By Durratul Ain Ahmad Fuad
KUALA LUMPUR: The Madani government’s success in attracting investments last year, which rose 23 per cent to a historic high of RM329.5 billion, will create thousands of new jobs, including high-skilled jobs, for the people and raise their per capita income in the process.
This is based on 5,101 projects approved in 2023, which would generate a staggering 127,000 much-needed new jobs, especially for youths coming out of schools, colleges, and universities.
An encouraging factor is that 57.2 per cent or more than half of the investments constitute foreign direct investments, clearly proving that Malaysia continues to be an attractive destination despite stiff regional competition, thanks to well-tailored investment policies.
Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai lauded the government’s economic management measures, which enabled Malaysia to lure significant foreign direct investments (FDIs) into the manufacturing sector.
These included investments from renowned multinational companies in high-technology industries with established manufacturing plants here, as well as those companies expanding their operations in the country, creating numerous job opportunities for locals.
“Government policies and development plans targeting to transform Malaysia into a high-income economy identified the manufacturing sector as a key game changer for growth leading to various initiatives to lure investments and boost job creation in the sector,” he told Bernama.
For 2024, the government expects a minimum eight to 10 per cent growth in approved investments from last year.
So far this year, Malaysia has secured US$2.2 billion (RM10.5 billion) in investments from American multinational technology giant Microsoft, which has committed to empowering the country’s technology with cloud and artificial intelligence (AI).
The zest to continue creating jobs is evidenced by the Madani government ramping up efforts to this end with the New Industrial Master Plan 2030 (NIMP 2030) and the National Energy Transition Roadmap (NETR).
Under the seven-year plan until 2030, NIMP would provide employment for 3.3 million people by creating high-skilled jobs as the country advances towards higher value-added activities and improvements in automation as well as technological advancements.
As for the NETR, its flagship catalyst projects covering six energy transition levers – energy efficiency (EE), renewable energy (RE), hydrogen, bioenergy, green mobility, and carbon capture, utilisation and storage (CCUS) – are expected to attract investments of more than RM25 billion.
In the process, it would create 23,000 job opportunities and reduce greenhouse gas emissions by more than 10,000 gigagrams of carbon dioxide equivalent annually.
FMM’s Soh said the manufacturing sector’s job creation has evolved significantly over the years due to a combination of factors, including technological advancements, shifts in global trade dynamics and business-friendly government policies.
“Malaysia’s participation in various trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Regional Comprehensive Economic Partnership (RCEP) and many other free trade agreements, has expanded the market access for manufactured goods, and this has boosted production and, consequently, job creation,” he said.
Integral role in global supply chains
Manufacturing companies in Malaysia also play an integral role in global supply chains, which, again, has led to job growth as manufacturers supply components and parts to major global players.
Undoubtedly, the manufacturing sector is a major contributor to Malaysia’s Gross Domestic Product (GDP), accounting for 22-24 per cent of total GDP, reflecting its pivotal role in the economy.
“As a key driver of exports accounting for about 88 per cent of the country’s total exports, the manufacturing sector generates substantial foreign exchange earnings, thereby enhancing national income and, subsequently, the income per capita.
“The manufacturing sector also provides a significant number of jobs, representing about 17 per cent of the total labour force.
“The average monthly wages in the manufacturing sector has risen from RM2,200 in 2013 to about RM3,800 in 2023 with the increased industrial activity and foreign investments; no less important were the various government policies aimed at boosting high value-added manufacturing activities and transitioning manufacturing to more advanced activities which demand more skilled labour, leading to better wages and improved per capita income,” he added.
Soh said FMM supports Technical and Vocational Education and Training (TVET) programmes to equip workers with the technical skills needed to meet the demands of members.
“FMM has also been a strong promoter of lean manufacturing principles and other process optimisation techniques that increase productivity, having worked closely with the Malaysia Productivity Corporation to assist members wanting to embark on lean manufacturing practices.
“FMM has also played a critical role in rolling out the National Industry 4WRD Policy and encouraging the adoption of advanced technologies such as automation, internet of things, and AI to help members improve their efficiency and reduce costs,” he said.
He said the Ministry of Investment, Trade and Industry (MITI) recently appointed the FMM as the mission-based project 2.1 champion to transform 3,000 factories under NIMP2030, which would be critical in supporting productivity and efficiency improvements amongst members.
“FMM also conducts our salary surveys to benchmark wages in the manufacturing sector against industry standards which will help companies stay competitive in terms of compensation, ensuring that wages grow in line with the cost of living,” he said.
AI and automation to accelerate job upskilling
Malaysian Economic Association deputy president Professor Dr Yeah Kim Leng said Malaysia’s share of skilled jobs should be increased to 30 per cent or higher by 2030 from the current 25.1 per cent, as the greater the proportion of a skilled workforce, the more prosperous the economy.
He reckoned that a quicker increase in skilled jobs would reflect a quicker pace of structural upgrading and a shift to higher-value-added activities, which would have greater spillovers to the economy through increased consumption and investment spending.
He said that with Malaysia’s GDP growth projected at four to five per cent per annum over the medium term and population increases estimated at around one per cent, the real income per capita growth is forecast at three to four per cent annually.
“However, Malaysia should aim for a ‘high case’ scenario of 5.5-6.5 per cent GDP growth for the remaining period to 2030.
“At this rate, the country will be able to attain high-income status before the end of the period and achieve a majority of the United Nations 2030 Sustainable Development Goals,” he said.
Yeah, said the nation saw a reduction in low-skilled jobs by four per cent to 1.11 million in the first quarter of 2024 from the same quarter in the previous year, which augurs well for the economy to move to higher-skilled jobs.
“However, the share of skilled jobs needs to be increased substantially from the current rate.
“Hence, the introduction of automation and AI will accelerate jobs upskilling and the desired reduction in the number of semi-skilled and low-skilled jobs where there are a large number of unskilled foreign workers,” he said.
Yeah said that at the end of the first quarter this year, semi-skilled jobs accounted for 62.4 per cent of the total jobs, while skilled jobs made up 24.9 per cent and low-skilled jobs 12.7 per cent.
Putra Business School economic analyst associate professor Dr Ahmed Razman Abdul Latiff said that while automation and AI have the potential to improve efficiency and productivity, they also raise concerns about job displacement.
“Certain jobs may become obsolete due to automation, requiring workers to upskill or reskill to remain employable.
However, automation can also create new job roles, particularly in areas that require human creativity, empathy, and problem-solving skills,” he said.
Ahmed Razman said job creation and income per capita are closely linked; as more jobs are created, the overall income per capita tends to increase, reflecting a higher standard of living.
“However, the quality of jobs created, including wages and benefits, also impacts income per capita. Low-paying or unstable jobs may not contribute significantly to income growth.
“Initiatives by the government to increase the minimum wage as well as introducing progressive wages are indicative of the government’s seriousness in ensuring the continuous increment of average salaries as well as the quality of life of the workers,” he said.
Ahmed Razman said continued investments in education, healthcare, and infrastructure can contribute to sustainable income growth over time.
“That’s why education and healthcare sectors remain the two most allocated budgets in every budget announcement.
“However, challenges such as income inequality and environmental sustainability continue to remain an important agenda to the government, and if nothing is being done to address these, they can impact long-term income per capita projections,” he added. – BERNAMA
