E&E sector poised to remain firm thanks to govt proactive measures, says MIDA

The electrical and electronics (E&E) industry —Malaysia’s largest export earner in 2019 — is poised to remain firm this year, despite the Covid-19 crisis, says the Malaysian Investment Development Authority (MIDA).

MIDA chief executive officer Datuk Azman Mahmud said this is thanks to the government’s pro-active measures that include allowing the industry to operate since the first phase of the Movement Control Order (MCO).

“Being the catalytic sector that cut across many industries, particularly in producing parts and components for the medical devices, most companies in the E&E industry have been given approvals to operate during Phases 1 to 3 of the MCO, between March 18 until April 28.

“E&E is essential in helping the world to fight Covid-19, which is why it was decided that the sector should be allowed to operate from the beginning (of the MCO), although initially it was at 50% headcount. But now, the headcount number is at 100%,” Azman said in a webinar titled “Business Unusual: Journey to Recovery on E&E Industry” today.

Last year, the E&E industry accounted for a notable 6.3% of the country’s GDP, according to MIDA. The sector contributed some RM372.67 billion in export value, representing 44.7% of all manufactured goods exported.

E&E also recorded the highest approved investments in 2019, totalling some RM25.7 billion or 31% of total approved investments, driven by the sector’s vibrant and robust ecosystem.

In view of this, Azman said MIDA has been enganging with E&E players on a regular basis since the start of the MCO, to gauge the sentiment on the ground and identify issues enveloping the sector amid the Covid-19 crisis.

“The input we gathered was then channelled to the Economic Action Council committee, chaired by our prime minister. The government is very much engaged (with industry players) and knows what’s happening on the ground.

“This, coupled with other measures taken by the government to reboot the economy, including the interest rate cut, economic stimulus package and the Short-Term Economic Recovery Plan, play a crucial role in providing support for the industry,” he said.

Globally, the Covid-19 pandemic outbreak has painted a grim outlook on numerous sectors, including E&E.

Based on Gartner’s forecast, the global semiconductor market is expected to decline by 0.9% from the initially projected growth of 12.5% in revenue in 2020, Azman said. Gartner is a global research and advisory company listed on the New York Stock Exchange.

The forecast was based on the halting of production facilities of electronics parts, contributed by the logistics slowdown due to the closure of borders and unavailability of the workforce worldwide.

Going forward, Azman said he wants to encourage local E&E companies, particularly the small and medium enterprises, to take full advantage of the facilitation offered by the government.

This includes participating in MIDA’s Lighthouse programme, aimed at assisting local manufacturers to embrace digitalisation and Globalisation 4.0 in their business models and entire supply chains.

“Given the end-to-end value chain increasingly being adopted globally, MIDA is targeting multinational corporations (MNCs), as well as big local companies, to be the anchors in guiding the selected vendors into this new venture.

“To date, MIDA has engaged 17 companies from manufacturing and services sectors, namely E&E, chemical and advanced materials, transport, machinery and metal, food technology and green technology, to participate in the programme.

“We would like to have more local companies [to] be integrated into lighthouse operations, by engaging in innovative and productive activities such as the adoption of automation and digitalisation of business processes,” Azman said.

Globalisation 4.0 is a term coined by last year’s World Economic Forum to signal the coming shift in globalised structures.

Source: The Edge Markets