By Jeannie Cotter
Malaysia is going all in on advanced manufacturing, green tech and automation. The country’s new industrial master plan outlines an ambitious vision to transform key sectors of its economy over the next seven years. Dubbed the New Industrial Master Plan 2030 (NIMP), the strategy bets big on high-potential industries from healthcare to electric vehicles. The aim is to leapfrog Malaysia into the big leagues as a hub for precision engineering, smart manufacturing and sustainable technologies.
For international companies and investors, NIMP maps out priority growth areas where government support and partnerships will be directed. By syncing business plans with the master plan’s strategic goals, firms can capitalise on policies and funding that favour innovation, digitisation and supply chain resilience.
In essence, the NIMP provides very useful guidance on where Malaysia is headed and which sectors have the most potential over the next few years. Business plans that sync up with the NIMP’s missions will have a definite advantage when it comes to regulatory issues, talent recruitment and access to financing.
Healthcare and Medical Technology
A top priority under the plan is to develop higher value-added industries like pharmaceuticals and medical devices. Malaysia stands as the ASEAN region’s largest medical device market, with a substantial total market size of US$1.8 billion, according to the Malaysian Investment Development Authority (MIDA).
The country has established itself as a major exporter of medical devices, sending over 90% of its domestic production to international markets. Top destinations for Malaysian medical device exports are the United States, Germany, Singapore, Japan, Belgium, China, the Netherlands, Brazil, the United Kingdom and Australia.
Emerging as a significant focal point for medical device production, both regionally and globally, Malaysia boasts a flourishing industry with over 200 manufacturing companies. Within this well-connected ecosystem, 30 of these are multinational corporations that have chosen Malaysia as their manufacturing hub. Renowned names in this category include Abbott, Toshiba Medical Systems and B-Braun. The sector provides employment for over 70,000 skilled workers, serving as the backbone of the industry’s human capital.
Malaysia’s strategic location, strong manufacturing capabilities and pro-business environment have allowed it to become a key hub for medical device production and export within Asia. Building on existing strong capabilities in electronics and semiconductor fabrication, the aim is to move into more complex manufacturing like biomedical sensors and diagnostics.
Policies will incentivise joint ventures and technology transfers with leading multinationals to upgrade production and R&D capabilities. At the same time, training programmes through public-private partnerships will focus on developing the technical workforce required for advanced medical technology manufacturing. Foreign firms bringing experience in precision engineering and complex supply chain integration can benefit tremendously here.
Electric Vehicles and Renewable Energy
Another major emphasis is on green technologies, from electric vehicles to large-scale solar and wind power projects. NIMP aims to nurture homegrown electric vehicle (EV) manufacturers serving both domestic and export markets. It also outlines plans to phase out internal combustion engine vehicles entirely by 2040.
The electric vehicle (EV) market in Malaysia is gaining traction, fuelled by increasing interest from environmentally-conscious and younger consumers. While overall EV sales remain low, making up just 0.4% of total vehicle sales in 2021, the market is expanding rapidly. EV sales jumped 65% in 2021, with 2,717 units sold compared to 1,642 in 2020, according to data from the Malaysian Automotive Association (MAA).
The growing reliance on EVs to cut emissions in transport is intensifying the need for a strategic approach to the energy transition. Despite Malaysia’s predominant reliance on coal and natural gas in its energy mix, Tenaga Nasional Bhd reports a 23% lower emission rate from EVs versus ICE vehicles.
The current electricity generation mix in Malaysia leans heavily on coal and gas, with renewable energy sources making up only 17.8%. The nation aims for 31% renewable energy in the national installed capacity mix by 2025, escalating to 70% by 2050, as outlined in the National Energy Transition Roadmap.
Malaysia’s wealth of lithium, rare earth metals and other critical battery minerals will provide key inputs for EV production. Meanwhile, the EV shift will drive demand for upgraded electric grid infrastructure and renewable energy generation. These developments underscore the huge potential for renewable energy to play a pivotal role in Malaysia’s energy landscape.
Under the NIMP’s Net Zero mission, foreign power producers are encouraged to participate in efforts to decarbonise Malaysia’s economy. Opportunities exist across the clean energy spectrum, from utility-scale solar and wind farms to smaller rooftop solar installations.
Looking ahead, the Malaysian government has set a goal of having 125,000 EVs on the road by 2030. If this target is realised, Malaysia’s fledgling EV market is poised for massive growth over the next several years. Younger and eco-minded drivers are expected to continue leading the shift towards EVs in Malaysia.
Automation and Artificial Intelligence
As part of its goal to “tech up” Malaysian industry, NIMP aims to accelerate digital transformation in manufacturing. The plan sets targets for increased adoption of automation, robotics and artificial intelligence to sharply improve productivity and efficiency.
Based on Statista’s data, the artificial intelligence market in Malaysia is projected to reach a market size of US$3,859.00 million by the year 2030. The 2022 Oxford Insights Government AI Readiness Index ranks Malaysia 29th out of 181 countries. This ranking is attributed to Malaysia’s robust digital capacity and infrastructure, providing a solid foundation for the development and integration of artificial intelligence.
Tax incentives will promote large-scale integration of industrial Internet-of-things systems. Grants are also available to help SME manufacturers implement automation. And factory automation levels will eventually factor into manufacturing licensing requirements.
Malaysia wants to leapfrog ahead as a smart manufacturing location. Multinationals adept at applying technologies like predictive maintenance, computer vision and collaborative robots will find open doors here.
The Road Ahead
The NIMP represents a bold vision and a significant commitment by the Malaysian government to transform key industries. Achieving the goals will require major investments in infrastructure, workforce development and partnerships between government, businesses and academia.
Success is not guaranteed. The targets are ambitious and will require effective execution and adaptation along the way. Regional competition will be fierce as other Southeast Asian nations have similar ambitions to move up the manufacturing value chain. Malaysia’s centralised planning approach could give it an edge in marshalling resources. However, neighbours like Thailand and Indonesia are also making big bets on EVs, automation and other advanced manufacturing.
If Malaysia can successfully upgrade industries as envisioned, it will solidify its position as a leading manufacturing hub in Asia. This could make the country an attractive launch pad for foreign firms looking to serve regional and global markets.
For investors and companies, the time is now to evaluate how the NIMP’s goals align with their own long-term business strategies. Early movers may benefit the most from government incentives and policies aimed at nurturing priority sectors.
How Malaysia navigates the tricky transition toward high-tech, green industries bears watching across the region. Its transformation roadmap under the NIMP could provide valuable lessons for other developing nations.
