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Basic Metal Products
Malaysia’s basic metal industries include the iron and steel industries, as well as the non-ferrous metal industries.
The iron & steel industries in Malaysia produce the primary steel products that link the raw materials and components economic sectors to manufacturing industries, especially the construction, electrical/electronics, automotive, furniture, machinery and engineering fabrication industries. There are currently 230 companies producing primary steel products in Malaysia that have a total annual output of RM32.2 billion (USD10.1 billion) and employ a total of 61,683 workers.
The non-ferrous metal industries in Malaysia include the production of tin, aluminium, copper, zinc and lead products. There are currently 180 companies in the non-ferrous metal industry, with a total annual output of RM7.3 billion (USD2.3 billion) and total employment of 14,996 workers.
Electrical & Electronics
The electrical and electronics industry is the leading industry of Malaysia’s manufacturing sector, contributing 26.94% to the output, 48.7% to the exports, and 32.5% of employment in the manufacturing sector.
In 2010, the gross output of the industry was RM158.7 billion (USD50.9 billion), and exports amounted to RM235.5 billion (USD75.7 billion). Major export destinations are the USA, China, and Singapore, while major import destinations are Taiwan, the USA, and South Korea.
The electrical and electronics manufacturers in Malaysia are continuously progressing up the value chain to produce higher value-added products, which can be categorised into four sub-sections: consumer electronics, electronic components, industrial electronics, and electrical products.
Electronic Manufacturing Services
Electronic manufacturing service providers function as strategic partners to original equipment, design and brand manufacturers by providing them with services that range from contract design and manufacturing to post-manufacturing services.
The electronic manufacturing services industry has enjoyed significant growth in investment and extensive technological development, such that a majority of operations have shifted from board level operation to the provision of a full range of services, including contract design, prototyping, final assembly, configuration, repair and after sales services.
Malaysia’s engineering supporting industries have developed rapidly over the past three decades, keeping pace with the country’s booming manufacturing sector. The moulds and dies, machining, metal stamping, casting, heat treatment and plating/surface treatment industries of Malaysia have become major outsourcing destinations for MNCs in a wide range of industries.
Moulds and dies is the engineering supporting industry leader in the country, with about 450 companies that meet 60% of the local market demand. Currently, 40% of moulds and dies produced caters to the electrical and electronics industries, while 27% of output goes towards the plastics industry, and future growth in the industry will focus on the production of high precision and complex toolings for the electrical and electronics industry.
The machining industry consists of companies that offer machining services as well as those that produce precision machined parts and components.
The metal stamping industry is an established industry in Malaysia, with over 320 companies that supply stamped and pressed metal parts to the automotive, electrical & electronics, machinery & equipment and precision measuring & testing equipment industries.
The die-casting industry is a major supplier of components for the electrical, electronics, automotive and telecommunications industries; 50% of the die-castings produced in Malaysia are supplied to companies producing computers, computer peripherals, cameras and home electrical appliances, while another 30% go towards the production of automotive components.
Malaysia’s plating/surface treatment industry has enjoyed an increasing demand for treatment services, mainly by the electrical, electronics, automotive and machinery component industries.
The heat treatment industry provides essential services to the majority of metal-based industries, and thus is expected to keep pace with the growth of the rapidly developing the machinery and equipment, mould and die, iron and steel secondary products, and automotive component industries.
Exponential growth is also predicted for the forging industry in Malaysia, as the presence of many leading oil and gas companies promise much market potential for forged parts.
In 2011, Malaysia exported food products worth RM20.6 billion (USD6.4 billion) to more than 200 countries, to which processed food contributed over 65%. The main exports were cocoa and cocoa preparations (RM3.8 billion or USD1.2 billion), prepared cereals and flour preparations (RM1.6 billion or USD500 million) and margarine and shortening (RM1.3 billion or USD400 million), with major export destinations being Singapore, the USA, Indonesia and the Republic of China.
Malaysia is self-sufficient in poultry, pork and eggs, but imports about 80% of its beef requirements.
Commonly cultivated and produced fruits are mango, starfruit and papaya as well as local fruits such as rambutan and durian. Most of these fruits are for fresh consumption in the domestic market.
Malaysia is the largest processor of cocoa in Asia.
Malaysia is also a major producer of spice, and is the sixth largest exporter of pepper and pepper-related products in the world.
With increasing awareness of nutrition in Malaysian consumers, there has been a growing demand for minimally processed fresh food, organic food and naturally flavoured food. The production of food ingredients such as customised formulations required by food manufacturers and natural food additives and flavours is likely to see further growth.
The halal food industry in Malaysia provides immense opportunities for manufacturers, with an estimated value ranging from USD600 billion to USD2.1 trillion. Halal food products produced in Malaysia can easily penetrate halal markets around the world, thanks to Malaysia’s globally recognised halal certification.
Machinery and Equipment
The machinery and equipment industry of Malaysia is a key area for growth and development. With increasing competition from countries with a lower cost of production, the industry is expected to move away from the manufacture of low-end technology.
Malaysia is now focusing on moving towards producing high technology and high value-added machinery and equipment, such as specialised or custom-made parts and components.
Malaysia is the world's leading producer and exporter of medical gloves and catheters, supplying 80% of the world market for catheters, and 60% for rubber gloves.
The medical devices industry also manufactures high valued products such as othopaedic products, dialysers, surgical instruments, medical electrodes, catheters, diagnostic radiographic equipments, safety intravenous cannulae, sutures as well as ophthalmic lenses. These devices conform to internationally recognised quality standards such as the Food and Drug Administration (of the United States), the Department Of Health (of the United Kingdom) and Bundesgesundheitsamt (of Germany).
There is also a strong presence of established supporting industries in Malaysia, ranging from sterilisation services, sterile medical packaging, and precision engineering. The availability of these supporting industries gives Malaysia the potential to be a hub for the manufacture of medical devices in Asia.
Petrochemical and Polymer
With investments totally RM60.7 billion in 2011, the petroleum and petrochemical industry is a highly significant sector of the Malaysian economy.
The rapid growth of the industry is mainly attributed to the availability of oil and gas as feedstock, a well-developed infrastructure, a strong base of supporting services, the country's cost competitiveness, as well as Malaysia's strategic location within the Asia Pacific region.
Malaysia has the 14th largest natural gas reserves in the world and the 23rd largest crude oil reserves. Malaysia also boasts the world's largest production facility of liquefied natural gas at a single location, with a production capacity of 24.2 million metric tonnes per year.
Formerly an importer of petrochemicals, today Malaysia is an exporter of a wide range of petrochemical products.
These factors have led the plastic products industry becoming one of the most dynamic industries in Malaysia's manufacturing sector. Malaysia is currently a net exporter of plastic products, with the total export of plastic products amounting to RM21.2 billion (USD670 million) in 2011; an increase of 12.7% from 2010. It is one of the most competitive plastics industries in Asia.
The Malaysian pharmaceutical industry is producing about 30% of the domestic demand, as well as exporting to Asia-Pacific Rim countries, the Middle East, Africa, Latin America and Europe.
Malaysia is one of the few countries in the region that have been accepted into the Pharmaceutical Inspection Cooperation/Scheme (PIC/S), which has led to an increase in the country’s exports of pharmaceutical products, especially in the EU, Australia and Canada.
To further support the development of the pharmaceutical industry in Malaysia, efforts are being undertaken by the Government to develop the clinical trial services sector. Under the purview of the National Institute of Health, a Clinical Research Centre (CRC) has been established to conduct clinical trials, clinical epidemiology and economic research, and manage complex medical databases.
Currently, the manufacture of pharmaceuticals, biopharmaceuticals, nutraceuticals, microbials and probiotics are eligible for Pioneer Status or Investments Tax Allowance incentives. The development, testing and production of pharmaceuticals promoted under biotechnology are eligible for High Technology Pioneer Status or Investments Tax Allowance incentives.
Historically a major producer of rubber, the Malaysian rubber products industry comprises of over 500 companies that manufacture latex products, tyre and tyre-related products, and industrial and general rubber products. The industry contributed RM18.1 billion (USD5.7 billion) to the export earnings of Malaysia in 2011.
The Malaysian government have implemented various initiatives to promote the development of Malaysia's resource-based industries to diversify the country's sources of growth, targeting a contribution of RM52.9 billion (USD16.7 billion) by the rubber industry to the GNI by 2020. In addition to the fiscal incentives currently available for specifically for the rubber products industry, companies in the rubber industry that reinvest in expansion of their projects are eligible for Pioneer Status or Investment Tax Allowance.
Textiles and Apparel
In 2011, the textiles and textile products industry was the 10th largest export earner for Malaysia, contributing approximately 2.3% to the total exports of manufactured goods at RM10.8 billion (USD3.4 billion).
To encourage investments in the textiles and textile products industry, several textile products and production activities have been gazetted under the Promotion of Investment Act 1986 and may be eligible for tax incentives under the Pioneer Status or Investment Tax Allowance. These textile products and production activities are:
1. Natural or man-made fibres
2. Yarn of natural or man-made fibres
3. Woven fabrics
4. Knitted fabrics
5. Finishing of fabrics such as bleaching, dyeing and printing
6. Non-woven fabrics
7. Specialised apparel
8. Technical or functional textiles and textile products
The majority of the larger sawmills, veneer and plywood mills that are part of the Malaysian wood-based industry are located in the East Malaysian states of Sabah and Sarawak.
In 2011, the exports of saw logs and sawn timber amounted to RM5.2 billion (USD1.6 billion), while plywood amounted to RM5.1 billion.
90% of the furniture produced in Malaysia is exported, and the country is the 9th largest exporter of furniture in the world. In 2011, exports of wooden furniture amounted to RM6.2 billion (USD1.9 billion) with the main export destinations being the USA, Japan and Australia.
The Malaysian government has launched a National Timber Industry Policy with the aim of annual industry export earnings reaching RM53 billion (USD16.7 billion) by 2020. The policy includes various programmes to support the industry in areas of innovation and technology; marketing and promotion; human capital; funding and incentives as well as developing entrepreneurs at all levels to improve their capability in management, production skills and marketing strategy.
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