The Sky is not The Limit for Malaysia’s E&E Trade
MONDAY, 20 MAY 2024, KUALA LUMPUR -- Malaysia’s electrical and electronics (E&E) sector has grown by leaps and bounds, but it is certainly not the only one competing to lead the world in the semiconductor trade space.
While the nation is in the right direction to climb higher, the right and bold action is needed to reap the opportunities that the sector will generate in the years to come, with all eyes on the Malaysia External Trade Development Corporation (MATRADE), an agency under the Ministry of Investment, Trade and Industry as it is tasked to reinforce Malaysia’s role on the global E&E industry.
MATRADE Chief Executive Officer Datuk Mohd Mustafa Abdul Aziz shared with Bernama his vision in making the industry future-proof and reaching a wider global market.
PROACTIVELY RIDING ON FTAs TO ADVANCE GLOBAL PRESENCE, INDIA NEXT
Malaysia, nestled in the heart of Southeast Asia, has become a cornerstone of the global semiconductor supply chain, with a strong presence in the United States, Europe, and China.
To date, Malaysia has signed 16 Free Trade Agreements (FTAs), including the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), facilitating seamless trade and investment flows, fueling both its integration into the global supply chain and the broader economy's growth and prosperity.
Exports to FTA partners contributed 69.6% share or RM992.81 billion of total exports last year, with main exports of E&E products, petroleum products, chemical and chemical products.
Datuk Mohd Mustafa said that through proactive engagement in international trade agreements, MATRADE can step up efforts to tap into new markets, ensuring the country does not miss the opportunity to reap the benefits of the booming E&E sector in markets like India.
India’s electronics manufacturing services industry is growing significantly, driven by a higher share of outsourcing by Original Equipment Manufacturers (OEMs) as well as its developing component ecosystems sector and government incentives.
Currently the electronics market in India is valued at $155 billion with domestic production accounting for 65%.
“Although Malaysia is among the top 10 of India’s import sources for semiconductor products in 2023, the contribution is only 2.9 per cent of the total import, and there remains vast opportunities for further growth,” he said.
He said MATRADE coordinates Malaysian companies’ participation in international trade fairs like International Electronics Manufacturing and Interconnections (IEMI) in Penang (24-25 July) and Bangalore, India (29-30 July, 2024), SEMICON Southeast Asia (SEA) in Kuala Lumpur (May 28-30), SEMICON West in San Francisco, USA (July 9-11) and Industrial Transformation Asia Pacific in Singapore (14-16 October).
For SEMICON SEA, MATRADE partners with reputable industry associations abroad such as the China Semiconductor Industry Association (CSIA), and the Taiwan Electronic Equipment Industry Association (TEEIA) to bring in their member companies for business matching programs with local companies.
“This year, MATRADE’s involvement in SEMICON SEA will take a different approach, working closely with MIDA and other government agencies like Malaysia Digital Economy Corporation (MDEC) and Malaysian Research Accelerator for Technology & Innovation (MRANTI).
“The Malaysia Sourcing Pavilion will include business matching, round table meetings, Vendor Development Programme by Intel, sourcing talks by TEEIA and the Malaysian Consortium of Mid-Tier Companies (MCMTC), pocket talk on environment, social, and governance (ESG), networking sessions and exhibitions coordinated by MDEC and MRANTI featuring Malaysian tech companies,” he added.
Meanwhile, this year marks the 15th consecutive year MATRADE has participated in SEMICON West in USA, a flagship international trade show for the global semiconductor and microelectronics industry.
SEMICON West also highlights related sub-industries such as LED, MEMS (micro-electro-mechanical systems), photovoltaics, flexible electronics, displays and nanoelectronics.
He said Malaysia’s pavilion at SEMICON West will showcase the technical capabilities of 10 Malaysian companies, seeking to explore opportunities for collaboration with foreign counterparts.
BUILDING ON MILESTONE
Datuk Mohd Mustafa said Malaysia has been the key winner with substantial benefits in the E&E sector, solidifying its position as a regional hub for semiconductor production.
On top of that, the Global Trade Atlas (GTA) ranked Malaysia as the tenth largest exporter of E&E products and the sixth-largest exporter of semiconductors, despite the challenges faced by the global electronics market.
Malaysia is also among the top 10 exporters of Automatic Test Equipment (ATE) in the world.
The nation's achievement is also well supported by better trade performance figures, having recorded a staggering RM931.39 billion or US$204.19 billion in electrical and electronics trade in 2023 alone.
A significant portion of this trade, totaling RM575.45 billion (US$126.18 billion), came from exports, highlighting the vital role of the E&E industry in Malaysia's economy, he added.
“Semiconductor devices, integrated circuits (ICs), transistors, and valves’ exports collectively made up 67 per cent to Malaysia's total E&E exports in 2023, amounting to RM387.45 billion (US$84.95 billion),” he said.
Major export markets include Singapore, USA, China, Hong Kong, and Taiwan.
“Over the next five to 10 years, the trade performance in E&E is expected to be influenced by global trends that present both opportunities and challenges.
“Malaysia should be ready to leverage these trends, which include demographic shifts, economic transformations, sustainability requirements, evolving shopper behaviours, the convergence of manufacturing costs and supply chains, uncertainties in global trade, and other factors,” he said.
He is also confident that the launch of the New Industrial Master Plan (NIMP), which aims to enhance Malaysia’s economic complexity through strategic sectoral development can support the industry’s future needs.
Among the 32 identified sectors, the E&E sector stands out, focusing on various opportunities driven by strong global demand, including moving up the value chain to focus more on front-end activities specifically in integrated circuit (IC) design, advanced packaging, and expanding wafer fabrication capabilities.
“As the global trend is geared towards advanced technology in Artificial Intelligence (AI)-powered devices, 5G, quantum computing and Autonomous Vehicles (AV), Malaysia is expanding its focus beyond IC design into high-value sectors.
“Products such as Electric Vehicles (EVs), drone tech, aerospace, and Medical Technology (MedTech), leverage on technological advancements such as the integration of AI and Internet of Things (IoT) for enhanced performance and safety, usage of new materials and technologies for lighter and climate-conscious technologies to reduce carbon emissions; robotics and automation,” he said.
He reckoned that the recent establishment of the National Semiconductor Strategic Task Force (NSSTF) and the announcement of the IC Design Hub in Selangor by Prime Minister Datuk Seri Anwar Ibrahim is critical to supporting high-value, front-end design work, moving away beyond production.
BOOSTING SMES PARTICIPATION IN E&E SPACE
Datuk Mohd Mustafa said that small and medium enterprises (SMEs) have contributed significantly to the country's exports and employment in the manufacturing sector.
These companies produce E&E components like semiconductors, printed circuit boards, passive components, as well as consumer products and will continue to be assisted.
Among mid-tier companies, ViTrox Technologies Sdn Bhd shared that various support provided by government entities, particularly MATRADE, through comprehensive market insights, extensive networking opportunities and strategic partnerships have significantly contributed to solidifying its stature as a forefront innovator in manufacturing solutions.
“ViTrox Technologies’ international export trajectory, which spanned 32 countries and involved engagement with 363 customers worldwide in 2023, exemplifies our strategic approach to global market penetration,” Business Development Senior Director Gary Leong Chee Yeong said.
Founder and group managing director of JF Technology Bhd (JF Tech) Datuk Foong Wei Kuong said valuable support provided by MATRADE has been instrumental in the company’s journey.
“For instance, the Malaysian Pavilion booth organised by MATRADE for SEMICON West in San Francisco opened doors in the US market.
“Separately, our recent participation in the Mid-Tier Companies Development Programme Wave 10 as part of the export growth acceleration program by MATRADE led to numerous opportunities and valuable new partnerships,” he noted.
CG Global Profastex Manufacturing Sdn Bhd, a woman-owned SME said since becoming a member of MATRADE in 2018, the company has expanded its global market presence in the US, United Kingdom, France, Australia, and China through participation in international trade fairs and business matching activities.
“The existence of MATRADE offices worldwide, staffed with capable representatives, facilitates a smooth process of entering new markets,” Managing Director Siti Padillah Abdul Wahab said.-- BERNAMA
