NIMP 2030 – Overview
“The NIMP 2030 is designed to drive Malaysia’s trajectory as a global leader in industrial development, extend the domestic linkages to create wealth across the nation as well as strengthen its position in the global value chain,” stated Prime Minister Anwar Ibrahim (PMX), as he launched the new policy on September 1st, 2023. He described this New Industrial Master Plan (NIMP) as the key component of the “Madani Economy: Empowering the People” framework, which was unveiled on July 27th.
The NIMP 2030 has been painstakingly formulated after a considerable amount of collaborative effort by both the public and private sectors, extensive industry consultations, focus sessions and engagements with over 300 stakeholders in terms of ministries, regulators, agencies, industry associations and industry players.
With its short deadline of seven years to achieve a massive input of national strategy and implementation, it has been termed a moon-shot campaign policy with immediate goals in mind to raise the lagging industrial and manufacturing sectors. It has a range of targets which tie into economic growth, job creation and ESG enhancements, among others, and takes on a new mission-based approach to achieve its targets.
It encompasses and adopts a nation-wide direction and strategy, interconnecting all States, all industrial-related policies, as well as ministries and authorities involved in its approach. The nation-wide drive is expected to accelerate the transitional processes with its interactive framework. It differs from the three previous economic policies that were very sector-related and which lagged in the overall implementation process with its sectoral approach to financial resources, funding and approvals from the respective state authorities and organizations to get it off the ground and running.
In a nutshell, this new industrial master plan, the fourth for Malaysia, aims to revitalise and increase its value-added turnaround of the manufacturing sector by more than 6 times to achieve RM587.5 billion by 2030, costing approximately RM95 billion in total investment over the seven-year implementation phase, while providing employment to 3.3 million people. This is formulated to be created through high-skilled jobs that result as the country advances its activities in automation and technology.
Key Challenges
Major global trends that have emerged to compel the country to reevaluate its economic priorities and upgrade its industrial and manufacturing edge urgently would be:-
- the need for resilience due to geopolitical shifts
- embracing digital transformation
- aligning the country’s industrial activities with environmental, social and governance (‘ESG’) requirements.
Malaysia’s economic growth potential has stagnated in recent years, not only due to the macro, geopolitical tensions (like the US and China standoff; the Ukraine war; US Federal government rate hikes and worldwide inflationary threats; and, of course, the Pandemic), but also internally within the country with a shortage of quality, skilled workforce and high dependence on low quality migrant labour; the underutilisation of the 16 free-trade agreements by local companies; lack of confidence in the government in terms of firm policies, education, training, healthcare and much more. It must be noted also that the previous three Economic Policies failed to see implementation or results on its policies and more often than naught, were left to languish and be ignored.
Eight challenges identified in The Twelfth Malaysia Plan (2021-2025) were low productivity among SMEs, the low quality of investment, a slow structural economic transition, a widening development gap between states, low share of employee skillsets and compensation, limited gains from the global value chain, disruption from geopolitical issues and the pandemic.
Singapore and South Korea understood this concept and began implementing solutions early in the 1970s by increasing minimum wage structure progressively over the last couple of decades. The data from other countries denote that raising the minimum wage faster could have had net positive effects to Malaysia’s economy. Workers then earn enough for the cost of living in the country, and their higher wage earnings will help push up domestic consumption, which in turn grows the profits of domestic businesses and Malaysia’s economy.
Additional challenges with regards to foreign investors doing business in Malaysia has been identified to be starting a business; dealing with approvals and permits; getting electricity; registering property; getting credit; protecting Investors; paying taxes and trading across borders.
Having identified these issues, the NIMP machinery will have to rev up and start working to tackle these issues while embarking on transition and goals.
NIMP Goals
The focus of NIMP 2030 is on six key goals: enhancing economic complexity, creating high-value job opportunities, expanding domestic linkages, developing new and existing industry clusters, improving inclusivity, and promoting ESG (Environmental, Social, and Governance) practices. The outcomes of each goal and the criteria by which they are measured are set out in detail in the NIMP 2030. It is projected to increase global competitiveness via enhanced exports, include economic diversifications and increased compensation for the manufacturing sector employees.
With new job creations by 2030, the average wage for the manufacturing sector is projected to increase from RM1,976 in 2021 to RM4,510 in 2030. Additionally, this new Industrial Master Plan aims to increase investments as a share of State GDP from the current estimated 13% of State GDP to 25% by 2030. These goals would be guided by the National Investment Authority’s (NIA’s) five key pillars and Environmental, Social and Governance (ESG).
NIMP Structure
The NIMP is formulated to provide a united nationwide thrust, a fully collaborative effort between public and private sectors and an adoption of a mission-based approach to drive industry transformation. Through its 4 Missions, 4 enablers, 21 Strategies, 62 Action Plans, 9 Mission-Based Projects and 21 Sectors, this Master Plan has left no stone unturned to steer the country to achieve its goals and targets within the short span of seven years, well and truly implementing a “moon-shot thinking” approach.
The 4 Missions
To meet the Goals and targets, the 4 Missions formulated are:-
Mission 1: Advance economic complexity – (comprising 5 Strategies and 15 Action Plans)
Mission 2: Tech up for a digitally vibrant nation – (comprising 4 Strategies and 8 Action Plans)
Mission 3: Push for Net Zero – (comprising 4 Strategies and 10 Action Plans)
Mission 4: Safeguard economic security and inclusivity – (comprising 4 Strategies and 10 Action Plans)
An in-depth look at the Mission statements reveals a much wider perspective and basket of aspirations.
Mission 1: Advance economic complexity
- To encourage high-growth industries to innovate and produce more sophisticated products
There’s been a progressive stagnation in industrialisation and a lack of participation in the global value chain (GVC) in the last decade. It is, therefore, logical and timely that Advancing Economic Complexity is the first Mission in the NIMP 2030 to be addressed to upgrade the economy upwards in the Global Value Chain. In order to revitalise industrialisation and to achieve a higher GVC, there is an urgent need to craft more sophisticated levels of quality goods and services.
Domestic exports will need to be innovative and of higher value in order to enter niche markets globally, preferably, those with little or no competition. Strategies to ‘shift from basic to speciality chemicals’ can provide high value-added opportunities in the sectors of aerospace, pharmaceutical and medical devices. ‘Leveraging alliance with ASEAN countries to integrate the semiconductor, advanced materials and clean energy value chain’ is another well-propositioned strategy. Opportunities to attract investments would be favourable when useful guidance for both public and private stakeholders on which actions in which fields to prioritise in the coming years is provided.
The NIMP 2030 is definitely a clear framework for Malaysia to move up the value chain, escape the middle-income trap and achieve developed country status with above strategies and action plans in place.
Mission 2: Tech up for a digitally vibrant nation
- By initiating a whole-of-nation digital transformation to spur innovation, increase productivity and explore opportunities in digital frontier technologies.
The emphasis on technology, including artificial intelligence (AI) and machine learning responds to the need for digital transformation both in industrial production as well as in related public administration. The increased adoption of innovative technologies such as state-of-the-art automation and robotics, AI models for different application scenarios and cloud-based integration of industrial systems are deemed relevant to enhance productivity and efficiency. The Malaysian Government intends to create a national digital platform for manufacturing and even make the level of factory automation a requirement when accessing applications for manufacturing licenses in the future.
Mission 3: Push for Net Zero
- This emphasises Malaysia’s commitment to addressing climate change by striving for a Net Zero carbon emission target by 2050.
The transition towards more sustainable manufacturing practices and the shift towards the use of more renewable and clean energy are two of the strategies that emphasize Malaysia’s commitment to achieve Carbon Net Zero by 2050 as also envisioned in its new two-parts National Energy Transition Roadmap (‘NETR’). The Malaysian Government sees great growth potential also within different areas of the sustainability transformation of the manufacturing industry, in particular in the areas of renewable energy, electric (and other new-energy) vehicles, Carbon Capture, Utilisation and Storage as well as circular economy
Mission 4: Safeguard economic security and inclusivity
- To build resilience and enhance trade security against global shocks and geopolitical tension, and create an enabling environment that fosters entrepreneurship, supports small and medium enterprises (“SMEs”), and promotes equitable participation in economic activities to narrow all forms of disparities between the States.
Lastly, Mission 4 serves as a guideline for more resilient supply chains that can withstand present and future disruptions caused by global events such as climate change, the recent Covid-19 pandemic or the current upsurge in geopolitical tensions between nations like the United States and China, Ukraine and Russia as well as Palestine and Israel. At the same time, it addresses the urgent need to level out disparities in economic participation between different states and different groups within the Malaysian socio-economic environment.
The 4 Enablers
The Enablers – (comprising 4 Strategies and 19 Action Plans) – will support the NIMP 2030 by driving systemic and institutional reforms by:-
- Mobilising a comprehensive financing ecosystem to support industry development
- Fostering and attracting the right talent to support high value-added activities
- Establishing best-in-class investor journey to provide seamless investor experience in Malaysia
- Introducing a whole-of-nation governance to rally the industry and implement the NIMP 2030
The 9 Mission-Based Projects
These refer to the catalytic projects that have been identified to launch and catapult the mission-based implementation process. The so-called MBPs encompass a wide range of areas critical to achieving the industrial development objectives. The role of the MBPs involves the continuous engagement with industries and stakeholders for “industry deals” that will provide an avenue for the industry players to foster collaborative partnerships and submit strategic proposals that can be executed in delivering the Missions. “Champions” within the MBPs will be consistently identified to spearhead and lead interactions with stakeholders, investors and industry leaders.
The 21 Sectors
There are 21 sectors identified to contribute to realizing the goals and missions of the NIMP 2030, with aerospace, chemical, electrical and electronics (E&E), pharmaceutical and medical devices designated as priority sectors. Also identified are four new growth areas, which are advanced materials, electric vehicles, renewable energy and carbon capture, utilisation and storage (CCUS). The 21 sectors are listed as:-
- Aerospace
- Chemical
- Electrical and Electronics (E&E)
- Pharmaceutical
- Medical Devices
- Digital and Information and Communication Technology (ICT)
- Automotive
- Food Processing
- Global Services and Professional Services
- Halal
- Machinery & Equipment (M&E)
- Manufacturing-Related Services (MRS)
- Metal
- Mineral
- Palm Oil-based Products
- Petroleum Products and Petrochemicals
- Rail
- Rubber-based Products
- Shipbuilding and Ship Repair (SBSR)
- Textile, Apparel and Footwear
- Wood, Paper and Furniture
Sectors not covered in the NIMP 2030 include banking, insurance, construction, utilities, tourism, private healthcare, private education, transport and logistics, food and beverage and other unregulated services. But some of these areas are already covered within the sectoral policies or blueprints.
NIMP Implementation and Monitoring of Progress
The implementation and monitoring process will be set up as a governance structure with three levels of reporting:
- National NIMP 2030 Council – chaired by the Prime Minister, to ensure the timeline can be met
- NIMP 2030 Steering Committee – chaired by the Minister of MITI with participation of private sectors to ensure collaboration between the industry players and the Government
- Delivery Management Unit (DMU) – led by the KSU of MITI for structure and close monitoring
The PMX announced the creation of the National NIMP 2030 Council to be chaired by him to ensure timely and effective implementation. This council would include the participation of the relevant ministries and industry representatives.
The implementation process itself will be in two phases: Phase 1 from 2023 to 2026 and Phase 2 from 2027 to 2030. Phase 1 will set the foundation of the implementation process by strengthening the collaboration between public and private sectors. Phase 2 will focus on diversification of the economic base, creation of strong local linkages with global collaboration for economic resilience to enable sustained growth.
More importantly, a mid-term review will be done by the end of 2026 to study the progress and the extent of the implementation. It would also assess any further global trends and its impact in order to recalibrate the implementation process, if required.
A Delivery Management Unit (DMU) under MITI would be set up to coordinate all efforts and drive cohesive implementation across stakeholders.
Additionally, a One-Stop Portal (OSP) will be set up to enable investors a seamless investment journey from inception to post-investment care.
The PMX also added that the RM95 billion in total investment required to implement the NIMP 2030 would be predominantly derived from the private sector mobilised from private equity, capital and financial markets, with close to 10% allocation by the government.
Comparing the NIMP to Previous Masterplans
As mentioned, the NIMP has set an ambitious target to achieve RM 587.5 billion in value added turnaround from its RM 95 billion investment. Under the Third Industrial Masterplan (IMP3), an investment target of 362.5 billion was set to be achieved by 2020. Investments in the manufacturing sector averaged at approximately Rm 61.3 billion during the period under the IMP3, and ultimately exceeded the initial investment target by more than double. The figure below shows how the investment projection for the NIMP compares with other major economic blueprints in Malaysia taken from the period between 2006 and 2030.
Data sourced from respective masterplan resources online
Conclusion
The development of NIMP 2030 is driven by the goal of establishing a stronger industrial sector as a crucial step toward achieving socioeconomic prosperity. The master plan also represents a collaborative effort between the government and the private sector, jointly owned to leverage the collective expertise and resources. The NIMP 2030 serves to offer national strategic guidance, insights to potential investors and feature the government’s role in shaping the economy
The IMP3 was able to surpass initial projections with regard to investment inflows, therefore the NIMP certainly has the potential to exceed the expected RM 587 billion mark which it has set by double or even triple. Indeed its strategic mission based approach and greater emphasis on implementation are encouraging factors which are likely to contribute to its success.
However, it must be kept in mind that the key to meeting its objective will be in the execution. The mission-based project champions (MBPs) must be fully accountable for the key performance indicators (KPIs). Strategies must be reviewed and updated on an ongoing basis to make the plan relevant so it can keep up with changing new technologies while ensuring Malaysia is globally competitive.
References
- Moonshot: Malaysian Government Launches the New Industrial Master Plan 2030, Skrine, Kok Chee Kheong, Tham Zhi Jun, Accessed 28/10/2023
- Govt rolls out seven year New Industrial Master Plan (NIMP 2030), create 3.3 mil jobs, Adib Povera, Ashiquin Arifin, Accessed 1/11/2023
- NIMP 2030, Ministry of Investment, Trade and Industry, Accessed 1/11/2023
- Malaysia New Industrial Master Plan 2030 (NIMP), Kenanga Investment Bank Berhad, Accessed 2/11/2023
- Vision, Goals, and Missions: Malaysian New Industrial Development Plan 2030, Rodl and Partner, Accessed 5/11/2023
- Malaysia’s New Industrial Master Plan: Clear Eyed on Implementation, Tham Siew Yean, Accessed 5/11/2023
