AZMIN ALI

Month: September 2020

Special Address at Invest Malaysia 2020 on advancing Malaysia: 5G and Industry 4.0

Special Address at Invest Malaysia 2020 on advancing Malaysia: 5G and Industry 4.0

Distinguished guests,

Ladies and gentlemen,

1. Firstly, I would like to express my appreciation to Bursa Malaysia and Macquarie for organising this event and inviting me to deliver this special address.

2. If I may, I would like to first touch on the economic performance of Malaysia in terms of investments and international trade and some of the major policy responses that the Government has undertaken.

3. The COVID-19 pandemic has unleashed a tsunami of such force and magnitude that no economy has been spared. In dealing with this crisis, governments had to implement drastic measures thereby incurring unintended economic consequences.

4. Across the globe, severe disruption to industrial supply chains, plunging demand for goods and services, and sluggish pick-up in businesses upon initial resumption resulted in into dismal economic performance for the first half of the year.

5. Not spared from the ravages of this global downturn, Malaysia’s GDP contracted 17.1% in the 2nd quarter from a marginal growth of 0.7% in the first quarter.

6. The manufacturing sector recorded a negative growth of 18.3% in the second quarter. Total trade for the same quarter, valued at RM392.96 billion, declined by 10.8% compared to the first quarter. Exports totalled RM210.3 billion, a decrease of 11.9% while imports amounted to RM182.66 billion, contracting by 9.4%.

7. Having said that, I should now add that it is not all doom and gloom. There is a silver lining to every dark cloud and as restrictions began to be lifted along with the gradual resumption of economic activities, the numbers for economic performance in June 2020 started signalling that the country is on track for a gradual recovery.

8. Thus, Malaysia’s total trade in June 2020 actually expanded by 2.2% to RM144.78 billion while exports bounced back with an increase of 8.8% to RM82.82 billion. The manufacturing sector recovered with double digit growth and exports of manufactured goods which made up 87.5% of total exports picked up by 13.7% year-on-year to RM72.48 billion.

9. Now, even more promising are the numbers that we’ve just obtained last Friday for July, signalling Malaysia’s exports rising for the second straight month. We recorded an expansion of 3.1% from a year earlier on higher shipments of manufactured goods and agricultural commodities, particularly palm oil. All said, our trade surplus widened to a historical high of RM 25.15 billion last month, beating the previous record of RM20.9 billion in June.

10. In terms of investment, as at June 2020, MIDA is reviewing a total of 725 projects with a value of RM36.7 billion and monitoring 141 high profile leads with potential investments of RM72.6 billion. MIDA has also facilitated 86 companies from various countries including China and closed deals on 32 projects with investments amounting to RM17.5 billion to relocate or redeploy activities to Malaysia.

Ladies and gentlemen,

11. The pandemic has called for at least three major policy responses. The first is the introduction of emergency economic relief measures that are targeted, timely and proportionate to the phased reopening of economic sectors. Hence, to date RM295 billion worth of relief was provided by the Government. The positive economic and trade numbers that I reported at the outset are clear testimony to the effectiveness of the decisive, bold and comprehensive action taken swiftly by the Government to deal with the unintended economic consequences.

12. The next major policy response, being an extension of the first, is ensuring investors’ confidence is restored by facilitating investments and promoting greater market access to sustain international trade. The Short-Term Economic Recovery Plan (PENJANA) that was announced in June 2020 supports the promotion of domestic and foreign investments in positioning Malaysia as an attractive horizon for businesses.

13. Efforts to allow investments to be realised upon approval, need to be coordinated and accelerated. With that in mind, MIDA established the Project Acceleration and Coordination Unit (PACU) to facilitate investors in getting regulatory approvals and coordinate resolution of issues within the fastest time possible. This is part and parcel of the overall government policy in providing a value proposition to investors by way of easing regulatory approvals and to enhance the ease of doing business.

Ladies and gentlemen,

14. At the recently concluded APEC Ministers Responsible for Trade meeting, Malaysia together with other APEC Economies have committed to ensuring uninterrupted flow of essential goods across borders.

15. In this regard, Free Trade Agreements (FTA), represent an important platform to gain better market access and advance Malaysia’s trade and industrial development agenda. Expansion of growth in trade with Malaysia’s FTA partners that covers almost 63% of Malaysia’s total trade has therefore helped to cushion the impact of the ongoing crisis.

16. At the 52nd ASEAN Economic Ministers’ (AEM) Meeting, ASEAN Plus Five namely China, Japan, South Korea, Australia and New Zealand made significant progress towards the November 2020 signing of the Regional Comprehensive Economic Partnership (RCEP) agreement.

17. We cannot overstress the significant role that the RCEP agreement could play in post-COVID-19 recovery efforts particularly in contributing to deepening economic integration and enhancing prosperity of the region.

18. The third major policy response is to encourage our domestic industries to enhance their capacities and capabilities towards building better resilience and ensuring sustainability. This entails a trajectory towards digital transformation as well as holistic policies in the face of the Fourth Industrial Revolution.

19. In Malaysia, companies especially the SMEs were cautious in taking the first step towards Industry 4.0 adoption. Nonetheless, the impact of the COVID-19 pandemic has created a sea change in how companies think about this. As a matter of fact, from our engagement with SMEs and other stakeholders, one general concern stands out – the issue of scaling and how to modernise production processes, upgrade equipment and advance in higher technology towards that end.

20. In short, companies are now more receptive to adopt Industry 4.0 technologies to become more agile to mitigate production and distribution shortfalls. MITI is spearheading this agenda in bringing digital transformation of manufacturing and related services to be more resilient and competitive. This is a crucial point given that SMEs account for nearly 97.1% of our manufacturing landscape.

21. The Government is highly committed to developing a comprehensive industrial ecosystem to embrace new opportunities via the adoption of more smart manufacturing processes that will enhance production flexibility and efficiency, and radically transform value chains and business models.

22. In this regard, the Cabinet has approved the establishment of the National 4IR and Digital Council to be chaired by the Prime Minister. The Council will provide policy leadership with regards to the 4IR and digitalisation policy direction and steer socio-economic development of the country by leveraging technological advancement.

23. Indeed, with the formation of the Council, the way forward to accelerate the growth of the economy will go in tandem with the adoption of Artificial Intelligence, robotics, drone and sensor technology whilst synergising the capabilities of 5G infrastructure.

24. The National Digital Infrastructure Plan, namely, Jalinan Digital Negara or Jendela, unveiled on Saturday, is therefore most timely and central towards our transition into 5G wireless technology and will pave the way to strengthen digital connectivity and close the digital divide in Malaysia.

25. It is, therefore, clear that the Government has identified Industry 4.0 as the key growth engine that will play a big role in ensuring sustainable economic growth. In this regard, the Industry4WRD policy, launched in 2018, envisions that by 2025, Malaysia will be the strategic partner for smart manufacturing and related services in Asia Pacific.

26. One of the flagship programmes under this policy is the Industry4WRD Readiness Assessment Programme (RA) which provides assessment for businesses and factories on how they can move into Industry 4.0 through targeted intervention.

Ladies and gentlemen,

27. Talent development will also be intensified as we gear up to produce our own talent pool for 4IR transformation. The development of this talent from the beginning of ideas to the marketing process will be enhanced through the formation of sandboxes in driving the development of R&D, innovation, and high-tech entrepreneurship.

28. In this regard, at the recent launching of the National Technology and Innovation Sandbox, the Prime Minister said that Malaysia stands ready to crystallise the output of high technology and high incomes mandate by increasing the commercialisation rate of local products, technologies as well as R&D. Investors, therefore, would be able to work in a safe and controlled environment to jointly develop high-tech products and services and commercialise these investments.

29. These strategic moves toward digitalization and technological adaptation will see us trailblazing many more programmes to increase the supply of local talents with high skills, thus reducing our dependency on foreign workers.

Ladies and gentlemen,

30. Being a highly open economy and a global trading nation, Malaysia will continue to remain vigilant of the geo-political and geo-economic dynamics of the region amidst the 
US-China trade war, South China Sea conflicts and COVID-19. Issues of safeguarding national security and strategic national interests as well as advancing economic growth are no longer confined to the physical world.

31. As we know it, the Fourth Industrial Revolution is characterised by a range of new technologies that are fusing the physical, digital and biological worlds.

32. In this regard, the advancing of Malaysia’s 5G coupled with the implementation of Industry 4.0 is indeed the way forward to push the technology adoption and digital transformation so crucial to propel our economic trajectory. This has to be a concerted effort by all relevant stakeholders including the GLCs, SMEs, MNCs and financial institutions working hand in glove with the government agencies.

Ladies and Gentlemen,

33. Akira Kurosawa made the world classic movie Rashōmon, which was adapted from the short story In a Grove written by Akutagawa. Here’s an inspiring quote that I’d like to share with you:

“Individually, we are one drop. Together, we are an ocean.”

Let us therefore move forward together to make that transformation and drive our economy to greater heights.

Thank you.