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Taking Malaysia’s Manufacturing Sector to The Next Level: The Next Steps – Sarojini Ganesan

30 November 2022

Sarojini Ganesan, Deputy Director of Advanced Technology and R&D Division, Malaysian Investment Development Authority (MIDA)

This article features the main highlights from Sarojini Ganesan’s presentation at TM One’s Leap Forward Manufacturing 2022 event, where she talks about MIDA and the government’s role in supporting the manufacturing industry’s journey towards digitalisation. Sarojini is the Deputy Director of the Advanced Technology and Research and Development (R&D) Division of the Malaysian Investment Development Authority (MIDA).

Industry4WRD is Charting the Path for Malaysia’s Manufacturing Industry and Related Services

Working under the Ministry of International Trade and Industry (MITI), MIDA positions itself as the government’s principal agency for promoting foreign and domestic investment and development. MIDA acts as the first point of contact for businesses to invest in the Malaysian manufacturing industry and relevant service sectors, and is responsible for planning and recommending the right policies and strategies for industrial development in Malaysia to MITI.

In 2021, MIDA brought in RM306.5 billion in overall investments.  This represented an 83.1% increase when compared to investments made in 20201.

As investors roll in, MIDA partners with them step-by-step to evaluate, approve, and oversee the implementation and post-investment processes of their projects to ensure a smooth sailing business process.

Over the past few years, the Malaysian government has been encouraging the growth of a technologically smart nation. To stay aligned with this goal, Malaysia’s manufacturing industry and services sector are now guided by a framework set by the national policy – Industry4WRD.

Launched during the Fourth Industrial Revolution (4IR) in 2018, this policy aims to integrate 11 key IT services or ‘pillars’ into manufacturing operations to achieve smarter, systematic, and resilient technological advancement. These pillars include:

- Big Data Analytics- System Integration
- Cloud Computing- Additive Manufacturing
- Augmented / Virtual / Mixed Reality- Simulation
- Cybersecurity- Internet of Things (IoT)
- Artificial Intelligence- Autonomous Robots
- Advanced Materials

Tech adoption by our manufacturing industry will strengthen the industry’s growth and productivity while enhancing Malaysia’s global competitiveness. Gradually, tech integration will generate job opportunities for local labour and as a result, our industries will be able to manage greater volumes of investments in the near future.

To accelerate efforts in strengthening the industry’s growth through tech integration, MIDA works hand-in-hand with TM One in its’ Industry4WRD High Speed Broad Band (HSBB) initiative. The initiative has provided 37 industrial areas across the nation with 1GBps high-speed broadband, providing network infrastructures for businesses to adopt 4IR technologies. This reflects a shared commitment between MIDA and TM One in supporting the adoption of IR4.0 tech and making it more accessible for manufacturers, with the common goal of elevating the manufacturing industry through digitalisation and connectivity.

Further building on the Industry4WRD initiative, the Malaysian government has since developed two additional policies to further drive the digitalisation of the nation:

  • MyDIGITAL Blueprint symbolises the government's aspirations of transforming Malaysia into a regional example of a digitally-driven and high-income nation by charting the contribution of digitalisation to the country.
  • National 4IR policy complements the MyDIGITAL blueprint with a broader approach to transforming the development of the nation’s socioeconomic sector by championing the ethical usage of advanced technologies.

MIDA fully abides by these policies, providing the means and resources to guide businesses and manufacturers on their journey to digitalise their operations aligning to these government initiatives.

Driving the Revolution of Digitalisation Through Government Initiatives

With the numerous policies set, it is clear that the Malaysian government is on the path of digitalising the nation. In accelerating this journey, several incentives have been set up to support the digitalisation of the manufacturing industry:

1. Industry4WRD Readiness Assessment (RA) Programme

A key initiative is the Industry4WRD Readiness Assessment (RA) Programme, aimed at providing manufacturers and related businesses access to trained assessors to help them understand their own readiness for digital transformation and get recommendations to kick-start their journey.

This assessment criteria focusses on three shift factors: Process, People, and Technology.

  • The ‘People’ shift takes 20% of the overall priority, focusing on the people involved in the workforce by enforcing suitable strategies, and upgrading their skills and talent.
  • The ‘Process’ shift hones in on the management system of the business (I.e., Operations, supply chain, and product lifecycle), taking up 30% of the priority. This is to create a favourable business environment and encourage frictionless public-private partnerships.
  • The ‘Technology’ shift prioritises the application of intelligent and automated tech to compete with global manufacturers, taking up the remaining 50% of focused criteria.

2. Industry4WRD Intervention Fund

Businesses can also rest easy with the establishment of the Industry4WRD Intervention Fund, a financial support facility to ensure that Malaysian Small and Medium Enterprises (SMEs) within manufacturing and related sectors are progressing along with their larger counterparts.

Applications for these funds are managed by MIDA and are important for SMEs to implement any intervention projects and improvement plans as recommended by a report from the RA mentioned previously. Eligible applications will receive an upfront grant (30%) while the remaining funds can be reimbursed along the way, all of which are approved by MIDA.

3. Biz4WRD Platform

Further supporting the digital transformation of businesses, MITI launched the Biz4WRD Platform: a collaborative platform to connect, learn, and encourage discussions among companies who are on their digitalisation journeys.

This platform also acts as a repository as it provides businesses with resources pertaining to the right tech and services for 4IR. 

4. Automation Capital Allowance (ACA)

The government also launched the Automation Capital Allowance (Automation CA) incentive while announcing the National Budget in 2015. This incentive was released through a collaboration with the Standard and Industrial Research Institute of Malaysia (SIRIM) who manages the technical verification of companies while MIDA manages the non-technical verification.

Promoted as the key to driving automation and increasing productivity in the manufacturing industry, this incentive encourages manufacturing companies to get involved in innovative, productive, and automotive initiatives, and for MIDA to assist in reducing the technological gap among industry players by providing assistance to businesses in need.

There are two categories to this initiative:

  • Category 1:  involves labour intensive industries (I.e., rubber, plastic, wood, furniture and textile products). Applicants are eligible to receive an ACA of 200% on the first RM4 million expenditure incurred within 8 years of assessment (between 2015 – 2023). Expenses incurred refers to plant and machinery that has been purchased and used for the business.
  • Category 2:  involved other industries that do not qualify under Category 1. Terms are similar to Category 1, with a lower ACA of 200% on the first RM 2 million expenditure.

Entering the Digitalisation Era for Other Relevant Sectors

Aside from formal government initiatives, MIDA is also spearheading several other facilitations related to 4IR:

Supply Chain Development: MIDA collaborates with other anchor companies to develop local suppliers and potential vendors for the adoption of 4IR technologies at scale across the supply chain.

Industry4WRD Centres of Excellence: This initiative is built in tandem with R&D centres from selected local institutes such as University of Malaya (UM), Universiti Putra Malaysia (UPM) and International Islamic University of Malaysia (IIUM), among others. This initiative provides access to professional industrial consultants and researchers in guiding businesses through technical insights and expertise.

Artificial Intelligence for SMEs (AI4S):  The coming together of MIDA, the Malaysian Productivity Corporation (MPC), and Intel Malaysia resulted in the AI4S initiative, aimed towards empowering 100 potential SMEs by providing the opportunity to learn and explore AI usage for innovation within business operations.

Achieving the Status of a High-Income and Technologically Advanced Nation with the National Investment Aspirations

With MIDA’s core purpose being to attract maximum value investments for both investors and the nation, our policies and incentives are designed to help propel Malaysia towards a high-income and technologically advanced future. To guide the direction and selection of policy and incentive implementation against five National Investment Aspirations:

  • To increase local economic complexity
  • Create high value job opportunities:
  • Extend domestic linkages
  • Develop new and existing clusters
  • Improve inclusivity

With each step taken in these aspirational directions, MIDA is committed to providing the right type of support in helping manufacturers and business practitioners alike, going hand-in-hand towards preparing Malaysia for a digitalised, economy.

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