Overview of E & E sector
Malaysia’s E&E sector is a diverse and wide-reaching area of the economy. Analysis of the end-to-end value chain was undertaken across three key perspectives in order to form a holistic assessment of its operations.
First, the sector was examined through a subsector lens, covering the various subsegments of electronics and electrical products produced within the country. Secondly, a value chain perspective was adopted to evaluate the different stages across the E&E value chain, ranging from frontend segments such as research and development & design to back-end segments such as assembly and testing, then business services including marketing, distribution and sales. Finally, the different types of activities and services engaged by the sector were analysed, looking at those which could be vertically integrated with the local E&E sector. This includes activities such as strategic command and control, where major E&E players have established their global hubs, centres of excellence, and fulfilment centres in Malaysia.
Subsectors (non-exhaustive)
- Electronic Products
- Electrical Products
Components
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Semiconductors
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Passive components
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Printed Circuit Board Assembly (PCBA)
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Leadframe
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Display panel
Consumer
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Audio video products (television receivers,
infotainment products, etc)
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Digital cameras
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Game console
Industrial
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Telecommunications Devices
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Multimedia (such as computing devices)
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Digital transmission & receiver devices
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Data storage
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Energy storage
Electrical
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Distribution boards Control panels
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Switching apparatus
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Transformers, cables and wires
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Solar cells and modules
Aspirations across each NIA for the sector
Moving forward the sector-level initiatives outlined in the New Investment Policy focuses on enabling the sector to grow moving forward, with specific target outcomes across each National Investment Aspiration.
Increase economic complexity
Malaysia’s top contributor to exports and economic complexity, with mature presence in back-end segments.
Expansion into high-value and economically complex activities by developing front-end capabilities and modernising back-end segment.
Create high-value job opportunities
Major contributor to high-skilled and semi-skilled employment, yet certain segments still rely heavily on low-cost foreign labour.
Generating opportunities for a greater share of high-skilled employment through widespread adoption of technology.
Extend domestic
linkages
Malaysia is a major exporter, but domestic participation in global value chain trails regional E&E peers.
Homegrown champions act as key suppliers across global E&E value chains, with enhanced SMEs participation.
Develop new & existing economic clusters
Mature clusters with longstanding track records built around major E&E players, but focused within several key geographies
World-class E&E clusters operating as part of comprehensive ecosystems housing global E&E leaders.
Improve
inclusivity
Investments and jobs concentrated around four select states of Penang, Johor, Selangor, and Kedah.
Economic knock-on impacts from successful local E&E sectors create wider economic benefits. Investment focusing on E&E regions creating adjacent value for the rakyat by benefiting the back-end of the E&E value chain and complementing other sectors.
Enhance ESG
practices
Environmental risks are driven by high GHG emissions and relatively short finished product life cycles.
Social risks are driven by concerns around health, safety and labour issues.
Concerted shift by industry players to minimise GHG emissions to mitigate impact from any carbon taxes in the future.
Sustained shift towards higher value-add activities within E&E value chain and wider adoption of automation to minimise social risks.
Key Investment opportunities for E & E sector
Malaysia is well positioned to leverage key short-term opportunities as they emerge over the next five years. There also remain other nascent opportunities which will require further development across key areas such as talent and innovation in order for the country to unlock the greatest potential value. These medium-term opportunities present important potential to develop the industry but will necessitate a longer timeframe to realise. While these opportunities are not ripe for Malaysia to take advantage of, they still present a medium-term opportunity as the local environment evolves. As these subsectors continue to grow in terms of market size and technology, Malaysia should take an agile and proactive approach, broadening the talent and technology understanding required to explore these opportunities.
- Short Term Opportunities (opportunities for the next 5 years)
- Medium Term Opportunities (opportunities beyond 5 years)
Initiatives to unlock E & E sector
Malaysia needs to address several pivotal challenges if it is to encourage further investments in key areas of the E&E ecosystem, particularly if it aims to capture the value highlighted in the three short-term opportunities. These efforts will need to focus on reducing barriers to evolution, promoting and developing clusters which focus on innovation and R&D as avenues of growth, and promoting the sector as an attractive investment opportunity. The New Investment Policy identifies four key initiatives to drive this transformation to ensure Malaysia remains one of the world’s finest destinations for E&E activities.
Investment accelerator targeted at participants within crucial parts of the E & E value chain (eg : R & D materials and substrate suppliers, advanced packaging players) Learn more
- Sector-wide
- Opportunity Specific
