Turning Point for the Electrical and Electronics (E&E) Industry in Malaysia? Part 2

Media Statement by Dr. Ong Kian Ming, Deputy Minister of International Trade and Industry (MITI) on the 30th of July, 2019

In part 1 of my media statement, I explained the importance of the E&E industry to the larger Malaysian economy and how this sector has evolved over time.[1] In Part 2 of my statement, I will highlight some of the key challenges and opportunities for this sector in Malaysia in the context of global trade and economic uncertainties.

  • Capturing new and higher value-added investments from existing players

An investment by a new company worth RM100m, especially if it is a well-known global brand, can generate more publicity in Malaysia compared to a re-investment by an existing player worth RM1 billion. In some ways, this is understandable given our larger fascination with new, bright shiny objects compared to older and duller toys, so to speak. But as the saying goes, “a bird in hand is (sometimes) worth two in the bush” meaning to say that we should not forget the importance of existing players while we aggressively pursue new investments.

Many of the existing players in the E&E industry in Malaysia are well-known multinational companies (MNCs) with operations in many countries. And these companies can choose between various locations, including Malaysia, for their future expansion plans. The attractiveness of tax and other related incentives would be one the factors influencing global HQ investment location decisions. The challenge here is for the respective management teams in Malaysia to make a pitch to their global HQs for these new investments in competition with their colleagues from other countries. The pushback from the Malaysian authorities which the local teams are facing is to show that their investments involve higher value-added products and processes deserving of new incentives.

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Turning Point for the Electrical and Electronics (E&E) Industry in Malaysia? Part 1

Media Statement by Dr. Ong Kian Ming, Deputy Minister of International Trade and Industry (MITI) on the 30th of July, 2019

The report in June 2019 that Apple was mulling a 15-30% supply chain shift out of China and that Southeast Asia was a potential relocation destination created a lot of media interest in Malaysia.[1] What could the Malaysian government do in order to pull some of these investments onto our shores? How ready is our local E&E industry to capture part of Apple’s value chain? Which companies could be potential beneficiaries? These questions are part and parcel of a larger debate regarding the E&E sector in Malaysia. The industry is facing a turning point in its development, and the US-China trade war has created a unique window of opportunity which can catalyse the development of the entire industry in Malaysia for decades to come.

Contribution to the Economy

Before we delve into the future prospects of the E&E industry, it is important to contextualise the current role which this sector plays in the Malaysian economy. The E&E sector’s contribution to the overall health of the country’s economy goes far beyond its 5.4% share of GDP in 2018 (RM78b out of a RM1.4 trillion economy). It is BY FAR, the largest driver of exports in Malaysia. 38.1% of the almost RM1 trillion in exports in 2018 came from the E&E sector. Manufactured petroleum products comes in at a distant 2nd with 7.7% of total exports in 2018.

It is also a DISPROPORTIONATE contributor to the nation’s trade surplus. Out of the RM120.5b trade surplus enjoyed by Malaysia in 2018, 99% or RM119.2b was generated by the E&E sector. Without the contribution of the E&E sector, Malaysia would have experienced the ‘twin deficit’ phenomenon – a budget as well as a trade deficit and this would likely have had an effect on foreign investor confidence. Many would be surprised to learn that Malaysia’s largest export to China is not palm oil or agriculture or petroleum products but products from the E&E sector. This is also one of the few sectors where Malaysia enjoys with trade surplus vis-à-vis China.

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感谢拉玛沙米的提醒履行希盟在14届大选的承诺

万宜区国会议员兼行动党全国政治教育局副主任王建民博士于2019年7月1日发表的文告

2019年6月8日,我在为民主及经济事务研究中心 (IDEAS) 第二份监督报告成绩单开幕时要求大众继续提醒希盟政府在第14届大选的承诺,务必在下届大选前履行承诺,化压力为动力。

我还提到那些最热衷呼吁政府要履行承诺,大多是我们希盟的后座议员,他们通过各种内部管道上达其意。但当时我忘了提到我们也有些州议员虽然是通过其它的管道平台传达,但他们在提醒政府方面的政务上不亚于国会其它的后座议员。

我当然要感谢槟城第二副首长拉玛沙米在他的面子书专页里提醒政府“履行希盟选举承诺还未太晚!”即使我对拉玛沙米的提醒表示谢意,但是如果他能够有系统地阅读那IDEAS详细列出希盟政府已达成224项大选承诺的报告,而不只是对当今大马的一篇文章标题作出回应,那么他的提醒将会更具建设性。他的面子书帖文对IDEAS深入的报告并不全面。IDEAS里表示在竞选宣言中不切实际的承诺只占小部分,例如在10年内打造1百万个可负担房屋,以及把高等教育基金开始还款的收入水平设定为4千令吉。

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