MIDA's advice for Malaysian industry to reduce reliance on foreign workers

Bernama has reported that the Malaysian Investment Development Authority (MIDA) has urged SMEs to raise their efficiency levels, strengthen inter-firm linkages and respond timely to market changes to remain competitive.

In the report, MIDA’s deputy chief executive officer Datuk N. Rajendran said that local companies, particularly those in the labour intensive industries such as the furniture sector, could reap much benefits by embracing the potential of Industry 4.0 technologies.

This includes smart manufacturing, robotics and the Industrial Internet of Things (IIOT) to significantly increase production volume and reduce dependency on foreign labour.

"When you move from high labour intensive industries to machinery, you will have three added benefits, namely, in terms of volume, machines can of course produce more compared to human labour,” he said.

He added: "Secondly, in terms of precision and accuracy, if you want to compete globally, you cannot afford any human errors in your product and thirdly, in terms of pricing, you will have a cheap but high quality product over a shorter period of time.”

Datuk Rajendran also highlighted that “this will reduce (our) dependency on foreign workers” in the long run. Using Muar Furniture Park as an example, he said that “we hoped that it would emerge as a state of the art project that adapts to high level of technologies in line with the Industry 4.0 aspiration.”

This was shared at a press conference after he attended the Supply Chain Conference for the Southern Region in Johor Bahru on 17 Aug 2017.

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Datuk Rajendran added that the Automation Capital Allowance (ACA) was introduced to encourage automation adoption in the manufacturing sector, under the Budget 2015.  

The initiative provides an automation capital allowance of 200 per cent for high labour intensive industries like rubber products, plastics, wood, furniture and textiles.

He added: "For this scheme, MIDA approved 32 applications in 2016. In line with the Ministry of Finance's announcement to introduce specific incentives in relation to Industry 4.0 for this year's budget, MIDA is currently identifying suitable incentives to assist companies in their technological transformation journey.”

"Aside from this, MIDA also has the Domestic Investment Strategic Fund (DISF) allocation of RM1 billion under the 11th Malaysia Plan that is given to Malaysian companies wanting to enter the global value chain of Multinational Corporations (MNCs),” he said.

As at 30th June 2017, MIDA approved RM1.3 billion for 261 projects under the DISF with investments valued at RM12.7 billion.

Rajendran said MIDA would work closely with the Johor Corporation (JCorp) and other relevant stakeholders to ensure the new Muar Furniture Park has all the right value propositions to spur the adoption of Industry 4.0 among local companies.

This will further reinforce Johor's position as Malaysia's main exporter of high-value added wooden furniture.

Additionally, Johor will be setting up a Robotic Future City following the signing of an agreement between JCorp and Siasun Robot Investment during Prime Minister Datuk Seri Najib Razak's visit to Beijing in May this year.

Once it materialises, this RM15 billion project is poised to develop the robotic industry, as well as spur the growth of various supply chains in the country.

Johor is among the top recipients of investments in the manufacturing sector. As at 2016, a total of 4,464 projects with investments valued at RM145.2 billion had been implemented in the state. More than 500,000 locals have benefitted from these projects through employment.

The state continues to sustain its position in 2016 in emerging the largest recipient of approved manufacturing projects with 165 worth RM26.4 billion.

According to the report, these projects are poised to generate more than 8,500 job opportunities for Malaysians.

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