By Charles F Moreira, Editor
The 12th Malaysia Plan notes the setback which Malaysia’s economy has suffered due to the COVID-19 pandemic and in Part 1, we focused upon those aspects which 12th MP aims to address – namely issues and challenges which Malaysia faces such as low productivity especially amongst micro, small and medium enterprises (MSMEs), low quality of investment and low gains from global value chain participation.
In Part 2, we will look at those measures under the 12th MP to address these issues – namely Game Changer II which aims to catalyse strategic and high-impact industries to boost economic growth and Game Changer III – namely to transform MSMEs into the new driver of growth.
This will involve shifting the services, manufacturing, agriculture, mining and construction sectors towards higher value-added activities, supported by driving productivity growth in moving up the value chain, strengthening the financial capability of industry players as well as scaling up successful Productivity Nexus and green practices to enhance their business competitiveness.
Focus will be be placed upon accelerating the development of strategic and high impact industries, such as by driving the electrical and electronics (E&E) industry up the value-chain through design & development (D&D), as well as front-end manufacturing activities. Efforts will also be made to transform the aerospace industry by driving it towards high-end, technology-driven manufacturing.
The 12th MP also aims to attract multinational companies to make Malaysia their global services (GS) hub, drive the development of high value-added products and services in the biomass industry, revive the tourism industry by strengthening brand positioning and aggressive promotion, intensify smart farming activities through the adoption of modern technologies, and to promote greater private sector investments in driving industrial growth.
Efforts will aim to promote investments in adoption of digitalisation and advanced technologies, governance reforms, talent upskilling, high-quality employment opportunities, innovation and R&D to transform these industries into producers of high value-added products and services, to expand the global market and to attract quality investments.
Since MSMEs are key in promoting entrepreneurship and economic growth of the country, their transformation will increase the contribution Malaysia’s gross domestic product (GDP) and exports; enhance their competitiveness, enhance the capabilities of Bumiputera entrepreneurs and address the low level of technology adoption.
This will be achieved by enhancing the MSME’s digital adoption and competitiveness, as well as to develop a supportive ecosystem encompassing the following initiatives – namely:-
- Introduce a national MSMEs digitalisation roadmap.
- Use community Internet centres and village Internet centres as one-strop centres to drive digitalisation.
- Develop a unified portal for entrepreneurs to obtain essential information on financing resources and advisory services.
- Shift more more MSMEs from a domestic to a global market focus.
- Implement a second chance intervention programme to assist failed entrepreneurs and mitigate the
- risk of bankruptcy.
- Appoint a commissioner to assist small businesses in securing payments on time and to resolve payment disputes.
- Leverage the cooperative movement in entrepreneur development.
The above initiatives aim to increase MSMEs’ contribution to GDP to 45%, increase their total exports to 25%, for their average annual labour-productivity growth to be 3.5%, for 90% of MSMEs’ business operations to be digitalised, and to have more globally competitive MSMEs.
In the bigger picture, the 12th MP aims to increase average labour productivity growth in manufacturing by 4.3%, in services by 3.6% and in agriculture by 2.5%; achieve RM1,075.6 billion worth of total exports in manufacturing, RM171.2 billion in services and RM90.6 billion in agriculture; to increase utilisation of selected industrial estates by 15% and to achieve 80% utilisation of selected food production areas; and to improve governance and policy through a New Industrial Masterplan, a New Services Sector Blueprint, a National Agrofood Policy 2021 – 2023 and a National Agricommodity Policy 2021 – 2030.
Up the value-chain
The modernisation and digitalisation of manufacturing operations to achieve higher productivity will involve intensified implementation of the Industry4WRD National Policy on Industry 4.0 (2018 to 2025), particularly in the development of local system integrator capabilities to provide innovative solutions to the digitalisation of production processes.
Also, the implementation of Robotics Awareness Programme (RAP) will be enhanced to enable more companies to adopt Industry 4.0 (4IR) related technologies in their productivity improvement.
Concerted efforts will also be made to ensure higher technology adoption to boost efficiency and productivity across the services sector.
Modern services subsectors, such as financial, professional and private healthcare services, will adopt 4IR technologies to boost efficiency and effectiveness in service delivery.
The wholesale and retail subsector, will emphasise modernisation of currently mostly manual business activities. Large scale retailers will be encouraged to invest in cost-effective systems which improve their customer experience, including self-check-out, and pick and pack.
Meanwhile, hawkers and petty traders will be encouraged to adopt multichannel payment gateways, including e-payment and e-wallet, in the modernisation of their business.
Digitalisation in logistics services is essential to increase productivity and efficiency as well as deliver quality services. The industry will be encouraged to digitalise its operations and connect to an integrated platform in establishing a smart and highly efficient supply chain, so as to facilitate seamless information sharing and improve cost efficiency, which will eventually benefit end users and drive competitiveness of the logistics industry.
In keeping up with increasing demand from eCommerce channels and meeting expectations of consumers, logistics services providers will be encouraged to increase investment in warehousing and distribution centres to enhance efficiency. This will help accelerate development of the advanced supply chain.
Digital technologies will help optimise the operation and production process in the agriculture, in order to minimise costs, reduce processing time and optimise the usage of resources.
Farmers will be encouraged to adopt digital applications in farm and fishery management practices, production and marketing, whilst the use of Big Data Analytics (BDA) will enable farmers to access granular data, such as on agricultural land, farm inputs, incentives and financial assistance as well as market demand in making smart decisions on production, whilst the use of sonar-based fish detection systems will enable efficient marine fishery activities.
Farmers and agricultural cooperatives and associations will be encouraged to leverage eCommerce platforms to improve marketing of agriculture produce, thus reducing over dependency on intermediaries.
Also, these platforms will enable the outsourcing of farming machinery and equipment services to optimise resources and achieve cost efficiency.
The adoption of technology in agriculture will also minimise risk from health-related crises on farms to ensure uninterrupted production.
More high-value added activities
The manufacturing sector will focus on producing high value-added and complex products, especially in E&E, chemical and chemical products, machinery and equipment (M&E) and aerospace. Meanwhile, avenues for growth along the value chain in the shipbuilding, pharmaceutical and medical devices will be explored.
Intensification of high value-added activities in the automotive industry will be supported through the implementation of the National Automotive Policy (NAP) 2020.
The manufacturing sector will also focus on developing and incorporating key technologies, including Internet of Things (IoT), Artificial Intelligence (AI), sensor fusion as well as deep and machine learning into manufacturing products.
The manufacturing sector also aims to increase the production of advanced critical parts and components locally to reduce imports, which includes using robotics application to cater for increasing demand.
Meanwhile, technological innovations in the services sector are changing the way businesses operate and deliver services. In ensuring continued recovery and restoration of the economy, the modern services subsector will focus on accelerating high value-added activities, adapting technological changes, improving labour productivity and increasing export.
These efforts will lead to a high quality and knowledge-based services sector. For the professional services subsector, local SMPPs will be encouraged to provide high value-added services through the adoption of 4IR technology such as BDA, AI and IoT.
This effort will transform service delivery and provide better customer services and complex products. In this regard, a comprehensive roadmap for all professional services to embrace 4IR will be developed.
Meanwhile, measures will be undertaken to increase the adoption of BDA and strengthen the provision of holistic end-to-end care in the private healthcare. This effort will enable real time analysis and provide high quality healthcare services. Digital innovation in healthcare delivery and solutions will ensure better quality of healthcare services including aged care services.
The Industrial Collaboration Programme (ICP), a component of the Government Procurement policy will be promoted as a strategic tool to support the effort in moving up the value chain through high technology uptakes and innovation strategies. In this regard, implementation of the ICP will be further strengthened to ensure more significant involvement of the local companies in the economic development.
This initiative will drive creation of higher value local content and jobs, enabling technology transfer, promoting innovation as well as greater regional and global market penetration through strategic partnership.
In the agriculture sector, efforts to increase high value-added products will be intensified in the upstream and midstream activities by producing premium agricultural products, high-yielding crop varieties and breeds as well as internationally accepted by-products.
Smart farming and precision agriculture technologies will be adopted on a wider scale for both agrofood and agricommodity subsectors. These initiatives will include adopting high-tech farming methods utilising BDA, AI and IoT as well as precision tools, such as drones, robotics and sensors. Focus will also be given to developing and customising agricultural machineries and equipment to suit local conditions, such as terrain features, weather and crop requirements.
In addition, smart indoor vertical farming or plant factory will be expanded by leveraging on existing Permanent Food Production Parks (TKPM), idle land and abandoned buildings. Farmers will be encouraged to adopt organic farming practices in meeting increasing demand for organic products and generating higher income.
In marine fishery, agricultural cooperatives and associations will be encouraged to venture into deep sea and high sea fishing utilising modern vessels and innovative equipment to enhance competitiveness as well as promote a sustainable fishing industry.
Technology in New Product Development
A more targeted approach will be taken to move the economic sectors up the value chain, producing high value, diverse and complex products through technology adoption. The establishment of the Research Management Unit (RMU) will enhance management, facilitation and monitoring of research activities by industry and research institutions.
Experimental research and commercialisation will be prioritised to encourage more demand-driven R&D activities. In addition, efforts will be intensified to strengthen technical cooperation in product innovation among local and international research centres, higher education institutions (HEIs) and the private sector.
Efforts will be intensified to embrace future industries in producing high value products and enable continuous productivity improvements in the manufacturing sector. In this regard, a centre of excellence for future industries will be established to coordinate and integrate best practices and research as well as provide support and training. The centre will establish strategic collaboration to optimise resources in conducting R&D&C&I activities.
In the agriculture sector, research will focus on developing new crop varieties, livestock and fish breeds, methods of planting and niche export products, as well as ensuring affordable, healthy and safe agriculture produce. Research will be intensified through greater collaboration between local and international research institutions.
In accelerating the development of the private healthcare subsector under the services sector, a more coordinated research in T&CM will be conducted through private sector led collaboration with the research institutions. The research will focus on high-value and complex products as well as quality control and safety, utilising advanced medical technology along the value chain.
Skills and capability of the workforce will be uplifted to enable all economic sectors to move up the value chain.
In the agriculture sector, the training curricula and modules will be reviewed to produce certified and highly knowledgeable agriculturists to meet current and future demand. A professional body will be established to recognise trained and experienced farmers, farm experts, agricultural technicians and scientists, as professional agriculturists to elevate the standing, image and recognition of the agriculture sector workforce.
Manufacturing industries will be encouraged to collaborate with skills training institutions in designing customised training programmes to accommodate their respective needs in moving up the value chain.
Efforts to uplift talent will also focus on expanding the provision of micro-credentials programmes to meet the current reskilling and future skills requirements. Under these programmes, workers will be trained to acquire additional skills set, such as software coding or data analytics modelling beyond traditional disciplines to meet market demand.
The shift to a knowledge-based services sector requires talent in this sector to be equipped with the latest professional and practical skills. In this regard, a new Services Sector Blueprint will provide the strategies for talent development programmes in the services sector.
A holistic blueprint for business and professional services will also be formulated to guide the upskilling of talent with automation tools and advanced technology in embracing 4IR.
In Part 3, we will look more closely at initiatives to accelerate the development of strategic and high-impact industries.