Despite
the outbreak of Covid-19, the global electrical and electronics market is
estimated to be $3055.3 billion in 2020. It is projected to grow at a CAGR of
7% from 2021 and reach $3699 billion in 2023.
Malaysia E&E Outlook
Surprisingly, the E&E industry has been Malaysia’s largest export earners for decades. In 2019, the industry contributed RM372.67 billion in terms of export value, representing 44.7% of all manufactured goods exported. It also accounted for a remarkable 6.3% of Malaysia’s GDP in 2019, producing components such as semiconductors for mobile devices, automotive and computer parts. While Penang has the most E&E companies, there are also big players in Kedah, Selangor, Melaka, and Johor. Nearly 560,000 job opportunities have been created in the industry.
According
to SEMI, a global industry association representing the electronics
manufacturing and design supply chain, Penang itself contributes approximately
8% of (Malaysia’s total 13%) the global back-end semiconductor output. The
state is one of the most significant microelectronics assembly, packaging, and
testing hubs in the world. This has successfully positioned Malaysia in the
global supply chain of electronic manufacturing services, outsourced semiconductor
assembly and testing (OSAT) as well as in research, design, and
development.
Malaysia’s
move into Industry Revolution 4.0 as well as the Internet of Things (IoT)
technology is made possible by the existence of its established (E&E)
sector. In short, our rapid industrialisation and high ranking among the top
group of trading nations globally were mainly contributed by this industry.
Where are Malaysian players on the value chain?
The
E&E industry in Malaysia today is generally labour-intensive. Most of the
local E&E companies listed on Bursa Malaysia are involved in the mid to
lower end of the value chain, serving foreign semiconductor manufacturers,
brand owners, integrated circuit (IC) developers and fabricators. Malaysia
E&E industry has minimal participation in the higher value-added activities
such as generating intellectual property (IP), design and development
(D&D).
Talent shortage and mismatch
The talent shortage starts with university graduates. Nowadays, university students prefer software design to hardware design as they can see results faster. Unfortunately, there is a shortage of design talent around the world, let alone Malaysia.
There
is also a mismatch of skills and competencies to industry needs. Malaysia has
insufficient qualified and experienced technical workers to participate in
higher-value activities, partly due to the low demand for masters and PhD
holders. This trend has discouraged university graduates to pursue postgraduate
studies as most of the job requirements are not knowledge-intensive. In the long
run, local engineers could not progress in their careers without specialist
technical knowledge ad skills, hampering Malaysia’s ability to climb up the
E&E value chain.
Need for a robust local ecosystem
People
should be aware that all the technology or IP invented by Malaysians belong to
the foreign companies they work for. Hence, we need the right ecosystem and
incentives to encourage more engineers to explore the entrepreneurial path.
Only with a robust entrepreneurial culture and adequate support system, local
technology start-ups can compete among the fierce regional competitors such as
Singapore, Taiwan and Indonesia and stake our claims as world-class engineers.
Not only we lack hardware design engineers but also engineers with entrepreneurial skills. Local engineers often choose to work for MNCs before consider starting up their tech companies.
Can we reach a new height?
As the backbone of our international trades, E&E industry in Malaysia needs to move up the value chain in the face of greater global uncertainties to the trade and investment climate. The Twelfth Malaysian Plan (2021-2025) has included tax incentives for industries to be involved in training students, academics, and to transform from labour-intensive to a knowledge-based economy. Greater collaboration between government, employers and unions is vital to provide sustainable funding mechanism supporting continuous upskilling and reskilling of local talents, as well as local technology start-ups. Young talents need to propel the E&E industry to new heights and to be recognised as a leading E&E hub of the world.
Written by Woon Chin Ping, Intern at 27 Advisory. Currently pursuing her degree in Actuarial Science at London School of Economics and Political Science (LSE). She enjoys adventure on the slopes and skis beyond her limit. Skiing has taught her to embrace her fears and be brave.
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