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Generally, manufacturing can be defined as the production of goods or items by using machines, equipments and labour force. Manufacturing activities vary from handicraft items to technology gadgets. But the term is applied to the process of industrial production in which raw materials are transformed into finished goods and ready for sale.
Manufacturing is an important sector in Malaysia. Besides agriculture, Malaysian manufacturing sector is also labour intensive and is considered a high yield investment opportunity. The country's economic development driven by export orientated manufacturing sector makes Malaysia a top choice for foreigners to invest in the industry.
Basically, there are few reasons that encouraged continuous growth of manufacturing sector in Malaysia. Ideally located in South East Asia, Malaysia definitely offers a dynamic and productive business environment suitable for investors to establish office, factories or corporations to manufacture high quality products for export market.
In addition to that, the well-developed infrastructure and abundant trained workforce are also some of the reasons that has brought in countless foreign investors to the country. The five state-of-the-art international airports complete with air-cargo facilities and seven international seaports make it convenient for investors to expand and flourish their business in regional and global market. To begin with, investors shall contact Malaysian Investment Development Authority (MIDA) to find out more information on the business opportunities in the country.
MIDA oversees the promotion and development of manufacturing sectors in the country. Newly established companies may seek MIDA to help in facilitating and executing their projects. The department offers various services for those who are into the sector – offer valuable information on the opportunities for investments and to match different companies together for joint venture partnership. Besides that, MIDA also serves as a platform for national and regional companies to get in touch and expand abroad for more business opportunities.
MIDA is affiliated with other departments and corporations such as Telekom Malaysia Berhad, Tenaga Nasional Berhad, Royal Malaysian Customs, Department of Environment, Department of Labour and Immigration Department. This is to ensure the smooth progression of manufacturing sector in the country. For new investors, you are encouraged to talk to MIDA officers to find out more information of opportunities on trade and financing availability for the business.
When you get involved in manufacturing sector in the country, investors are entitled to direct or indirect incentives. Based on Customs Act 1967, Sales Tax Act 1972, Excise Act 1976 and Promotion of Investments Act 1986, direct tax incentives would be given in partial or total relief from the income tax payment that lasts only for certain period while indirect incentives are exemptions from excise duty, sales tax or import duty. In addition to that, high technology companies, Small and Medium-Scale Companies, Machinery and Equipment Industry and Automotive Component Modules will also enjoy other form of incentives.
Federation of Malaysian Manufacturers
Federation of Malaysian Manufacturers (FMM) was established in 1968 to assist Malaysian manufacturers to adjust quickly with the rapid modernization. Today, the federation consists more than 2,000 manufacturing and industrial service companies. FMM aims to elevate Malaysian industries to be globally competitive. The federation has branches in Penang, Perak, Johore, Selangor, Negeri Sembilan, Malacca, Kedah, Sabah and Sarawak.
Issues and challenges of manufacturing sector
Malaysian small and medium enterprises (SME) face many issues and challenges and that include the lack of expansive framework and modules to work alongside policies to develop SMEs, the wide range of agencies that serve as platform for SME failed to have an effective and efficient coordination, lack of financial support from government departments and financial institutions, and insufficient skilled and talented labour force in the industry that somehow affects the productivity.
In addition to that, local SMEs are also facing new challenges such as competitive global market particularly strong competition from producers in China and India, inadequate capability to meet the needs of globalization standard, low labour force that has resulted in low productivity and quality output, and lack of expertise and management skills.
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