In a bid to bolster Malaysia’s manufacturing sector under the New Industrial Master Plan 2030 (NIMP 2030), the Federation of Malaysian Manufacturers (FMM) is advocating for increased government funding and incentives.
FMM President Tan Sri Soh Thian Lai emphasised the need for approximately RM5 billion in financial support to drive the transformation of local factories into smart facilities by 2030. This sum surpasses the current RM3 billion available in grants and funding.
Speaking at the FMM Industry 4.0 Conference 2024, Soh highlighted the strategic importance of Industry 4.0 technologies and digital adoption in achieving the nation’s goal of establishing 3,000 smart factories.
He underscored that such advancements are crucial for Malaysia to enhance its global competitiveness, especially after a recent drop in rankings to 34th place, citing various factors including operational efficiency, currency performance, talent availability, and bureaucratic processes.
A significant portion of Malaysia’s businesses, particularly small and medium enterprises (SMEs), are poised to benefit from government support as they navigate the costly upgrades necessary for digital integration, which can exceed RM500,000 per enterprise. SMEs represent over 97.5% of Malaysia’s business landscape, with micro-SMEs constituting 87% of these entities.
Soh also urged financial institutions to play a pivotal role by reducing interest rates on technology adoption financing, ideally lowering them from the current average of 7% to a more accessible range of 2% to 3%. He proposed leveraging the Credit Guarantee Corporation Malaysia Bhd to provide assurances that would incentivize banks to extend favorable lending terms to manufacturers keen on modernizing their operations.
Furthermore, FMM proposed fiscal measures such as double tax deductions for companies embracing Industry 4.0 technologies like artificial intelligence, big data analytics, and autonomous robotics. Additionally, they recommended an accelerated capital allowance scheme for qualifying expenditures up to RM5 million, specifically targeting SMEs in the manufacturing sector.
The urgency for accelerated smart manufacturing initiatives has been amplified by the disruptive economic effects of the recent pandemic. FMM emphasized the necessity for manufacturers to invest substantially in identifying key focus areas, selecting relevant technologies, and engaging proficient technology providers to execute comprehensive transformation plans effectively.
Collaborating with 29 companies, FMM introduced a robust technology ecosystem aimed at expediting technology adoption among manufacturers. This initiative seeks to shift from labour-intensive models to technology-driven processes while nurturing local talents, thus aligning with the objectives outlined in NIMP 2030. The enhanced ecosystem also advocates for widespread integration of 5G technology to enhance connectivity and operational efficiencies within the manufacturing sector.
Looking forward, industry leaders like Soh stressed the importance of establishing transparent pricing structures for 5G usage, urging government intervention to set clear guidelines that would facilitate broader industry adoption.
As Malaysia charts its course towards becoming a regional leader in smart manufacturing, the collaborative efforts between government, industry leaders, and financial institutions will prove pivotal in fostering innovation, enhancing competitiveness, and ensuring sustainable economic growth in the years ahead.
