Industry in Malaysia (Overview)

Malaysia is an industrialised market economy that is relatively open and state-oriented. The economy is robust and diversified, with a significant export value of high-tech products, which stood at US$92.1 billion in 2020. It makes Malaysia the second highest in the ASEAN region. The manufacturing sector contributes to the nation’s export revenue and job creation. It ensures growth amidst global economic uncertainties. Malaysia has transitioned from an agriculture and commodity-based economy to a services sector. The services sector now contributes over half of Malaysia’s GDP in 2022.

The industries in Malaysia identified by the Malaysian Investment Development Authority (MIDA), include agriculture, infrastructure and communication, electronics and electrical, oil, gas, energy, tourism, wholesale and retail, and healthcare. Among these, the electrical and electronics, construction, and automotive industries are highlighted as the biggest industries in the country. These sectors contribute to economic growth and position Malaysia favourably in the global industrial landscape. It ranks fourth in economic size in Southeast Asia and 38th globally.

List of Industry in Malaysia

The industries in Malaysia contribute significantly to the country’s economy. Here’s the list of the industries in Malaysia:

Food Industry

The food industry in Malaysia is a fast-growing sector with a diverse range of products being produced for both local consumption and export. It include various segments including food processing, food retailing, and food service. Malaysia is also strategically located in a region with abundant agricultural resources, which provides a solid foundation for developing the food industry. The government supports the sector through various incentives and support programs aimed at promoting innovation, enhancing competitiveness, and ensuring food safety and quality standards are met.

The food industry in Malaysia contributes significantly to GDP, employment, and export earnings. It ensures food security and promotes sustainable agricultural practices in the country. The development of the food industry also supports the growth of other related sectors such as agriculture, packaging, logistics, and retail. The food industry is key in promoting Malaysia as a halal food hub, attracting investments, and fostering entrepreneurship. Its growth and development are essential for achieving the country’s economic diversification goals, enhancing its global competitiveness, and improving the livelihoods of the people involved in the sector.

Aerospace Industry

The aerospace industry in Malaysia includes manufacturing, maintenance, repair, and overhaul (MRO) services, engineering, and design. Malaysia has been developing its aerospace industry to compete in the global aerospace market. Key areas of focus include increasing the capability of local companies, attracting foreign investments, and fostering innovation and technological advancement.

The aerospace industry is significant for Malaysia’s economic diversification and high-value manufacturing ambitions. It holds the potential for job creation, technology transfer, and export earnings. It also enhances the country’s industrialisation and technological development, positioning Malaysia as an attractive destination for aerospace manufacturing and services.

Oil Industry

The oil industry in Malaysia is a sector that significantly contributes to the country’s economy. Malaysia is a leading oil producer and exporter in the Southeast Asian region, including exploration, extraction, refining, and distribution of oil and gas. Key players in the Malaysian oil sector include Petronas, the state-owned oil and gas company, and other international and local oil companies. The industry has also spurred the growth of supporting industries such as petrochemicals and logistics.

The oil industry is important for Malaysia’s economic stability and growth. It provides a substantial source of government revenue, foreign exchange earnings, and employment opportunities. The oil industry also drives technological advancements. The government has set forth various policies and initiatives to ensure sustainable development of the oil sector while adhering to environmental standards and promoting energy security.

Semiconductor Industry

The semiconductor industry in Malaysia has a rich history dating back to the 1970s when the first Free Trade Zone was established in 1972. This zone, governed by the Free Trade Zone Act, offered companies tariff exemptions on imports and exports, tax holidays, tighter controls on labour organisation, and streamlined regulatory processes, which were instrumental in attracting multinational semiconductor firms to Malaysia.

Companies such as Intel, AMD, HP, and Hitachi established their presence in Malaysia during the 70s and early 80s. Intel opened its 5-acre assembly plant in Penang in 1972, marking its first offshore production facility. The industry saw a significant growth, especially in Penang, which was estimated to contribute to 5% of global semiconductor exports in 2019.

The Malaysia Semiconductor Industry Association (MSIA) projected a growth of 8% to 10% for the industry in 2022, although a weaker 2023 was anticipated due to certain global market conditions. However, the automotive segment within the semiconductor industry remained resilient. The industry’s core activities include the design, development, manufacturing, and testing of semiconductors. Malaysia accounts for 13% of global chip assembly testing and packaging and 7% of the world’s semiconductor trade passing through the country.

The semiconductor industry attracts investments and creates numerous job opportunities. In the first quarter of 2022 alone, Malaysia drew RM 42.8 billion in approved investments in the electrical and electronics industry.

Electrical and Electronics Industry

This sector is a major contributor to the manufacturing industry in Malaysia, accounting for about 32.8% of the total exports in 2013 and providing employment to about 27.2% of the total workforce in the same year. It covers a range of products, including mobile devices, storage devices, optoelectronics, and embedded technologies. Malaysia is a significant hub for global firms in this sector, with companies like Intel, AMD, and Texas Instruments having branches there.

Automotive Industry

The automotive industry is well-developed in Malaysia, with 27 vehicle producers and 640 automotive components or parts manufacturers. It contributes about 4% of the total Malaysian GDP and employs over 700,000 individuals nationwide. Notable companies include Proton and Perodua, which are national car companies established to promote industrialisation on a national scale.

Construction Industry

The construction industry in Malaysia is worth over $32 billion. The construction of non-residential buildings contributed the largest share at 34.6%. Significant construction projects like Iskandar Malaysia, KVMRT, and Tun Razak Exchange have been driving forces behind the expansion of this sector.

Computer/IT Industry

The computer and IT industry is highly in-demand in Malaysia, driven by a technology-forward National Policy on Industry 4.0. It became more important as more companies moved into automation, interconnectivity, and artificial intelligence.

Engineering Industries

Engineering industries, including the electronic industry, are significant in Malaysia. Electronic industry being the top contributing industry, accounting for 32.8% of the total exports and employing 27.2% of the total workforce.

Defense Industry

Defence industry in Malaysia is a relatively new sector established in 1999. Companies like DefTech produce armored cars and special vehicles for the Malaysian army. Boustead Heavy Industries manufacturing warships.

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