THE manufacturing sector is expected to grow 5.1 per cent per year and contribute 22.5 per cent to the gross domestic product (GDP) and 18.2 per cent to total employment by 2020.
The growth would be mainly contributed by high-end manufacturing sub-sectors.
Last year, the manufacturing sector contributed 23 per cent to the GDP, 80.2 per cent to total gross exports and employed 16.5 per cent of the total workforce.
The government has identified sub-sectors with potential for high-end manufacturing such as aerospace, green technology, electrical and electronics (E&E) and medical devices.
These sub-sectors require moving up the value chain.
In the aerospace industry, the government has put in place key initiatives to make Malaysia the regional leader by 2030.
These initiatives include the National Aerospace Blueprint (2015-2030) and a new Entry Point Project (EPP) to make Malaysia the hub for aerospace original equipment manufacturers in Southeast Asia.
The EPP is targeted to contribute RM1.1 billion to gross national income (GNI), and create RM1.9 billion investments and 3,368 highly-skilled jobs by 2020.
Green technology, which is a new growth area, is expected to generate RM22.4 billion to GDP, RM28 billion worth of investments and create more than 144,000 jobs by 2020.
The National Green Technology Policy focuses on four pillars, namely energy, environment, economy and social.
The medical devices sub-sector produces mostly export-oriented equipment and has three general categories, namely rubber and latex products, general manufacturing of medical devices and products manufactured by foreign multinational corporations.
Malaysia remains the world’s leading producer of catheters and medical rubber gloves. The industry is expected to generate revenue of RM17.1 billion, RM11.4 billion in GNI and create 86,000 jobs by 2020.
Challenges in the manufacturing sector are stiff competition from low-cost producers such as China and Vietnam, and inefficiencies associated with cheap labour.