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12MP: Significant Tech Automation Gaps Revealed (Part 3)

12MP: Significant Tech Automation Gaps Revealed (Part 3)
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By Charles F Moreira, Editor

In Part 2 of our article on the 12th Malaysia Plan (12th MP), we covered those measures under the 12th MP to address the 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, and the measures to transform MSMEs into the new driver of growth.

In this part, we will look more closely at initiatives to accelerate the development of strategic and high-impact industries.

During the 11th Malaysia Plan, measures undertaken to accelerate the momentum of economic growth have brought positive results with steady growth of a number of industries as well as MSMEs. However, several issues and challenges continue to hamper efforts to expedite the growth of these industries and MSMEs.

The unprecedented disruption from the COVID-19 pandemic has slowed down economic growth and affected the resilience of entrepreneurs and industries.

Moving forward, efforts will be undertaken to accelerate the development of strategic and high impact industries such as electrical and electronics (E&E), global services (GS), aerospace, creative, tourism, halal, smart farming and biomass, as well as to enhance the capacity and capability of entrepreneurs as well as enterprises, so as to position Malaysia as a key player in the global value chain.

Efforts will also be made to drive development of high-value services, including information and communications technology (ICT), research and development (R&D), finance and accounting, human resources, procurement, legal, marketing, business analytics and shared support services across multiple locations within an organisation.

Way Forward: Twelfth Malaysia Plan, 2021-2025

The aerospace and tourism industries have been adversely affected by the COVID-19 pandemic and will take some time to recover. Thus, strategies for the aerospace industry in the Twelfth Plan will focus on laying a stronger foundation for recovery to seize future growth opportunities in the post-pandemic global market. The tourism industry will be re-energised in the Twelfth Plan as it is a substantial contributor to foreign exchange earnings and has high spillover effects on other sectors.

E&E, GS, creative, halal, smart farming and biomass are strategic industries and activities that will be further developed in generating high value-added activities and products, advanced technology adoption, R&D and innovation and quality employment opportunities.

In the Twelfth Malaysia Plan (12th MP), efforts will be focused on transforming these industries and activities to be more sophisticated and driven by advanced technology.

The 12th MP will focus on propelling a number of potential growth drivers leveraging advanced technology and digitalisation in line with the National Fourth Industrial Revolution (4IR) Policy and the Malaysia Digital Economy Blueprint.

In this regard, the development of strategic and high impact industries will be accelerated, while the capabilities of entrepreneurs and enterprises particularly MSMEs will be enhanced. The successful implementation of these measures will strengthen the competitiveness and resilience of the economy and position Malaysia as an important player in the global supply chain for complex and high value-added products and services.

Priority Area A

Accelerating the Development of Strategic and High Impact Industries

Strategy A1: Boost Electrical and Electronics Industry in Moving up the Value Chain

Strategy A2: Enhancing Competitiveness of Global Services

Strategy A3: Establishing a Sustainable Aerospace Industry

Strategy A4: Maximising the Potential of the Creative Industry

Strategy A5: Re-energising the Tourism Industry

Strategy A6: Fostering Competitiveness of Inclusive Halal Industry

Strategy A7: Intensifying Smart Farming Activities

Strategy A8: Realising the Potential of Biomass Industry

Space does not allow us to cover all of the above in detail in this article, so we’ll focus on the technology-related aspects.

Under Priority Area A, the development of strategic and high impact industries will be accelerated to propel the growth of the economy, particularly in adapting to the changing global supply chain landscape post-pandemic.

The focus will be on boosting the E&E industry to move up the value chain, strengthening Malaysia as a global services hub, establishing a sustainable aerospace industry, maximising the potential of the creative industry, re-energising the tourism industry, fostering the competitiveness of the halal industry, intensifying smart farming activities, as well as realising the potential of the biomass industry.

These industries are prioritised based on their ability to harness advanced technologies and niche capabilities, as well as their significant multiplier effects. The implementation of these strategies is expected to increase the contribution of the industries to GDP growth, create high-paying jobs and boost export earnings.

Boosting Electrical and Electronics Industry in Moving up the Value Chain

During the 12th MP, the E&E industry players will be encouraged to adopt advanced technologies and produce more sophisticated products, resulting in higher productivity and growth.

The E&E industry needs to boost investments in high value activities such as design and development (D&D) and front-end manufacturing. In this regard, efforts will be focused on strengthening manufacturing ecosystems, promoting new technology adoption, uplifting the development of talent as well as enhancing R&D and D&D activities.

By 2025, the E&E industry is targeted to contribute RM120 billion to GDP and generate RM495 billion in export earnings.

In strengthening the E&E industry ecosystem for higher-value chain, a comprehensive ecosystem based on a more systematic approach is important to ensure the sustainable development of the E&E industry. In this regard, a national E&E roadmap will be formulated to provide strategic direction for the industry.

The key sub-sectors in the roadmap include semiconductors, solar photovoltaic, light-emitting devices (LED), electronics manufacturing services (EMS) and manufacturing-related services (MRS). These sub-sectors are selected based on the vast potential and Malaysia’s current strengths in these sub-sectors.

The roles of relevant organisations will be enhanced to better coordinate and create strong collaborative linkages with research institutions as well as between the public and private sectors.

Incentives for the E&E industry will be restructured to be more impactful and the implementation of these initiatives will enable the streamlining of Government funding, technical support and facilities.

Promoting High Adoption of Technology

Emerging technologies are a strategic catalyst to leapfrog the country’s capability in developing high value-added products and create skilled jobs. Efforts will be undertaken to move the E&E industry towards higher-value activities across the supply chain with greater automation and advanced technology use.

The application of technologies such as artificial intelligence (AI), IoT, robotics, and big data relies heavily on advanced semiconductors, so industry players will be encouraged to focus on the manufacturing of advanced semiconductors.

Multinational companies (MNCs) will be encouraged to facilitate the enhancement of local MSMEs capabilities and to assist them to embrace digitalisation and globalization in their business models.

In addition, the establishment of the Fourth Industrial Revolution (4IR) business platform will provide opportunities to E&E companies and MSMEs to accelerate 4IR technology adoption and innovation.

Uplifting the Development of Talent and Capability

A skilled talent pool is important to grow the E&E industry in meeting the new competitive landscape, so the various micro-credentials programmes will be expanded based on the Triple Helix model.

Additional skills sets, including software coding and data analytics modelling, will be provided by various training institutions to meet market demand.

Several initiatives will be implemented to develop talent in the E&E industry in line with the National 4IR Policy. These include establishing industry-led 4IR skills development centres, incentivise industry to reskill and upskill employees in 4IR areas, and establishing an AI-enabled data platform to facilitate manpower planning.

To accelerate the development of the high-end manufacturing industry, employees will be upskilled and reskilled in the field of design. A dedicated centre will be identified to train highly skilled design engineers to meet industry demand.

To address major global changes brought about by technologies such as artificial intelligence (AI), robotics and the IoT, enrolment in science, technology, engineering and mathematics (STEM) education programmes will be increased to produce the talent-pool to support the production of high value and high-tech products in the E&E industry.

Programmes in software engineering and programming in public universities will be aligned with industry requirements. The implementation of these initiatives will reduce talent gaps, as well as enhance the competence of talent in the E&E industry.

Enhanced R&D and D&D knowledge-intensive design programmes for the E&E sub-sector will be promoted to realise the importance of innovation and design activities thereby spurring growth in the industry. Industry players will be encouraged to undertake D&D activities, particularly in integrated circuits (IC), IC packaging, embedded systems as well as test and engineering design services.

Incentives will be provided to encourage companies to invest more in D&D activities. R&D grants and incentives will be reviewed to cater to advanced technology push and market pull activities. In addition, end-to-end R&D activities will be promoted to ensure the R&D outputs are able to go through extensive experimental development and testing programmes to meet the technology and product standards.

In addition, research institutions and centres of excellence will be streamlined to reduce redundancy and increase the effectiveness of conducting R&D activities. Dedicated technology and innovation centres will be established to drive technology development, accelerate innovation and technology transfer as well as increase the development of home-grown technologies.

In enhancing competitiveness of global services (GS), a conducive and supportive ecosystem is important for Malaysia to be a competitive GS hub. To create this environment, clear and supportive policies, a better regulatory and business environment, talent development, digital infrastructure and air connectivity to major cities are required. Meeting these requirements will enable Malaysia to attract more GS companies and facilitate the growth of ancillary services providers.

In intensifying smart farming activities, a smart farming approach will be implemented across all sub-sectors in the agriculture sector including crops, aquaculture and marine fishery as well as livestock.

This will be undertaken by developing a comprehensive smart farming framework, accelerating the adoption of modern technologies, improving the dissemination of technological information and talent development, enhancing the participation of technology providers, and empowering local communities. This approach will increase the productivity and income of farmers, reducing dependency on foreign workers as well as minimising environmental impact.

Smart farming has been identified as one of the Key Economic Growth Areas (KEGA) of the Shared Prosperity Vision 2030. So a comprehensive framework will be developed as a guideline to support the implementation of smart farming.  Collaboration among agencies at Federal and state levels will be enhanced to ensure policies on smart farming are consistent.

Accelerating the Adoption of Modern Technologies

The application of modern technology is one of the key factors in increasing the productivity and income of farmers as well as achieving sustainable production. Efforts to accelerate the adoption of modern technologies among farmers will be implemented by encouraging utilisation of big data analytic (BDA), IoT and AI as well as intensifying usage of drones, robotics and sensors.

Several dedicated food production areas such as Permanent Food Production Parks and Aquaculture Industrial Zone will be leveraged for the implementation of demonstration projects. These projects will provide cost-benefit evidence of modern technology to attract the participation of more farmers in smart farming.

Existing incentives will be improved to promote investments in smart farming that utilise modern technologies and apply green practices. The mechanisation and automation fund will be expanded to encourage participation from private companies as well as agricultural cooperatives and associations. A dedicated smart farming fund will also be introduced to support the acceleration of modern technology adoption in the agriculture sector.

The application of precision agriculture technology in plantations under FELDA through geospatial information systems will be rolled out to improve operational efficiency. This initiative will enable FELDA to utilise detailed plantation data including tree counts, vacant areas and tree health indicators to optimise resources use.

Improving Dissemination of Information on Technology and Talent Development

Effective dissemination of information pertaining to modern technologies will be one of the important factors to increase application of smart farming. The AgF will be strengthened to provide reliable and specific data related to modern technologies. This system will also include interactive analytical information to allow sharing and exchange of information among key stakeholders.

Knowledge on the utilisation of modern technologies such as drones and robotics that are supported by AI and IoT is essential to drive the adoption of smart farming. In this regard, training curricula and modules will be reviewed to incorporate elements of modern technology. The involvement of farmers including young agropreneurs in technological research will be intensified to ensure farmers are always kept abreast of new developments. Also, the role of technology providers in supporting the adoption of modern technology is essential for sustainable and profitable production.

Amongst other aspects, Strategy B2 involves the promotion of inclusive participation through MSMEs, cooperatives and agriculture-based associations.

The participation of these sub-sectors in the economy will be strengthened to ensure inclusive growth, though initiatives which will include increasing MSMEs contribution to the economy, widening market access and international trade opportunities as well as capitalising cooperatives, agriculture-based associations and social enterprise in developing entrepreneurs.

Also, concerted efforts will be undertaken to increase the contribution of MSMEs to the economy by transforming them into innovation-driven enterprises is crucial to increase their resilience and competitiveness.

Initiatives to accelerate the creation of high growth and innovative firms will include enhancement of targeted assistance for automation, digitalisation, AI and other 4IR technologies. Technology adoption and innovation will be promoted by increasing R&D uptake and strengthening research collaboration between MSMEs, industry experts and academia.

Targeted assistance and access to financing will be improved for the development and adoption of new technology. Training and development programmes related to automation, digitalisation and 4IR technologies will be strengthened to upskill and reskill talent in supporting technology adoption and automation.

The digitalisation of MSMEs will be undertaken as an important national agenda to transform the conventional way of doing business. A national MSMEs digitalisation roadmap will be introduced to drive the adoption of digitalisation.

A total of RM147.1 billion was allocated by the Government to assist MSMEs through the eight economic stimulus packages since the outbreak of the COVID-19 pandemic. Out of this total, more than RM20 billion is dedicated to drive the digital and technological transformation agenda.

In Part 4 we will delve further into policies to develop the required skills and talents, enhance digital connectivity and the alignment of R&D activities towards commercialisation, wealth generation and economic growth.

Meanwhile, dear readers can download copies of the 12th Malaysia Plan in English from the Economic Planning Unit’s website over here:- https://rmke12.epu.gov.my/en

Or in Bahasa Melayu over here:- https://rmke12.epu.gov.my/bm

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