investments by Mida was capital-intensive projects and 10 of them were worth at least RM1 billion each.
These were mainly petroleum products including petrochemicals, basic metal products, natural gas, E&E products, food manufacturing and transport equipment.
The substantial multiplier effect included forward and backward linkages, the development of supporting industries, the transfer of new technologies and research and development, the creation of employment opportunities, local sourcing, skills development, and the generation of foreign exchange earnings.
The shift in focus over the decades also saw the growth in the number of approved investments.
From agriculture and mining in the 1950s and import substitution in the 1960s, the economy shifted to export-oriented activities and labour-intensive industries in the 1980s before turning into heavy industries in the 1990s.
With the turn of the century, Malaysia also moved into high-technology industries within the first decade after economic corridors were set up.
The next natural move was innovation, and now the focus will be on achieving the high-income nation status by 2020.
Industrial estates, free-trade zones and licensed manufacturing warehouses were soon set up.
The move attracted top multinational corporations to Penang, including the “eight samurai” which are Advanced Micro Devices, Hewlett Packard (now Agilent Technologies), Clarion, National Semiconductor (now Fairchild), Hitachi (now Renesas), Litronix (now Osram Opto Semiconductor) and Robert Bosch.
From then, Mida embarked on aggressive promotions by setting up centres overseas.