Malaysia’s economy ranks in the fourth position in terms of size in Southeast Asia, while globally it is 38th. The reason for the higher ranking in Southeast Asia is that the country has workers who are more productive because of better education, better technology, and having knowledge-based industries. In fact, reports from 2017 show that regarding competitiveness, the Malaysian economy is position 23 in the world. This statistic is in stark contrast to neighboring countries such as Indonesia, Vietnam, the Philippines, and others.
Due to the advancements in the crucial industrial sector, the country has been able to develop a highly diversified and robust market. For example, in 2015, the value of exports stood at $57.258 billion. Recently, in 2017, the World Bank reported that the nation’s income per capita was 10,620 nominal US Dollars.
Major Industries In Malaysia
In total, the industrial sector of Malaysia accounted for more than a third (around 36.8%) of the nation’s GDP in 2014. As of 2012, the sector employed almost 40% of the Malaysian labor force. The highest contributors from this sector are the Electronics industry, the Construction industry, and the Automotive industry.
Electrical and Electronics Industry
The electrical and electronics (E&E) sector is the number one contributor to the manufacturing industry in Malaysia. Data shows that the sector accounted for about 32.8% of the total exports in 2013 while providing employment to about 27.2% of the total workforce in the same year. The E&E sector is responsible for fulfilling the insatiable need that the world has for technological equipment like mobile devices, storage devices, optoelectronics, and embedded technologies.
Within the larger sector of the E&E industry, there is a smaller sector that specializes in the production of electrical components. Under this smaller sector, the production includes things like semiconductor gadgets, printed circuits, passive components, and a few other things. In this sub-sector, the leading industry in the export business for the larger E&E sector is the one for semiconductor devices. In 2013, this sub-sector accounted for about 47% of the total exports from the E&E sector. So far, the nation is a major hub for global firms, which are more than 50. Some of the notable names that have branches there include Intel, AMD, ASE, Texas Instruments, and others. Firms that have Malaysia owners in this sub-sector include the likes of Globetronics, Green Packet, and a few others.
Another sub-sector under the larger E&E industry is the one for the manufacturing solar equipment (Photovoltaics). In 2013, the total production of solar cells, solar panels, and solar wafers reached a whopping 4,042 MW. A year later, in 2014, Malaysia was third, behind the EU and China, in terms of production of photovoltaic equipment. The majority of global firms involved in this sub-sector have major branches in Malaysia. These companies include the likes of First Solar (over 2,000 MW capacity situated in Kulim), Hanwha Q Cells (1,100 MW capacity situated in Cyberjaya), and SunPower (1400 MW capacity located in Malacca). Other companies include Panasonic, Jinko Solar, JA Solar, and a few others.
This industry is well developed with a total of 27 producers of vehicles and a total of 640 manufacturers of automotive components or parts. In Southeast Asia, the industry is the third largest while it ranks in the 23rd position on a grander global scale. In a single year, the sector churns out well over half a billion vehicles. About 4% (around $9 billion) of the total Malaysian GDP comes from this sector, which is responsible for the provision of employment of more than 700,000 Malaysians from all over the nation.
Historically, this sector has been in existence since the time when the British colonized the area. Established in 1967, the sector was aimed at promoting industrialization on a national scale in the country. The government has put in a lot of effort since the 1980s to ensure that the sector developed properly. Some of the efforts included the establishment of a national car company known as Proton. In the early 1990s, the government established another car company known as Perodua.
With the establishment of the two previously mentioned car companies, Malaysia became the first nation in Southeast Asia to have an indigenous automotive firm. Further history for Malaysia was made in 2002 after Proton made Malaysia the 11th country in the globe to manufacture cars from the start to the finish. Essentially, this involves coming up with a design for the car, engineering the car, and finally manufacturing. Joint venture companies also exist between the locals and foreign investors. While the sector mainly services the local populace, the number of exports to other countries has been steadily going up every year.
The relatively large industry is worth well over $32 billion. The erection of non-residential buildings contributed the largest share at 34.6%. This share was closely followed by the civil engineering sub-sector with 30.6%, then by residential building with 29.7%, and special trades with 5.1%.
Looking at the states of Malaysia, the highest value of construction undertakings was recorded in the state of Selangor with a contribution of 24.5%. The state of Johor is second with 16.5%, followed by Kuala Lumpur with 15.8%, then Sarawak with 8.6%, and then Penang with 6.4%. In total, these top five states accounted for just over 70% of the total worth of construction projects in Malaysia.
The major capital expenditure projects have been one of the driving forces behind the expansion of this sector in Malaysia. Other key factors are government efforts and mega-projects between the public and private sectors such as Iskandar Malaysia, KVMRT, and Tun Razak Exchange.
One of the newest sectors of Malaysia is the defense industry, which was established recently in 1999. One of Malaysia’s leading automotive manufacturer, DefTech, is responsible for making armored cars and special vehicles for the Malaysian army.
The navy sector is spearheaded by Boustead Heavy Industries that is tasked with the manufacture of warships and ensuring the technology used in the vessels is up to date. So far, four vessels have been made with six others in the pipeline.