Vision, Goals and Missions: Malaysia’s New Industrial Development Plan 2030

 

Despite this overall positive development, the new Malaysian Government under Prime Minister Anwar Ibrahim has identified some notable shortcomings and bottlenecks that urgently need to be addressed in order to stay competitive internationally and to further improve the living conditions of the Rakyat (i.e., its people). These challenges include

 

On top of that, three global mega trends have emerged that compel Malaysia to re-think its economic priorities and upgrade its industrial capabilities as soon as possible: striving for resilience due to geopolitical shifts, embracing digital transformation and aligning the country’s industrial activities with environmental, social and governance (‘ESG’) requirements.

 

It is against this background that on 1 September 2023 PM Anwar Ibrahim officially presented Malaysia’s New Industrial Master Plan 2030 (‘NIMP 2030’) which pursues the overarching goal of devising and implementing solutions to the challenges and trends described above.

 

Drafted under Malaysia’s Ministry of Investment, Trade and Industry (‘MITI’) following multiple stakeholder focus sessions, public consultations and strategic engagements with different industry players, NIMP 2030 is closely tied to the Government’s new EKONOMI MADANI policy. NIMP 2030 differs in so far from previous IMPs as it adopts, for the first time, a so-called mission-based approach instead of laying too much emphasis solely on specific sectors. 

 

Although all missions and enablers under the plan are supposed to be implemented contemporaneously, Mission 1 (Advance economic complexity) marks the logical first step in the upgrading of Malaysia’s economy to propel itself upwards in the global value chain. The underlying strategies and action plans (such as ‘shift from basic to speciality chemical’, ‘identify high value-added opportunities in the aerospace, pharmaceutical and medical devices sectors’ or ‘leverage alliance with ASEAN countries to integrate the semiconductor, advanced materials and clean energy value chain’) give useful guidance for both public and private stakeholders which actions in which fields to prioritise in the coming years.

 

Mission 2 (Tech up for a digitally vibrant nation) responds to the need for digital transformation both in industrial production as well as in related public administration. The increased adoption of innovative technologies such as state-of-the-art automation and robotics, AI models for different application scenarios and cloud-based integration of industrial systems are deemed relevant to enhance productivity and efficiency. The Malaysian Government intends to create a national digital platform for manufacturing and even make the level of factory automation a requirement when accessing applications for manufacturing licenses in the future.

 

The transition towards more sustainable manufacturing practices and the shift towards the use of more renewable and clean energy are two of the strategies under Mission 3 (Push for Net Zero) that underline Malaysia’s commitment to achieve Carbon Net Zero by 2050 as also envisioned in its new two-parts National Energy Transition Roadmap (‘NETR’). Similar to the digital transformation, the Malaysian Government sees great growth potential also within different areas of the sustainability transformation of the manufacturing industry, in particular in the areas of renewable energy, electric (and other new-energy) vehicles, Carbon Capture, Utilisation and Storage as well as circular economy.

 

Lastly, Mission 4 (Safeguard economic security and inclusivity) should serve as guideline for more resilient supply chains that can withstand present and future disruptions caused by global events such as climate change, the recent Covid-19 pandemic or the geopolitical tensions between the United States and China. At the same time, it addresses the urgent need to level out disparities in economic participation between different states and different groups within the Malaysian society. 

 

All four Missions and the supporting enablers (i.e. (i) mobilise financing ecosystem, (ii) foster talent development and attraction, (iii) further improve ease of doing business and (iv) the introduction of a so-called ‘whole-of-nation’ governance framework) are applied to all manufacturing activities in Malaysia, but a particular focus is placed on support of small and medium-sized enterprises. 

 

The implementation of NIMP 2030 will be carried out in accordance with the above-mentioned ‘whole-of-nation’ approach which consists of a multi-tiered governance structure involving various public and private decision-makers and stakeholders. This structure should ensure transparency and accountability on one hand and provide a mechanism for performance evaluation on the other. 

 

NIMP 2030 constitutes the ambitious attempt by the Malaysia Government to catch up with developments and profound changes in the field of industrial production and society that have been taking place around the world in the last decades. Its explicit remit is to search for solutions to the pressing challenges not only by imitating other countries’ approaches, but rather by reflecting upon what is the most suitable approach in the particular Malaysian context. Given the uniqueness of Malaysia’s societal composition and economic situation, this seems appropriate. Whether the goals of NIMP 2030 can be achieved within the comparatively short timeframe of seven years – previous IMPs were conceived for 10 or even 15 years – can only be answered after first experiences in its implementation have been made. 

 

What can be said with certainty is that the Master Plan and the missions, strategies and action plans contained in it provide very useful guidance for foreign investors in the coming years. Investment decisions that take due account of the strategic goals and missions formulated by the Malaysian Government and that are continuously checked against specific support policies may significantly increase their chances of positive returns over a longer time. The flipside is that business practices going against NIMP 2030’s strategic orientation will sooner or later meet considerable opposition from either the private sector (e.g., difficulties finding suitable business partners or talents) or the state (e.g., through compulsory laws sanctioning unsustainable practices). It is, therefore, strongly advisable for foreign investors to look closely into if and to what extent their current and future investment projects align with NIMP 2030 and make necessary adjustments to avoid missing out on business opportunities or running afoul of statutory or regulatory compliance provisions.