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12th Malaysia Plan with 4.5% – 5.5% Annual GDP Growth Focussing On Prosperity, Inclusivity And Sustainability Is Transformational, Holistic And Pragmatic

Kuala Lumpur – The Federation of Malaysian Manufacturers (FMM) commends the Government for tabling a transformational, holistic and pragmatic 12th Malaysia Plan focused at addressing the immediate and medium-term issues and challenges faced by the nation with the themes of resetting the economy; strengthening security, wellbeing and inclusivity; and advancing sustainability.

Four catalytic policy enablers, namely developing future talent, accelerating technology adoption and innovation, enhancing connectivity and transport infrastructure as well as strengthening the public service will support the achievement of the themes of the Plan. More importantly, these policy enablers would be key to ensuring that Malaysia is able to achieve the target annual GDP growth of 4.5% to 5.5%, the higher GNI per capita of RM57,882 by 2025 as well as to support the manufacturing sector which has been targeted to achieve an average growth rate of 5.7% over the period. In particular, we are glad to note that emphasis has been placed on several key enablers, game changers and initiatives which would be critical to supporting the private sector and well as the manufacturing sector as the main drivers of growth namely:

• Catalysing strategic and high impact industries which will be able to attract high quality investments and expand our export base and participation in the global value chain, Existing incentives will be reviewed, to focus on investments based on advanced technologies and meet aspects of environmental sustainability;

• Improving the Technical and Vocational Education and Training (TVET) ecosystem to produce the future-ready talent which would be instrumental to technology, digital and manufacturing transformation that has already started to accelerate. We laud the development of a centralised platform for TVET supply and demand data and establishment of a more flexible higher education system to enhance collaboration with industry to improve the quality of graduates and meet industry needs. At the same time, Science, Technology Engineering and Mathematics (STEM) education will be strengthened to prepare students for the technological changes taking place;

• International trade will be strengthened by identifying new markets and products, improving the efficiency of trade facilitation and enhancing the competitiveness of key export industries as well as encouraging trade cooperation through the ratification of new free trade agreements (FTAs) such as the Regional Comprehensive Economic Partnership (RCEP).

• Improving productivity via advanced technology adoption, digitalisation, research and development (R&D), innovation and commercialisation to build greater resilience and competitiveness of our industries.

‒ We welcome the establishment of the Research Management Unit which will be instrumental in ensuring that R&D and innovation activities and funding will be aligned to national priorities.

‒ In addition, we note that several major programmes and projects have been approved to support the growth strategic sectors and industries in the form of investment loan funds for research and development in the fields of aerospace, electrical and electronics; the establishment of the Centre of Excellence for Future Industry; intellectual property funds; and a simple financing scheme for digitalisation and adoption of technology to support local companies in transitioning to advanced technology.

• Transforming micro, small and medium enterprises as the new driver of growth

• Implementation of several key infrastructure and development projects which will be have spill over effect on the manufacturing sector. FMM wishes to emphasise that priority must be placed on using Made-in-Malaysia products and services for all the infrastructure and development projects outlined in the Plan;

• Support for green growth drivers such as embracing circular economy and adoption of integrated water resources management will support the industries move towards more sustainable manufacturing practices and adoption of ESG principles.

FMM strongly believes that as the main catalyst of growth with extensive upstream and downstream linkages throughout the value chain, the manufacturing sector can contribute significantly towards helping to achieve the strategies of productivity, investments, moving up the value-chain and strengthening exports.

We call on the Government to continue to support the manufacturing sector by ensuring a business- friendly operating and investment environment through the reduction of unnecessary regulatory burden and costs; and a more level playing field to facilitate fair and open competition and access to market opportunities. The priority should be to support and promote the expansion of the manufacturing and manufacturing related services sectors, especially in this very critical period that we currently are in, to enable the reaping of higher returns to revive the economy, enhance business sustainability, ensure job security and more importantly for medium and long-term growth.

FMM looks forward to close and regular engagement with the Government on the relevant programmes and initiatives under the strategic priority areas, enablers and game changers. FMM and industries expect that these targets and aspirations would be well executed and achievable through close collaboration and consultation between the Government and the business sector, in particular the manufacturing sector.