By Associate Prof. Dr. Sabariah binti Yaakub & Ms Aruna Raj Devarajoo
By the end of 2024, the business in Malaysia is flourishing; and the Malaysian economy has achieved a higher growth of 4.2% in the first quarter of 2024 while the inflation has remained moderate. The major economic sectors such as construction, service, manufacturing, and agriculture have grown modestly and are remarkable in comparison to those of 2023. In these sectors, Information and Communication Technology (ICT), E-commerce, and Healthcare and Biotechnology belong to the list of top sectors driving the Malaysian economy this year. The Industrial Production Index (IPI) has also indicated a rise of 5.3% year-on-year. The export trade is also expected to grow by 5% drawing advantage of the free trade agreements (FTAs) as outlined in the New Industrial Master Plan 2030 (NIMP 2030). A total of $9.7 billion in FDI has been announced to provide Malaysian businesses with access to new cloud computing and advanced AI infrastructure. This indicates that Malaysia has maintained a favorable investment climate.
Despite this, Malaysia has many challenges in the era of the Fourth Industrial Revolution (IR 4.0). The IR 4.0, i.e. the transformation of the physical systems or operations of the industry with digital technologies, is not possible without bridging the digital divide between urban and rural areas, training the workers with expertise in technologies like AI, IoT, and data analytics, cybersecurity, robust data privacy and governance frameworks, and flexible, dynamic and innovative attitude of the organizations.
Moreover, the nation couldn’t attain the status of an industrialized nation by the original deadline of Vision 2020. Hence, implementing the National Policy for 2025 is very crucial for the nation. In the National Goals and Targets of National Policy for 2025, Industry 4.0 transformation is a major concern. This is because the majority of the Malaysian manufacturing industry delivers the output of contract manufacturing, i.e. producing goods on behalf of another company, around the world.
To compete with global manufacturing centres and technology disruption, the Malaysian industry must implement the five key factors that drive smart manufacturing industries i.e. autonomous production lines, smart manufacturing practices such as automatic maintenance of systems and custom service, use of big data tools, process flexibility, and security. Besides manufacturing, the other sectors including tourism, services, agriculture, petroleum and natural gas, and construction also need to have a full digital strategy in operation.
Digitizing the businesses can transform the existing businesses in Malaysia by reducing the cost of operation, enhancing quality, and improving customer service. This is possible with various advanced IR4.0 technologies, such as Artificial intelligence (AI), Autonomous Robotics (Autonomous Robot), Digital Twin, Cloud Technology (Cloud Computing), Smart Device Technology Industry (Internet of Things - IoT), System Integration, Additive Manufacturing (Printing Reality), Virtual Reality (Augmented Reality) and Big Data Analysis, that facilitate automation of the operations through autonomous robots by reducing the dependency on humans, thus eliminating the human error.
However such massive infrastructural transformation requires planning roadmaps for new technology, customizing the existing processes, and upgrading technology in existence. There are several steps Malaysia has already taken: 1. adopting the Industry4WRD: National Policy on Industry 4.0 from 2018; 2. Industry4WRD Readiness Assessment program to support the transition and migration of up to 500 Small and Medium Enterprises (SMEs) to Industry 4.0 from 2019 to 2021; 3. a new program, Tech Up for a Digitally Vibrant Nation under the New Industrial Master Plan 2030 (NIMP 2030), launched in 2023 to promote the adoption of Industry 4.0 technology for companies in the manufacturing and manufacturing-related services (MRS) sector; 4. implementing the Construction Strategy Plan 4.0 (2021–2025) to provide a proper machine involvement in the construction activities; and 5. the establishment of Centre for the Fourth Industrial Revolution Malaysia to speed up the ongoing initiatives of Digital Transformation.
These steps specifically the strategies to boost the digital economy under the NIMP 2030 ensure that the dynamics of technological progress don’t hurt or devalue human labour by replacing it with automation. Mission 4: Safeguard Economic Security and Inclusivity under NIMP 2030 emphasizes the creation of economic opportunities, enhancement of social equity, and building the resilience of the economy. There is a projection of increasing productivity by 30% across all sectors by the year 2030 and its contribution to GDP will foster better services for all the Malaysians in the future.
Malaysia’s digital economy is about to reach US$31 billion (RM 138.4 billion) in gross merchandise value (GMV) by the end of this year. This is a flat 16 percent increase from 2023 and indicates a sign of a better future for businesses in Malaysia. It is because the Shared Prosperity Vision in NIMP 2030 aims to boost economic diversity and complexity by developing sophisticated products and services with strong local R&D and innovation, create high-skill jobs for better income, enhance domestic and global supply chain integration, focus on high productivity sectors, and improve inclusivity for socio-economic development. Hence, embracing IR 4.0 will drive businesses to a new feat of socio-economic prosperity in the coming decades in Malaysia.
