Being a trading nation, Malaysia continually seeks innovative ways to grow their market and deliver more improved products. The Southeast Asian country has radically improved its manufacturing sector over the past few years, making it the leading player in the global market. This is what made Malaysia into a major industrial nation.

The country’s manufacturing industry has undergone rapid evolution in recent decades, starting from mass-scale production to the use of robotics for enhanced efficiency. The industry experts have learned how to use intensive labour force and smart technologies throughout the production lines and supply chains, thus enabling the sector to evolve consistently.

Trends and Government Initiatives

After the evolution of Industry 4.0, Malaysia has learned to infuse automation into their systems and core business processes. Evolution doesn’t depend on how many technologies the industry has. But, it largely depends on how well one has applied them to their core functions.

Malaysia is among those nations that have successfully acquired the skills of utilizing efficient manufacturing technologies and applying advanced digitization to add value to their products and services. This facilitates automation of all critical processes without human dependence, thus increasing efficiency and productivity.


Brief Insight Into Industry 4.0 and the Importance of Transformation

Industry 4.0 refers to the current trends of process automation and data exchange using advanced manufacturing technologies. These include the Internet of Things (IoT), Industrial IoT, cyber-physical systems (CPS), cloud computing, artificial intelligence (AI), cognitive computing, 3D printing, predictive maintenance, smart sensors, and others.


The Mathematics of Industry 4.0

Image source: The Mathematics of Industry 4.0

These technological trends are designed to facilitate machine to machine (M2M) communication using minimal to no dependence on human force. The aim of adopting the Industry 4.0 model is to make a complete transformation of one’s manufacturing firm into a ‘Smart factory’, giving a competitive edge over other brands and retailers.

Industry 4.0 transformers the way products are built, designed, delivered, used, and operated. It also enhances and monitors the after-purchase performance like maintenance and servicing. Overall, the 4th Industrial revolution has the ability to transform processes, operations, machinery, supply chain management, and the entire energy footprint of manufacturing firms to create ‘smart factories’.

With the implementation of Industry 4.0, Malaysia has become successful in widening its market globally and extending its services to international clients. Besides automating core business functions, these smart technologies have allowed industries to customize their products to cater to the unique needs of modern-day digital consumers.

Additionally, Industry 4.0 can also address several issues concerning manufacturing practices, including the efficient management of supply chains, making economic usage of valuable resources such as time, money, and workers, reduction in wastage, and taking care of the health and safety of the employees. In short, if one has the right knowledge about the application of the right technologies, there would be endless potential for growth.


The Status of the Malaysian Manufacturing Sector

At the global front, manufacturing firms are already exploring the limitless possibilities of Industry 4.0 and reimagining the future. The traditional manufacturing processes and machinery are undergoing digitization and technological transformation to accelerate efficiency, flexibility, and speed to survive the fierce market competition.

Talking about Malaysia, the country’s manufacturing sector is rapidly shifting to digitization, delivering higher value-added products and services, efficient resource utilization, and implementing advanced manufacturing resources.

Moreover,  the nation has realized the need to have enhanced productivity, better innovation capacity, higher job creation, a high-skilled talent pool, and maintaining societal well-being and facilitating economic prosperity. Thus, executing these can help the entire country position itself as a smart manufacturing industry on a global level.


What Manufacturers Must Do Today


Image Source: Malaysian Investment Development Authority (MIDA)


What is Industry4WRD: National Policy on Industry 4.0?

On 31 October 2018, the Industry4WRD: National Policy on Industry 4.0 was launched to drive digitization and Industry 4.0 transformation of the manufacturing and other associated sectors in Malaysia. A number of initiatives have already been taken by the Malaysian Government and industry at the national, state, and regional levels.

The Industry4WRD: National Policy on Industry 4.0 can pave the path to achieve all these Industry 4.0 trends and practices.  Furthermore, this would help the country fulfil its commitment to the Sustainable Development Goals (SDGs) of the United Nations.

This objective of strengthening the country’s manufacturing sector is to streamline and form a more cohesive national agenda to accelerate the nation’s transformation into a smart manufacturing system.


WATCH: Industry4WRD Readiness Assessment

Objectives of the National Policy on Industry 4.0

The primary objectives of the Industry4WRD: National Policy on Industry 4.0 is threefold – A-C-T, an acronym for Attract-Create-Transform. Let’s have a look at each of them:

1. Attract

Malaysia’s manufacturing sector focuses on attracting stakeholders to Industry 4.0 technology trends and processes to make the nation a significant manufacturing location. Besides, it also works on maximizing SME inclusion for 4IR (the Fourth Industrial Revolution) adoption. In short, the key activities to be performed are:

  • Industry 4.0 adoption
  • SME inclusion
  • Making Malaysia a preferred manufacturing hub


2. Create

Industries should strive to create the most favourable ecosystem for adopting the 4th Industrial revolution technologies and align them with the existing infrastructure and practices, as well as with future development initiatives. This means one should create the right ecosystem for:

  • Innovation capacity in the future
  • Exploring talent pool and skillsets
  • Digital infrastructure
  • Data availability, i.e., easy accessibility and sharing
  • Funding support
  • Collaborative platforms


3. Transform

Manufacturing firms must transform the nation’s industrial capabilities in an accelerated as well as a holistic manner. It includes:

  • Enhancing labour productivity
  • Sharing high-skilled jobs
  • Increasing cost-efficiency
  • Development of local technologies
  • Technology and innovation capacities


The Industry4WRD: National Policy on Industry 4.0 Framework

The framework for the National Policy on Industry 4.0 is as follows:

1. The Vision

The country’s vision for its manufacturing industry in the upcoming 10 years is to become a:

  • Strategic partner for intelligent manufacturing and other similar services across Asia Pacific countries
  • Primary centre for establishing high-tech industry
  • Complete solutions provider for all the advanced 4IR technologies.


2. The National Goals

The policy aims at setting specific goals to measure and drive the progress of transformation, which ensures:

  • Labour productivity growth
  • Innovation capacity
  • Manufacturing contribution to the nation’s economy
  • Providing high-skilled jobs


3. The Shift Factors

Malaysia’s manufacturing sector needs to optimize a set of shift factors in a balanced manner, which includes:

  • People
  • Progress
  • Technology


4. The Enablers

The country’s manufacturing firms require specific enablers to identify and analyze their policies, strategies, and effective action plans. The enablers are collectively known as F.I.R.S.T., including:

  • Funding: Making funding strategies to invest in R&D and switch to new Industry 4.0 technologies.
  • Infrastructure: Enabling an efficient digital infrastructure and a smart manufacturing ecosystem.
  • Regulations:                                                                              Increasing the awareness of the need for Industry 4.0 adoption.
  • Skills & Talent:                                                                     Upskilling the existing human resources and producing future talents.
  • Technology:                                                                                     Gaining better access to smart technologies.


Issues and Challenges Faced by Malaysia

“Despite being the backbone of Malaysia’s business environment, SMEs perform relatively poorly in digitalization. There exists a digital divide among businesses in Malaysia”
Amos Tong, UCLA economics undergraduate, & Rachel Gong, Khazanah Research Institute,researcher

The common challenges faced by Malaysia include:

  • Lack of awareness of the need for and the impact of Industry 4.0 technologies, especially among SMEs, thus reducing the chances of exploring opportunities and the disruption of business models.
  • Lack of easy access to vital data to understand the industry best practices and analyze the relevant use cases.
  • Shortage of the necessary skills, talents and knowledge for adopting Industry 4.0, especially in areas like AI, IoT, robotics, cybersecurity, and many others.
  • Higher adoption costs and a longer payback period for the 4IR processes and technologies.
  • Lack of proper understanding of the benefits and costs associated with Industry 4.0 transformation.
  • Determining the unique customer demands and expectations for customizing products and facilitating faster deliveries.
  • Exposure to cyber threats and attacks with technology and connectivity up-gradation, especially IoT.
  • Limited use of adoption and low digital transformation in the manufacturing industry, especially among SMEs.
  • Fewer visible success stories of Industry 4.0 adoption by local companies.
  • Limited coordination among the stakeholders to work towards a common goal.
  • Lack of conducting proper training programmes to upgrade skills and talents, both for the existing and new workforce.
  • Lack of appropriate collaboration with research institutes, industry leaders, and universities.

To address these above-mentioned potential issues and challenges that Malaysian manufacturing companies often face, the government has initiated the National Policy on Industry 4.0. Additionally, a series of the government agency and industry-specific workshops were conducted to involve and reach a board community of stakeholders and industry experts.


The Future

From the above analysis of the common challenges and issues, five key themes emerge that encourage the growth of an end-to-end 4IR ecosystem in Malaysia. These include:

  • Upskilling and reskilling all the existing as well as future talents and skills.
  • A significant evolution in collaborative platforms and innovation capabilities to develop and have access to more efficient and cost-effective technologies for addressing specific consumer needs.
  • Inclusion of SMEs to encourage better involvement for enhancing productivity.
  • Focused funding strategy and support is required for faster and more efficient Industry 4.0 adoption.
  • Powerful digital infrastructure is needed to secure 4IR operations, thus increasing reliability and safety.

Therefore, these primary themes would guide developing and streamlining the National Policy on Industry 4.0, as well as the four major goals of Malaysia’s manufacturing sector – GDP contribution, high-skilled employment, national productivity, and innovation capabilities.

Build resilient business operations with intelligence, insights and expertise

Contact us