M AC H I N E RY A N D E Q U I P M E N T

WHITE
PAPER
2022
 INVEST SELANGOR BERHAD (481741-M)

WHAT’S
INSIDE
EXECUTIVE SUMMARY 1 ADDRESSING CHALLENGES IN
Overview
THE MACHINERY AND EQUIPMENT
Performance
ASEAN Gateway INDUSTRY 4
Moving Forward Automation Project Initiative (API) by MIDA
MIDA Assessment Development Centre (MADC)
The Development of Rancangan Selangor Pertama (RS-1)
2021-2025
GLOBAL INDUSTRY TRENDS 2022 2 Enhancing The State’s Competitiveness
Introduction
Adoption of Robotics and Automation
Technology Shift and Advance OPPORTUNITIES FOR MACHINERY
Availability of New Technological Skills
Endnotes
AND EQUIPMENT INVESTMENT IN
SELANGOR 6
Diverse and Robust Ecosystem

KEY CHALLENGES FACING Connected and Ready

The Ecosystem to Produce
THE MACHINERY AND EQUIPMENT
INDUSTRY 3
Introduction WHAT OUR INVESTORS ARE SAYING…
The Leap to Industry 4.0
Talent Gaps
Innovation in Advanced Technologies
Endnote
 MACHINERY AND EQUIPMENT 1

EXECUTIVE SUMMARY

Although the effects of the COVID-19 pandemic still reverberate across

the global economy today, the Machinery & Equipment (M&E) industry
has shown strong growth over the past year. Performance within this
industry in Malaysia continues to be encouraging with M&E products
making up 4% of the country’s total exports in 2021.Globally, companies
have been shifting towards smarter business practices, either through
upskilling workers or implementing Industry 4.0 (IR4.0) technologies,
while improving the sustainability of their businesses. Despite the strong
growth, Malaysian companies may find it difficult to convert their factories
into smart factories, which leads to the government to offer initiatives and
policies to help the industry innovate towards the future.[1]
Overview worth of investments, with 31.2%, or RM0.5 exceptional services. Beyond that,
billion, being domestic investments, while Malaysia’s M&E industries regularly exports
The COVID-19 pandemic has sent the other 68.8%, or RM1.1 billion, coming to Germany, China, and Singapore. Apart
ripples across the Malaysian and global from abroad. Of the 42 projects, 24 of them from its ideal location, distinct manpower,
economies, affecting every government, are new projects, while 18 projects are for and respectable export partners, Malaysia’s
industry, business, and person. However, expansion and/or diversification projects, M&E activities are diverse, with production
the M&E industry has seen a good recovery which has resulted in 2,268 new job activities ranging from robotic automation,
throughout the ongoing endemic phase, opportunities.[2] power generation, refinery exploration
seeing healthy growth, production, and platforms, petrochemical plants, as well as
profit margins. Malaysia has positioned Meanwhile, 55 new Engineering-Supported commercial buildings which serve various
itself as a hub for the ASEAN region that is Industries (ESI) projects saw approval, other sectors such as oil & gas, hospitals,
capable of serving a wide range of other resulting in a total of RM827.4 million F&B, and petrochemicals. Selangor
industries across different regions. In in investments. 71.1% of the total were being Malaysia’s central hub for the most
addition, the pandemic has encouraged domestic investments while the other prestigious M&E businesses and industries
more companies to adopt (IR4.0) solutions 28.9% were from foreign sources. There makes it the ideal location to establish or
to develop smarter factories that can were 31 new projects and 24 expansion expand new developments.[2]
withstand future threats.[1] and/or diversification projects, with 2,159
new job opportunities available. On top Moving Forward
Performance of these investments, homegrown M&E
companies with Bursa public listings Although the transition towards Industry
In 2020, MATRADE reported that the M&E recorded a market cap of RM28.3 billion 4.0 has been gradual, the COVID-19
industry contributed 4% of Malaysia’s in 2022. The promising development pandemic has expedited the adoption
total exports at a value of RM42.21 billion of this industry, despite the challenges of more modern solutions within the
(US$9.41 billion). The industry primarily that COVID-19 has brought, showcases M&E industry. Companies have begun to
focuses on four (4) subsectors, which are the strong growth prospects of the M&E realise the advantages of opting for smart
specialised process machinery for specific industry.[2] solutions to keep their business running
industries; power generating machinery smoothly even in difficult situations.
and equipment; general industrial ASEAN Gateway M&E companies will continue to take up
machinery equipment, components, and connectivity systems, Big Data Analytics
parts; specialised process machinery or Malaysia’s strategic location makes it the (BDA), and automation to move towards
equipment for specific industries; and perfect hub for companies that wish to Smart Factories. The advantages of running
metalworking machinery.[2] target the ASEAN region due to its close these systems include remote monitoring,
proximity to the surrounding. Its strategic machine-to-machine communication,
Driven by strong demand, 42 projects were location allows it to attract workers from and robotic assembly lines to improve
approved in 2021 totalling RM1.6 billion across the border while also providing productivity and keep lives safe.[2]

[1]
https://www.theedgemarkets.com/article/malaysias-me-exports-hit-rm344-bil-first-seven-months-2022
[2]
https://www.matrade.gov.my/en/
2 INVEST SELANGOR BERHAD (481741-M)

GLOBAL INDUSTRY TRENDS 2022

Introduction

The COVID-19 pandemic has shaken the world to its core, and the M&E
industry was not immune to the societal effects of the virus. When news of
the dire situation began to break through, many governments had to take
action to control the spread of the infection, and the world came to a halt.
Businesses had to stop operations or even close down because they were
unable to continue running without prospective clients.[3]

Even after the vaccine became widely In addition, the recent developments of Availability of New Technological Skills
available and movement control began AI allows for the immediate execution
loosening up, businesses were still of repetitive actions such as machinery The advent of new technologies means
struggling with the burden left by the cleaning, moving items across that the workforce will have to adopt
virus. China, the world’s industrial warehouses, and controlling duties a new set of skills such as design and
powerhouse, contributes approximately through the use of sensors, actuators, data processing to keep up with industry
20% of the world’s M&E products and the and visual-recognition systems. This field needs. Skillsets will begin to evolve into
disruption of their supply chain echoes will continue to grow as the technology a mix of conventional competences in
across the globe. Just a 2% output decline gets cheaper, gains accessibility, and traditional manufacturing alongside
from China means that Europe could more developments begin to unveil. skills in 3D printing methodologies and
expect to see USD1.2 billion (RM5.37 For instance, the American business robotics. Skills such as design, processing,
billion) in losses. Add job losses, supply Qualcomm unveiled the first 5G and AI- testing, and maintenance are needed
line disruptions, and a lower rate of Enabled Robotics Platform in the world.[4] across the whole value-chain, alongside
demand to the mix, M&E manufacturing soft skills related to IR4.0 technologies.[5]
activities struggle to return to normal.[3] Technology Shift and Advance
Endnotes
However, as the world began to embrace the The COVID-19 pandemic has pushed more
“new normal,” new trends began popping M&E companies to adopt a digital-based The COVID-19 pandemic was the catalyst
up to combat the effects of the pandemic. approach across their daily operations that has pushed technology forward at
Companies that wish to keep running have as a result of disruptions caused by the a speed faster than most people realise.
started to embrace changes in the way they pandemic and the closure of borders. As technology continues to evolve, the
operate to continue operating.[3] Digital transformation is at the core of industry alongside its people will need
this industry, as players create tailored, to evolve as well. With the introduction
Adoption Of Robotics and Automation digitally-enabled, intelligently-connected of robotics and the adoption of digital
products for their clients through the use technologies, the industry must support
In 2020, the World Robotics Industrial of connected manufacturing, predictive the training of new talents to adopt these
Robots report recorded a total of 2.7 maintenance, and pioneering service advancements.
million industrial robots operating in models. The digital shift enables the M&E
factories around the world, with 373,000 industry to grow while reducing the risk of
new units shipped globally in 2019. M&E becoming irrelevant in the global market.[5]
players around the globe have adopted
robotics and automation to improve
production, assembly, and warehouse
operations efficiency.[4]

[3]
https://onlinelibrary.wiley.com/doi/10.1111/twec.13269
[4]
https://ec.europa.eu/newsroom/rtd/items/700621/en
[5]
https://evalcareers.com/magazine/digital-tools-and-big-data-what-does-this-mean-for-me/
 MACHINERY AND EQUIPMENT 3

KEY CHALLENGES FACING THE

MACHINERY AND EQUIPMENT INDUSTRY

Introduction

Businesses have resumed operations as the pandemic transitions into

an endemic. However, some struggle to return to normal as the effects of
COVID-19 still reverberate all over the world. As a result, companies still
find it difficult to get a solid foot on the ground and keep up with trends
within the global industries.[7]

The Leap to Industry 4.0 Talent Gaps Globally, this industry is one of the
biggest drivers towards driving digital
Talks about IR4.0 have been going on Moving towards IR4.0 means adopting innovations. Nevertheless, creating
for several years now, but there are new technologies, which requires new digital-based machinery plants will
businesses that have still not taken the employees with the appropriate skills to require significant investments.[9]
next generational leap. Though IR4.0 run these new systems. Without the right
technologies bring a range of benefits, person handling these tasks, companies Endnotes
including better use of resources and may struggle to maintain these systems.
profit margin potential, getting to that As a result, a lack of a good and diverse The COVID-19 pandemic has caused
point is a very real challenge. Moving talent pool means that businesses may significant issues for M&E players due to
from one system to another takes a be apprehensive about making the shift interruptions towards operations and
significant amount of time, resources, towards IR4.0.[9] a loss of jobs. The primary issue is that
and training, which companies may all growth points are intertwined. The
not have as they need to focus on At the moment, manufacturers find it adoption of IR4.0 technologies and digital
staying afloat. Pair that with a reduction challenging to secure talent that can solutions both require a high amount
in business activities due to the innovate and increase productivity. The of investment, both in terms of capital
pandemic and that makes the process shift towards producing high-value and and human talent. It is no secret that
of transitioning all the more difficult. complex products requires talent with these new technologies can bring about
Companies can see the benefits of IR4.0, skill, creativity, and the ability to think new levels of growth but M&E players
but some struggle to incorporate these differently alongside the knowledge face difficulty in moving towards this
changes.[8] to operate these technologies. direction.
Conversely, easy access to low-skilled
The adoption of IR4.0 technologies is workers discourages manufacturers
usually high risk, high cost, and long from innovating and investing in
in duration, making the technology the technologies that enable higher
seem unattainable to business owners. productivity.[9]
Manufacturers are generally reluctant
to change the way they operate out Innovation in Advanced Technologies
of fear towards disrupting current
production cycles and unfamiliarity The effects of COVID-19 have caused
in new technologies. As a result, the massive disruptions in manufacturing
biggest challenge towards IR4.0 is not operations. However, the silver lining
the development of new technologies amidst the chaos was an opportunity
but a lack of interest towards making the to push the industry towards digital-
transition.[9] based solutions in their daily operations.

[7]
https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/when-will-the-covid-19-pandemic-end
[8]
https://www.businessnewsdaily.com/10156-industry-manufacturing-iot.html
[9]
https://www.cedar.my/images/industryarticles/12.pdf
4 INVEST SELANGOR BERHAD (481741-M)

ADDRESSING CHALLENGES IN THE MACHINERY

AND EQUIPMENT INDUSTRY

The Industry4WRD initiative was officially launched in 2018 by the Ministry

of International Trade and Industry (MITI) with the goal of becoming the
catalyst to support manufacturing-related businesses transition into IR4.0.
In 2021, the government allocated funds for the Smart Automation Grant
(SAG) under the PENJANA stimulus package, at RM100 million, and another
RM50 million under the PERKASA aid package. The goal was to encourage
small to medium Enterprises (SMEs) as well as mid-tier businesses to adopt
automation and digitalisation for production and operations.[10]

Automation Project Initiative (API) by future talent with IR4.0 skills, is in line initiatives worth a total of RM212.44
MIDA with the 12th Malaysian Plan (12MP) billion. The RS-1 planning efforts will
roadmap. The programme is uniquely focus specifically on economic growth,
The Malaysian Investment Development structured to give trainees rigorous empowering the people through welfare
Authority (MIDA) has taken steps to leadership and technical training programmes, sustainable development,
expedite the move towards IR4.0 within the Internet of Things (IoT) and and efficient, transparent systems and
through their Automation Project Industrial Internet of Things (IoT). This services.[13]
Initiatives (API). Their first launch was in hybrid talent development programme
2020, where 11 participating companies is a collaboration with three notable RS-1 has identified 9 focus sectors based
and 20 system integrators were invited public universities – namely University on its current GDP contribution, potential
to discuss what the industry needs to Kebangsaan Malaysia (UKM), Universiti market growth, and future demand that
move towards automation. This event Teknologi Malaysia (UTM), and Universiti will further propel Selangor’s economy
has resulted in the approval of 318 Putra Malaysia (UPM).[12] forward. The 9 focus sectors include Ports
applications to receive the automation & Logistics; Tourism; Digital Economy;
capital allowance, as well as a pitching The result of this strategic partnership Aerospace; Automotive; Electrical &
session to match automation systems between Government, public Electronics and Machinery & Engineering;
providers to the company that best suits universities, and industry technology Halal Industry; Life Sciences; and
the services that have been shown. The leaders is to create an industrial Agrotechnology.[13]
API is ongoing and MIDA encourages landscape where the industry is able
businesses to reach out if there is any to source a pool of technologically- To boost the Selangor state’s Machinery
interest.[11] inclined talent coupled with soft skills in & Engineering (M&E) industry, and in
critical thinking, problem solving, and tandem with the Electrical & Electronics
MIDA Assessment Development Centre leadership.[12] (E&E) industry, RS-1 has outlined the
(MADC) following 7 Projects, Programmes, and
The Development of Rancangan Initiatives (PPI) toward realising the goal
To keep up with rapid changes in Selangor Pertama (RS-1) 2021 – 2025 of strengthening Selangor’s economy:[13]
technological advancements and meet
industry demands, the MIDA Assessment The RS-1 is the framework for mobilising
Development Centre (MADC) HyTalent Selangor state policies for a period
Programme aims to develop and equip of five years involving projects and

[10]
https://www.miti.gov.my/index.php/pages/view/4832
[11]
https://www.mida.gov.my/media-release/midas-automation-project-initiatives-api-enabling-more-local-companies-to-adopt-automation/
[12]
https://mmdt.cc/mdt-innovations-joins-forces-mida-madc-project/
[13]
https://www.selangor.gov.my/selangor/modules_resources/bookshelf/RS1_Report_English/RS1_Report_English.pdf
 MACHINERY AND EQUIPMENT 5

ADDRESSING CHALLENGES IN THE MACHINERY

AND EQUIPMENT INDUSTRY

Key Projects, Programmes, Initiatives Brief Explanation

Malaysian Smart Factory 4.0 - Expansion The expansion of the MSF4.0 towards the Centre of Emerging Technologies would
for Centre of Emerging Technologies provide a comprehensive and unique integration of technology, talent, and innovation
(MSF4.0 - CET) in a collaborative ecosystem
Solar PV Centre of Excellence (CoE) Becoming the central region Centre of Excellence for training and talent development of
Solar PV Industry in Malaysia
Selangor Government Incentive (SGI) State specific incentives, involving land premium deposits, assessments and business
license fees
Bridging loans for SME development Loan assistance to bridge reimbursement type federal grants
Buy local programme Promote and encourage state GLCs to buy parts and materials from local SMEs
IKTISASS - Pembangunan Kurikulum TVET Development of a structured TVET courses to be offered in academic institutions with
Industri input and feedback from the industry
IKTISASS - Penawaran Persijilan Professional certification vetted and recognised by the industry to ensure that the talent
Profesional yang Diiktiraf oleh Industri pool trained are provided knowledge relevant to the industry needs
SIBS Invest Selangor organises the Selangor International Business Summit (SIBS) annually,
as an international marketplace for stakeholders to convene and explore the ASEAN
market and its massive potential
Jalur Lebar Industri Selangor High speed network infrastructure to be built in industrial areas

The present M&E industry in Malaysia consists of a total of 1,418 companies of various sizes from various fields with at least 85% of the
companies being locally owned small and medium enterprises (SMEs). Accordingly, support for this industry is very important.[13]

The M&E industry is among the highest paid in Malaysia. Over the past few years, the number of investors in the M&E industry has increased
significantly. Total FDI approved for the industry increased from RM1 billion in 2016 to RM2 billion in 2020, but total domestic direct
investment (DDI) jumped from RM540 million to RM4.7 billion over the same period. The specialised M&E sub-industry was the largest
contributor to investments in 2020, with 21 projects approved.[13]

The M&E industry in Selangor contributed to the increase in Malaysia’s overall M&E exports, which are now worth RM41.4 billion, with
export destinations including the world’s largest economies such as the United States and Japan.[13]

• Enhancing The State’s Competitiveness

To address the quality of the workforce, the higher learning institutes within the state shall collaborate more closely with industry
players via upskilling and training of current and future workforce leading to availability of skilled talents based on industry demand.[14]

The Selangor Government and Federal Government’s incentives will also be provided to international and domestic investors, which
involve land premium deposits, valuation, and business licence fees to attract and retain investors in Selangor coupled with the federal-
level incentives that are already offered.[14]

[13]
https://www.selangor.gov.my/selangor/modules_resources/bookshelf/RS1_Report_English/RS1_Report_English.pdf
6 INVEST SELANGOR BERHAD (481741-M)

OPPORTUNITIES FOR MACHINERY AND EQUIPMENT

INVESTMENT IN SELANGOR

Diverse and Robust Ecosystem Additionally, Selangor’s advanced • Growing Rail Network – Offers
commercial ecosystem is backed by convenient mode of transportation
One of Selangor’s greatest strengths is excellent state government and a highly and logistics for individuals and
that it’s home to an incredibly diverse developed infrastructure, making it one businesses within the state through
economic environment. The state is home of the most attractive business hubs to services such as heavy rail, light
to the nation’s largest companies, all of connect investors to the ASEAN region as rapid transit (LRT), mass rapid transit
which are doing business in different areas well as the global market.[14] (MRT), and monorail.
and are looking for ways to innovate in
the work that they do. MIDA has identified Beyond that, it is home to the country’s The Ecosystem to Produce
four (4) new investment opportunities busiest transportation hubs to help
within the M&E industry, which are companies send their products across A mango tree cannot bear fruit if the
semiconductors, electric vehicles, South-East Asia and beyond. The logistical ground it grows on does not have the right
robotics, and agriculture. Additionally, hubs include: conditions to make it thrive. Similarly,
the M&E industry currently provides manufacturers cannot innovate if they
products or support for special industrial • KLIA & Subang Skypark – provide do not have the right environment to
needs such aerospace, F&B, robotics, and great accessibility in and out of develop better products. In Selangor,
medical equipment.[14] the state through the air. KLIA has manufacturers have a range of choices
recently been named among the to establish their factories, such as
Connected and Ready world’s best airports in 2021 through Pulau Indah Industrial Park (Phase 3C),
Airport Service Quality (ASQ) survey Selangor Cyber Valey, or Selangor Bio Bay.
One of Selangor’s greatest advantages conducted by Airports Council Moreover, SHRDC offers their Malaysian
is its connectivity to the rest of Malaysia. International (ACI). Smart Factory (MSF) 4.0 Training
Some of Malaysia’s biggest companies • Port Klang – As the 2nd busiest Programmes with a fully developed
are also here, such as General Electric, container port in ASEAN, Port Klang training facility to help business owners
Petronas, Sime Darby, and many more. was named as the most efficient port and employees to better grasp how IR4.0
M&E players looking to get their products in the world during the pandemic works and ways to implement them.[14]
across the nation and beyond will find with the shortest turnaround time.
Selangor’s connectivity very convenient.[14]

[14]
https://www.industrialmalaysia.com.my/articles/2021/09/why-invest-in-industrial-selangor
WHAT OUR
INVESTORS
ARE SAYING…
“Government Support in Selangor”
“We are extremely grateful to your support since 1972. MHE-Demag Malaysia Sdn. Bhd. as
a manufacturing company in Malaysia, we always work hand in hand with Invest Selangor,
when we encountered any challenges and needed help, your departments have not failed
in helping us and is always there for us. Again, we appreciate the support you rendered,
especially in the areas of tax exemption from MIDA/MITI/Customs, it has benefited to our
company in many ways. Hats off to Invest Selangor team.”

MHE-Demag Malaysia Sdn Bhd

Mr. Law Kok Wai (KW Law)
Country Director

“Excellent Selangor Infrastructure”

“Selangor being the largest economy state and having good infrastructure in Malaysia with
strategic location, good connectivity and supportive state government agencies e.g. Invest
Selangor & etc, it helps a lot in our business operation and future expansion plan.”

Vepro Group Sdn Bhd

Mr. Lim Swee Peng
Director
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