Driving the Malaysian Manufacturing Industry Forward: The New Industrial Master Plan 2030 (NIMP 2030)
Launched on September 1, the NIMP 2030 is Malaysia’s 4th industrial master plan, and has the aim of boosting the progress of the country’s manufacturing industry, as well as increasing its value-add to the economy to RM587.5 billion by 2030. When launching the Plan, Prime Minister Datuk Seri Anwar Ibrahim affirmed that NIMP 2030 is a crucial part of the “Madani Economy” framework.
While the various initiatives under NIMP 2030 will be geared towards furthering the development of 21 different sectors, high-impact areas, such as electrical and electronic (E&E), electric vehicles (EVs), pharmaceuticals, aerospace engineering, and advanced materials (i.e., minerals and metals), will be prioritised; this is due to their combined GDP currently making up over half of the industry’s GDP, and the fact that Malaysia has the potential to house many more high-tech and high-value add industries.
In this article, Xeraya briefly explores the current performance of Malaysia’s manufacturing industry, provides a brief overview of NIMP 2030, and discusses the various targeted results that have been set by the Malaysian government as key measures of success for this Plan.
The Malaysian Manufacturing Industry Today
The nation’s manufacturing industry as it stands today is a key engine of growth for the economy, contributing 24% to the GDP (at a CAGR of 6%); it also comprises 80% of total exports from Malaysia (at a CAGR of 6%), and has a 17% share of the employment market (at a CAGR of 1%).
Additionally, the industry saw immense growth in the post-pandemic period, increasing at a rate of 10.4% YoY. This surge can be attributed to a strong demand for E&E products and rubber gloves, as well as a demand for other key sectors, such as refined petroleum and chemicals, which remained stable.
Focusing further on the different products and services provided by the industry highlights Malaysia’s importance as a key manufacturing hub. According to MIDF, the 2018 OECD database ranked the country 12th globally for the output of coke and refined petroleum products, while for chemical products, Malaysia was ranked 25th.
In terms of the E&E sector, Malaysia ranked 12th, specifically for the output of computer, electronic and optimal equipment, and 31st when it comes to electrical equipment. The implementation of various projects under NIMP 2030 should see the country increase in rank for all these different sectors, and eventually be placed among the top 30 global IT service providers.
Another strong sector in Malaysia is the automotive manufacturing space, for which Malaysia is placed in the top 3 hubs in ASEAN with a global ranking of 32. To date, the nation has established itself as a major automotive components production centre and has successfully attracted renowned global automotive players to open factories and set up operations. In terms of other modes of transportation such as aerospace, rail, and ships, Malaysia has also strived to increase its manufacturing output, focusing specifically on the maintenance, repair, and operations (MRO) segment.
As with other industries, a crucial factor in the race for progress when it comes to the manufacturing space is skilled labour. At present, there is a skill gap in Malaysia, with a need to hire manufacturing personnel with the requisite scientific knowledge and technical expertise – as an example, the E&E sector raised the alarm on recruitment and the lack of higher educated individuals in the space, stating that only 0.3% of the E&E workforce hold an advanced degree, a qualification that indicates potential for further growth.
An Overview of NIMP 2030?
As with its CIR2030 and the NETR, the Malaysian government has announced several initiatives under NIMP 2030 that should foster progress in the manufacturing industry. This 4th iteration of the nation’s industrial master plan has also shifted its approach from being based on the different sectors to focusing on “Missions”. In total, the NIMP 2030 has 4 Missions, 21 Strategies, 62 Action Plans, and 9 Mission-based Projects (MBPs).
This Mission-based approach policy relies on three different catalysts – 1) Moonshot thinking, which involves setting ambitious goals to achieve transformative outcomes; 2) A whole-of-nation approach, which calls for the galvanisation of the public and private sectors to realise its vision; and 3)Cross-cutting strategies, which will see the unlocking of strategies that involve multiple sectors with the initiation of focused and targeted action plans.
The 4 Missions of the NIMP 2030 are as follows:
There are 4 key enablers that will be supporting these missions: 1) Mobilising the financing ecosystem; 2) Fostering talent development and attraction; 3) Strengthening a best-in-class investor journey; and 4) Introducing a whole-of-nation governance framework.
In terms of the financing of these 4 missions, the government is introducing two funding systems – NIMP Development Fund and a NIMP Strategic Co-Investment vehicle, which will provide financial support to industry players, with a specific focus on SMEs.
Malaysia will also be addressing the talent war within the manufacturing industry by launching programmes and training initiatives that are aimed at nurturing high-skilled workers.
The Manufacturing Industry in 2030
As mentioned at the beginning of this article, the NIMP 2030 is geared towards increasing the manufacturing GDP, targeting a contribution of RM587.5 billion by 2030 with a growth rate of 6.5% YoY. This is a 61% increase over its contribution in 2022.
As for the skills shortage, NIMP 2030 should drive employment up by 2.3% YoY between 2023 and 2030, creating a total of 3.3 million new jobs. These new roles will primarily be high-skilled, as the Plan also promotes the adoption of automation technology to reduce Malaysia’s reliance on low-skilled labour. As a result, the median pay within the industry should also increase at an average of 9.6% YoY to reach RM4,510 by 2030, an increase 128% over 2021.
Fostering a stronger manufacturing industry while ensuring sustainability.
While the aim of NIMP 2030 is to boost the industry and increase economic complexity, it also considers the need for sustainable growth. As such, initiatives that focus specifically on addressing social and income disparities, as well as greener production processes are outlined in NIMP 2030.
These initiatives will ensure that not only are the missions of NIMP 2030 achieved, but that the manufacturing industry is also able to contribute to the fight to save the planet’s resources.
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