In its pursuit of a ‘knowledge economy,’ the Malaysian government has formulated numerous policies to attract private and foreign investments in the automation and electronics industry. The Third Industrial Master Plan, Ninth Five Year Plan, and Science and Technology Policy are some of the government policies and programs that can enhance the prospects for semiconductors and related sectors.
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The Science and Technology policy has identified microelectronics and nanotechnology as key sectors, prompting the Malaysian government to increase their R&D allocation and improve efforts to commercialize their innovations and technologies. The Third Industrial Master Plan formulated for 2006-2020, promotes the development of the manufacturing sector thereby encouraging increased investment in the electronics and semiconductors segments.
The electronics segment expects to remain the single largest exporter, and this will open new markets. In the future, the country's total trade volumes will likely increase three fold during 2006-2020. Additionally, the government provides several incentives to attract further investments, which contribute to the formation of industrial clusters and free industrial zones.
“The stable political situation in Malaysia will likely attract more investments in the government-backed automation and electronics industry,” says Frost & Sullivan Research Analyst Manoj C. “The monetary and fiscal policy measures are expected to lend stability to the economy, while the trade policy will expand growth opportunities.”
The Malaysian economy grew by more than 5.0 percent in 2006, with most of the economic indicators showing positive trends. Malaysia’s expertise in the manufacturing and designing segment will go a long way toward inviting investment in the high-tech automation and electronics industry.
Proficiency and robust R&D are critical for countries that are keen on drawing investments in high-end value-added activities. The expenditure on R&D is expected to reach 1.5 percent of the gross domestic product (GDP) by 2010 and help increase the number of researchers, scientists, and engineers in the country. Apart from establishing various funds for assisting R&D, the government has also enhanced the outlay on commercial R&D during the Ninth Five Year Plan (2006-2010).
“The interaction/collaboration among public and private agencies, research organizations, and industry participants is expected to improve in the future,” notes Manoj. “The semiconductors industry, which depends on technological advancement for growth, is sure to benefit from this move as it is one of the targeted sectors along with some of its end-user sectors such as ICT.”
The three-part series addressing the Malaysian Automation and Electronics Industry is part of the Frost & Sullivan Automation and Electronics GPS subscription services. The Political and Policy Analysis of the Malaysian Automation and Electronics Industry provides a detailed coverage of the political establishment, general economic and industry specific policies, and their impact on the industry. The Economic Analysis provides an overview of the market size, a discussion of drivers as well as restraints, and an analysis of market structure in the context of the overall Malaysian economy. The Social, Infrastructure, and Labor Analysis studies the labor market dynamics, infrastructure conditions, and consumption profile of end-users. Analyst interviews and briefings are available to the press.
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