BACK in 2015, many had predicted that the Malaysian economy would dip into recession by 2018, or even earlier. Perhaps, this was based on historical data which suggests that the economy tends to plunge into a recession every seven to 10 years.
The last time the economy experienced a recession was in 2009, when gross domestic product (GDP) contracted to 1.5 per cent. There were other recessions prior to this, one in 1998, and another in 1985. The depth of the recession was more significant in 1998 when GDP took a dive to negative 7.4 per cent. In 1985, GDP contracted to 0.9 per cent.
Given this background, what is the prospect for the Malaysian economy next year?
Clearly, there is no indication whatsoever that the economy is on the path of recession or crisis. On the contrary, there is evidence emerging that suggests the economy is on course to become a high-income nation by 2020.
The World Bank, based on simulations, predicted that we are on track to achieve the target. In fact, according to Malaysian Institute of Economic Research (MIER) analysis, Malaysia may even arrive at the high-income status as early as the first quarter of 2018.
The consensus forecast for Malaysian economic growth in 2018 is within the range of 5.5 to 5.8 per cent, with the prospect of stable inflation and low unemployment. There is evidence to suggest that the overall wellbeing of the people has improved steadily as incomes edged higher, especially for the bottom 40 (B40) group. Data shows that the education system is improving, number of jobs growing, income and regional inequalities are being reduced, and public transportation is becoming better over time. And, this trend is set to continue next year for reasons which I will elaborate.
For the first time since the great recession, the world economy is in a somewhat positive mood. It is projected to grow at more than 2.5 per cent next year. Interestingly, both developed and emerging economies are forecast to perform better next year.
The United States and the rest of Europe are expected to turn in an average growth rate of two per cent in 2018 while China, despite its slower than expected growth rate, is still a major force, with an economic trajectory of around 6.7 per cent next year. And without a doubt, the recently unveiled 2018 Budget, touted as the “mother of all budgets”, will further boost the Malaysian economy as we approach 2018, especially the people part.
The 14th General Election (GE-14) will be the central issue next year. While the government has a clear economic plan, a policy direction and a vision, the opposition has merely an incoherent economic wishlist: to abolish the Goods and Services Tax (GST), to have free education and to reduce the civil service. These are not economic plans, they represent an economic wishlist. Contrast it with the government’s Economic Transformation Programme (ETP), which is set to turn the country into a high-income, inclusive, and sustainable economy by 2020.
Instead of reverting to the past, the government is set for the future beyond 2020 with the Transformasi Nasional 2050 (TN50) vision. TN50 will prepare Malaysians, especially the youth, for future challenges such as the Fourth Industrial Revolution (Industry 4.0), an ageing society, the era of robots, climate change and the digital economy.
Indeed, with the launch of the Digital Free Trade Zone (DFTZ) this year, 60,000 high-income jobs are expected to be created primarily for the youth.
From the perspective of financial management of the country, the prospect for 2018 is promising.
Our international reserves now stand at US$102.2 billion (RM416.97 billion), which is sufficient to finance 7.5 months of retained imports and 1.1 times short-term external debt.
This compares starkly with 1998, when our reserves stood at a mere US$20 billion, sufficient to finance just 2.6 months of retained imports.
As for the prospect of the ringgit strengthening, we can see that the Malaysian currency is now performing well at RM4.08 against the US dollar compared with 1998 when it was at RM4.88.
Other indicators, such as the inflow of foreign direct investments (FDIs) and trade activities are also expected to improve. This is due to major investments in public transportation infrastructure and strong bilateral ties with important economies such as China, the US, Saudi Arabia, India, and Japan.
The 14 Malaysia-China business memoranda of understanding (MoU) and the 31 Malaysia-India business MoUs for instance, are expected to bring about RM302.4 billion worth of investments into Malaysia.
Multi-regional economic links such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership are also set to take effect in 2018.
That said, 2018 will surely be another encouraging year for Malaysia. Have a great New Year.
Dr Irwan Shah Zainal Abidin (2017, December 29). 2018 a good year for Malaysian Economy. New Strait Times. Retrieved from

The government is aggressively undertaking various efforts to assist industry players in embracing Industry 4.0 through the adoption of automation and smart manufacturing.
Malaysian Investment Development Authority (MIDA) strategic planning (manufacturing) executive director Zabidi Mahbar said Ministry of International Trade and Industry (MITI) and MIDA are heavily involved in formulating strategies and conducting related research.
“The research includes the “Future of Manufacturing” Study on the 3+2 catalytic and high growth potential sectors identified under the 11th Malaysia Plan and the National Plan for Industry 4.0,” he said in his keynote address during the East Malaysia Domestic Investment Seminar in Sabah, today.
He said both research documents are expected to be completed by the first quarter of 2018.
“Since 2015, the government has provided a facility in the form of Automation Capital Allowance for automation expenditure to assist manufacturing companies in embracing this new concept,” he added.
As at October 2017, MIDA has approved a total of 71 applications of which two applications approved were from Sabah.
In the recent Budget 2018, the government highlighted several new incentive packages to accelerate the growth and adoption of smart manufacturing and Industry 4.0 in Malaysia.
“With these facilities in place, we would like to encourage more companies to adopt smart manufacturing technologies and processes that will in return serve them well by reducing dependency on foreign labour, improve productivity and enhance their long term competitiveness,” Zabidi said.
He pointed out as the principal investment promotion agency of Malaysia, MIDA seeks to attract quality investments, which would have spillover effects towards generating greater prosperity for Malaysians.
“Sabah is certainly one of the recipients of such investments. As at December 2016, a total of 757 manufacturing projects with investments worth RM19.7 billion have been implemented in the state,” he said.
Zabidi said there are more than 91,000 Sabahans have benefitted from these projects through employment and Sabah continues to attract additional approved investments of more than RM400 million this year.
The approved investments include in the services sector particularly the hotel and tourism; energy generation and conservation projects, and in the manufacturing sector in the first half of 2017.
“We know that a comprehensive ecosystem will be a natural magnet for investments. With that in mind, the government continues to undertake concerted efforts to put in place the required enablers that will support investors in doing their business in this country.
“We are optimistic the latest infrastructure development project such as the Pan Borneo Highway will be an impetus to attract more quality investments into East Malaysia, particularly in the targeted sectors such as petroleum products, chemical and chemical products, oil & gas, building materials, food manufacturing, furniture, tourism and agriculture,” Zabidi said.
More than 200 industry players attended the one-day programme, which was part of MIDA’s continuous efforts to update the industry players especially in East Malaysia on the latest policies and facilities that are available.
It also featured two plenary sessions moderated by Federation of Malaysian Manufacturers (FMM) and Persatuan Usahawan Maju Malaysia (PUMM) and key speakers from MIDA, Malaysia External Trade Development Corporation (MATRADE), SME Corporation Malaysia (SME Corp), Halal Industry Development Corporation (HDC), Small Medium Enterprise Development Bank Malaysia (SME Bank), Malaysian Industrial Development Finance (MIDF), and Credit Guarantee Corporation (CGC).
The event also featured business clinic sessions that enabled participants to engage and obtain direct consultations with various agencies at both federal and state levels.
Ayisy Yusof (2017, December 7). Government Assists Industry Players to Embrace Industry 4.0. New Strait Times. Retrieved from
The manufacturing sector provided further signs of Malaysia’s economic recovery, registering an expansion rate last month that was not seen since 2014.
According to Nikkei Malaysia’s monthly Purchasing Managers Index (PMI), Malaysian factories recorded a score of 52.0 in November, up from 48.6 in the month before; the rate was the highest recorded since April 2014.
The index considers any score above 50 to be an improvement, while those below signify a contraction. Malaysia’s score was also the second-highest in the Asean region.
“The overall upturn reflected accelerated growth in both output and new orders, supported by improvements in domestic and overseas demand conditions.
“In response to greater inflows of new business, firms raised their payroll numbers at the joint-strongest pace since December 2012,” Nikkei Malaysia said in its report.
November was also the first time Malaysia has climbed above 50 in the PMI this quarter, with Nikkei Malaysia saying that factories were also receiving fresh orders at a rate not seen since 2014.
Backed by stronger foreign demand, the manufacturing sector also reported that export orders in November grew at the second-fastest rate since Nikkei Malaysia began the PMI in 2012.
“The degree of business confidence towards the 12-month outlook for output was the strongest in nearly four years. Positive projections for stronger demand conditions and new projects were cited as the key factors behind positive sentiment,” the firm added.
The news follows Malaysia’s sterling performance in the third quarter, when the country beat forecasts to register a gross domestic product (GDP) growth of 6.3 per cent, prompting Bank Negara Malaysia to raise its full-year projection to between 5.2 and 5.7 per cent.
The ringgit is also recovering on the back of improving oil prices, and is hovering at the 4.09 mark against the US dollar.
Elsewhere in the region, factories in the Philippines were also enjoying a boom, with a score of 54.8 in the Asean-level PMI. Myanmar was third with 51.6.
“Meanwhile, Indonesia’s manufacturing industry recorded another marginal upturn, albeit one that was stronger than in the previous month. Thailand reported stable operating conditions in November after a slight deterioration in October,” Nikkei Malaysia said.
Of the countries rated, only Singapore’s manufacturing remains in contraction, scoring 47.4 on the index.
Malay Mail Online (2017, December 4). Malaysia Factories in Highest Surge of Over Three Years. Malay Mail Online. Retrieved from
The Malaysian automation and control systems market, one of the biggest for suppliers, is stable and growing, says the study by Frost & Sullivan, which projects the market to be worth more than $409 million in the next four years.
Government incentives to aid manufacturing and infrastructure spend, as well as an established end-user base of sophisticated automation systems, are driving growth in the region.
Nonetheless, barriers to market entry are high. To succeed in a fiercely competitive ecosystem, automation vendors must embrace new technologies, such as Internet of Things, collaborate with developers of machine-to-machine technologies, and improve production capabilities.
Krishnan Ramanathan, Frost & Sullivan’s industrial automation and process control industry analyst, says: “Traditional end users, such as the oil and gas, power, and chemicals and petrochemicals industries, will continue to be important revenue contributors for automation systems suppliers.
“However, as Industrial Internet of things (IIoT) gains significance, such companies will have to collaborate with multiple suppliers and service providers in the value chain to reap the full benefits of the latest technology.”
Frost & Sullivan’s report, Opportunities in Malaysia for Automation and Control System Manufacturers, finds that the total automation and control market in Malaysia will be worth $409 million by 2021.
The study provides an analysis of current and expected market developments, drivers, restraints, and revenue forecasts across segments.
Strategic imperatives for success and growth in Malaysia’s automation and control systems market include:
  • Embracing change in both the short and long terms through new business models that offer scope for implementation of IIoT technologies;
  • Vendors cutting costs at all levels to optimize client benefits due to popularity of main automation contractor and main instrumentation vendor concepts;
  • Expanding cloud-enabled services through partnerships and relationships with service providers to leverage technological benefits;
  • Investing in requisite upgrades now to be able to adopt and integrate new technologies when they are available;
  • Offering development and training services; and
  • Focusing on niche solutions.
Krishnan says: “With the proliferation of IIoT and other digital technologies, the chances of a cyberattack on an industrial network increases. In most instances, the levels of readiness and skills to thwart cyberattacks are low.
“Collaborating or partnering with cybersecurity firms will be vital to future success.”
Frost & Sullivan’s study covers automation market segments such as:
  1. programmable logic controllers (PLC);
  2. distributed control systems (DCS);
  3. supervisory control and data acquisition (SCADA);
  4. human machine interface (HMI); and
  5. safety systems.

The market share and competitive analysis of major suppliers, such as Siemens, Rockwell Automation, Schneider Electric, Yokogawa, Emerson, Honeywell and Omron, are also discussed.

Mai Tao (2017, July 18). Government incentives driving growth of Malaysian automation and control systems market. Robotics and Automation News. Retrieved from

For the past 20 years, Malaysia’s manufacturing sector has embarked on robotic assembly lines, precision engineering and computer controlled processes. Building upon the country’s strong manufacturing base, Malaysia is aligning with the Fourth Industrial Revolution (Industry 4.0). Being open to emerging technologies is a key competitive differentiator that will assist in overcoming the many challenges faced by today’s businesses.

Companies that are able to grasp these technologies and incorporate them into their future strategy, development and innovation process will stay ahead and achieve much success through higher profitability, better energy efficiency and improved productivity. Some of the Malaysian companies are already undertaking research and development, engineering design, innovation and system integration as well as developing proprietary machinery and equipment for global exports.

To date, there are 165 projects to manufacture robotics and automation equipment for various industries. Most of them are in specialised machinery and equipment for the semiconductor industry and material handling while the rest are in food and beverages processing and packaging. Total investments made in these industries amounted to RM4.9 billion.
There are also more than 35 local systemintegrators (SI)such as ACM, VisDynamics, Kobay Technology, ViTrox, Genetec, Greatech, RC Precision, Pentamaster and Keu Control that can provide integrated automated solutions for high-tech industries. The presence of renowned global manufacturers such as ABB, KUKA (regional offices) and Hirata Engineering, which actively develop and produce robotic arms, have also led to technological progress, skills development and outsourcing requirements for this sub-sector. Malaysia’s engineering supporting companies have also been groomed to provide consistent quality of production and on-time delivery.
Recognising the challenges of transitioning towards this phase, the government is undertaking various efforts toassist the business community. This includes drafting a National Policy on Industry 4.0 that will be tabled in the Cabinet by the fourth quarter of this year and establishing a National Industry 4.0 Taskforce to spearhead the government’s policy and strategy in this area. There is also an industrial study focusing on the Future of Manufacturing “Industry 3+2 sectors”that is led by the Malaysian Investment Development Authority (MIDA).
The outcome of the study is expected to underscore the way forward for these industries vis-à-vis Industry 4.0. It is also a step in the right direction to address some of the existing challenges, such as privacy and security concerns for the implementation of smart factories, lack of inter-industry collaboration due to competition, requirements for a trained and knowledgeable workforce and cost of licensing software or systems. Today, Malaysia continues to adapt to emerging trends to maintain its competitiveness.

Rapid progress int his digital age is driving profound economic changes. The industry has no choice but to change the way it does business and think about the future, or risks being left behind. History has proven that Malaysia is a resilient nation and MIDA will continue to be an active participant in Malaysia’s transitioning towards being future -proof.

As an organisation, MIDA continues to re-engineer itself to become more pro-active and adaptive to the needs of its stakeholders with the goal of creating longterm inclusive and sustainable prosperity for Malaysians. In ramping up its efforts, MIDA is leveraging on its 50th anniversary celebrations to intensify engagements with its stakeholders through various platforms.

NST Business (2017, November 23). Industry 4.0: Where are our manufacturers now?. New Strait Times. Retrieved from

Malaysia’s move into Industry 4.0 as well as the Internet of Things (IoT) technology is only possible because of the existence of its established electrical and electronics (E&E) sector, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed.

“Malaysia is now the world’s seventh largest exporter of E&E products with a total export of RM287.7 billion last year,” Mustapa said at the launch of IoT Malaysia today.

“In fact, IoT technology is made possible due to the established E&E sector in Malaysia. This sector serves to provide the intermediary products and components which enable the execution of industry 4.0 by leveraging on IoT technology in various sectors.”

He explained that the E&E sector had shown an upward trend in export for the past three years, thus making it the only industry that recorded a trade surplus for three consecutive years.

For the first eight months up to August, E&E exports amounted to RM220.56 billion, growing 21.4 per cent compared to the same period in 2016.

“For the first half of this year, approved investments in the E&E industry recorded a total of RM5.8 billion in 47 projects. This will create additional 5,670 job opportunities,” said Mustapa.

He noted that last year, Malaysian Investment Development Authority (MIDA) had approved a total of 107 E&E projects with investments of RM9.24 billion.

“Of these, RM1.29 billion was from domestic sources while RM7.94 billion was from foreign sources. These have created over 16,200 job opportunities for the country.”

Mustapa also spoke about a catalytic sub-sector that stood alongside E&E, which is the machinery and equipment (M&E).

The government has formulated the 3+2 strategy under the 11th Malaysia Plan (11MP) which focuses on the development of three catalytic sub-sectors namely E&E, M&E; and two high potential growth sub-sectors namely aerospace and medical devices.

These targeted sub-sectors are envisioned to re-energise the manufacturing sector in the country.

“Malaysia’s M&E industry has grown significantly over the years. It contributed 4.6 per cent to the country’s total export of manufactured goods in the first eight months of 2017,” said Mustapa.

“With a healthy compound annual growth rate of 4.3 per cent, the M&E export is projected to reach RM43 billion in 2020.”

For the first half of 2016, approved investments for M&E were RM709.7 million, totalling into 37 projects and 1,606 job creation.

Last year, MIDA approved a total of 88 M&E projects with investments of RM1.54 billion. Of this, RM1 billion was from domestic investments while RM0.54 billion from foreign investments.

Hong Kong signed free trade and investment agreements with the 10-nation Association of Southeast Asian Nations on Sunday, in what one of the Chinese territory’s officials called a “loud and clear” vote against rising regional trade protectionism.
The pacts, which conclude nearly three years of talks, are expected to take effect on Jan 1, 2019, at the earliest. They aim to bring “deeper and bolder” integration of market access with the bloc, said Edward Yau, Hong Kong’s commerce and development secretary.
“In the face of protectionist sentiments in other parts of the world, these two agreements are in fact a loud and clear vote from all of us here for freer and more open trade,” Yau said.
“Hong Kong, being a free trade promoter and advocate of a strong, rule-based, multilateral trading system, will continue to take this pathway, continue to do our utmost.”
Total merchandise trade between Hong Kong and ASEAN was HK$833 billion (US$107 billion) last year, official figures show. Total services trade was HK$121 billion in 2015.
The ASEAN Hong Kong China Free Trade Agreement (AHKCFTA) was signed on the sidelines of a summit of the regional grouping in the Philippine capital of Manila.
It came after leaders attending an Asia-Pacific Economic Cooperation (APEC) summit in Vietnam agreed to tackle “unfair trade practices” and “market-distorting subsidies” in a statement on Saturday that bore the imprint of U.S. President Donald Trump’s efforts to reshape the global trade landscape.
That summit offered a contrast between the vision of Trump’s “America First” policy and the usual consensus favouring multinational deals that China now seeks to champion.
Hong Kong has one of the world’s freest and most open economies, and the pacts will see many ASEAN countries gradually reduce or eliminate customs duties on Hong Kong goods. Professional services should also benefit, with increased investment flows, Yau said.
The partnership “will usher in greater trade synergies and more job opportunities for people and businesses in the region,” said Philippine Trade and Industry Secretary Ramon Lopez.
The ASEAN grouping includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.