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Electric And Electronic Industry In Malaysia

Paper Type: Free Essay Subject: Marketing
Wordcount: 3470 words Published: 15th May 2017

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Since the 2010s, the electric and electronic industry has become the leading sector in manufacturing industry in our country – Malaysia. This industry has a part of distribution to the country’s manufacturing output, exports, and also employment. Here is the data that collected from the network cases:

The gross output in 2010 of the industry totaled RM166.2 billion or US$55.8 billion (in 2008: RM167.2 billion or US$53.9 billion), exports amounted RM249.8 billion or US$83.8 billion (in 2008: RM233.8 billion or US$75.4 billion) and the industry created employment opportunities for 336.408 people (in 2008: 296,870 people).

Over the years of centuries in this industry, especially for electronic industry in Malaysia, there are newly developed devices with advanced capabilities and skills. It can be seen through the production on electronic tools such as semi-conductor devices, high-end consumer electronic and information and communication technology (ICT) products.

Apart from that, electronic components are the most important sub-sector under this industry. It accounted for 44.6 per cent of the total investment approved in the industry. Semi-conductor devices provide the greatest distribution, which comprising 30 per cent of the total share of the exports. It also contributes 92.7 per cent of the total export of electronic components or 43.6 per cent of the total electronics export for 2010. However, there is a change in the industry. The global trend in the segment has led to many semiconductor companies undertaking specialization and adopting new technologies such as nano-technology in their manufacturing processes. With the advancing development in this electronic industry, they built up a strong network of inter-industry and also intra-industry linkages in the electronics industry. There is a total of 170 small-size companies and medium-size companies have been forged in linkage with lager-size companies. It is notably in the areas of electronics, machineries, fabricated metal products and engineering support industries.

On the other hand, another rising trend that can be referred is the emergence of local companies that form part of the supply chain. Currently there are at least 50 companies operate as contract manufacturing services (CMS) or electronic manufacturing services (EMS).

As a short brief on the electronic sector, it can be said to be shifted into a higher value-added products and activities accordingly to the rapid globalization and increasing cost pressures. Many operations has been upgraded into integrated manufacturing centre which together developed with manufacturing concept on research and development, product design and development, marketing and distribution activities.

Furthermore, Malaysia’s consumer electronics devices market is an addressable market for computing devices, mobile handsets and AV devices. It was projected at about RM32.48million in 2011 and is expected to increase to RM40.98billion in 2015. This is due to rising incomes and growing affordability of key products.

Vendors will continue to target products innovation to drive revenues, with growth areas. The leading companies are now undertaking R&D activities in the country to support their global and Asian markets. Exports of consumer electronic products in 2010 amounted to RM25.8 billion. Multinational companies continued to have a stronghold on consumer electronics in Malaysia. Due to their strong brand equity, they were able to record high value growth. Moreover the sheer amount of competition between these companies has driven down prices and thus making consumer electronics more affordable. By offering consumers the benefit of in-store customer service, specialist retailers such as Senheng Electric continued to be the preferred distribution channel for consumers. Senheng Electric in particular has been successful due to the rapid expansion of its outlets across the country. Reaching new levels of convenience and entertainment, products will continue to see strong growth. As for goods with older technology are predicted to experience a slowdown in demand as their functions have been superseded by newer technologies.

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For another aspect in this industry, the electrical sector can be classified into three main subsectors which are electrical industrial equipment, electrical components and electrical consumer. Notable growth is seen in the sector of the electrical consumer products, once the domain of foreign-owned. For example, since increased investment in R&D centres has paid off handsomely, Malaysia is now one of the world’s largest exporters of home air-conditioners. Malaysian brands have become household names not only locally, but also in the ASEAN region and the Middle East. Local company also a major exporter of air-conditioners and it also exports over 50% of its production to Europe, USA, Australia, the Middle East and Africa.

The major electrical products produced are household appliances. There are presently more than 381 companies producing a wide range of products such as household electrical appliances, wire and cables and electrical industrial equipment. These are mainly local companies such as Pensonic, and Tenaga Switchgear. Manufacturing activities in the electrical industry have evolved from mere assembly to design and marketing of local’ brands for the regional and global markets. The capital investment in this sub-sector amounted to RM13.2 billion (US$4.4 billion) for the year 2010.

Other sub-sectors experiencing rapid growth are the automotive electrical sub-sector which is fuelled by the advent of intelligent driving systems. The automotive connectors market is tipped to be the fastest growing segment in the global automotive electrical products market. Another must-watch segment for automotive electrical products is the automotive batteries market, which is estimated to account for the market share of 19.8% in 2009, and is the second largest segment in the automotive electrical products industry.

Current issues of Electric and Electronic Industry

The Electric and Electronic Industry is very important to the country as it will influence the country economy. This is mainly because every household depends on the electrical gadgets to complete their task such as light component to have a brighter room, computers and laptops to do their job and etc. where the Electric and Electronic Industry have included the consumer electric, electrics component and electrical. All these are vital to the whole nation as factories, offices, everyone needed them.

The issues face by the Electric and Electronic Industries are as below.

Malaysia’s semiconductor manufacturing output is declining.

The output keep on declining is because the lower-end production is continuously shift out of Malaysia. This shift has driven Malaysia to move up the electronic value chain in recent years, for example, in the higher value-added manufacturing and R&D space. Implementation of initiatives, strategies and plans by Malaysia enables the country to remain competitive.

Lack of Skilled Human Resources

As the growth of the industry keeps on expanding throughout the years, the problem of lacking of skilled human resources has always been one of the factors face by the E&E in Malaysia. If Malaysia wanted to remain in the global supply chain they must increase, or trained more human resource in this sector. Besides that, the MNCs are concerned about the lack of talent and the inability to attract and retain talents. Besides that, there are university which provide such courses however, the quality are not there. Because of the shortage of human resources, the government was forces to reject an investment project because they are unable to supply 1,000 engineers for it. On the contrary, due to the lack of upgrading of technologies in Malaysia, the population of scientist and engineers in the R&D is very low as well as the level of investment in R&D low which causes them to unable to support the population of manpower although they are lack of them.

Lack of the required technological know-how.

Due to the new equipment such as the machines used in the factory or new machines that had been bought are too new, nobody know how to use it. The new technology which required to help improve the productivity become useless if no one know how to function the machines and do not have the initiative to try and use it as well.

Lack of funding for new product development

Besides that, the government did not give sufficient fund for the sector to develop their product. As I have mentioned above, the investment in the R&D sector is low. This causes them unable to improve their product and increase productivity as they are lack of capital to do so.

Lack of access to new markets

In the semiconductor sector for the E&E industry, due to the lack of a matured eco system, our local IC design and manufacturing companies are required to seek overseas for businesses. Nevertheless, the local companies do not have the access or rather lack of the access to the global supply chain. Therefore, its growth potential become limited and the companies who conduct in this sector have to seek for another alternative such as train and reskill the local people in order to improve the shortage of human resources in the industry,

Development tools too expensive to procure

The tools are too expensive and forms great barrier for the local to conduct its business efficiently. This is because a single industrial license for IC design for EDA tools is very costly as it cost millions of USD. The EDA is too costly and at the same time there is lack of potential local customer and upgrading the license will be very expensive as well.

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New product venture is too risky a proposition

The government only gives limited fund for the industry, hence it will be very risky to develop new product as the local companies can only depend on themselves. Hence, it is too risky for the SMI to pursue. The SMI will prefer in participate in MNCs’ product development process because the risk is lower even though the government does not give any support either.

Importance of Electrical and Electronic Industry in Malaysia

Nowadays, the electrical & electronics (E&E) industry is the leading sector within the manufacturing sector in Malaysia and become the largest contributor to manufacturing output, employment, investment, exports and imports. The E&E industry is a diverse industry by offering products with unique market characteristics. Malaysia has become the major global manufacturing hub for the E&E industry because there is large number of multinational companies had chosen Malaysia as their base.

The electrical & electronics industry is an important contributor to the national economy. The sector has spawned successful local firms and virtually every leading global firm operates here. The total export of E&E products in Malaysia is accounted for 30-40 percent. It is the higher export value among all the industries in Malaysia. There are some leading electronic manufacturing services companies such as Flextronics, Jabil, Celestica, and Plexus. Those multinational companies also provide opportunities for local companies to be a part of their supply chain. Some of the small enterprises in the country have grown to become public-listed companies or some of them have gone global. This phenomenon is contributing to the economy of the country and brings a bright future to the nation.

Besides that, the electrical and electronics industry also is an important sector in Malaysia as it creates employment opportunities for hundred thousand of people in Malaysia. In this fast- paced and technologically- driven environment and many reputable companies around the world, this sector is well placed in Malaysia to offer the jobseekers precisely especially for the fresh graduates. This is because fresh graduates able to look at the problem at different angles and give their new ideas or solutions toward the problem.

In addition, electrical and electronics industry in Malaysia has developed a significant capabilities and skills in manufacturing variety types of semiconductor devices, electronics and information and communication technology (ICT) products. This can help the manufacturers in Malaysia to continue to move up to produce higher value added products.

In conclusion, electrical and electronic industry accounted for a high value for total nation’s export Therefore, government should support the manufacturers in E&E industry in order to move up the value chain and bring a better future to the nation.

Consequences of dropdown of electrical and electronic industry

The growth of the electrical and electronics (E&E) industry is influenced by the overall growth of the global market for electrical and electronics products.

When there is slowdown in E&E industry, although exports in Malaysia are diversified with many commodities and manufacturers, almost all export items are affected at the same time especially electrical and electronic products. Because of electrical and electronic industry accounted for a large number of manufacturing exports about 30-40%, this industry had a huge impact on the nation’s economy. The slowdown of growth in the industry raises some concern about the falls in competitiveness of this industry will influence and decrease the nation’s income as the industrial production decreases. Furthermore, as there is a slowdown of growth in E&E industry, the profit of the E&E companies also will be decrease.

Moreover, the dropdown in E&E industry will cause the drop in investment in the manufacturing sector. Foreign investment is essential for a country’s economic growth and prosperity. If there is no investment from multinational company, the country’s income will be decreased and hence, it will lead to a decrease in standard of living of individuals. This is because if there is no investment from other foreign countries as mentioned, no jobs will be acquired and hence, individuals are no longer able to gain income. Consequently, the standard of living will be decreased.

Besides that, the slowdown of growth in E&E industry will cause the unemployment rate increases because the lesser participation of E&E industries in export means that the country have less consumers and hence the demand of products will be decreased as well as the demand for labor too. The employees also worry about their jobs because the employers will fire them and hire foreign workers as the wages of foreign workers are cheaper than the locals. To prevent the nation from slipping into serious recession, government had distributed a stimulus package to protect and create jobs and assist the private sector to reduce the unemployment rate as well.

In conclusion, the government should encourage E&E industry to do more research and development (R&D) to increase the knowledge of the work and enhance to a higher level of technology and hence, brings a brighter future to the industry.

Recommendation and action plan on improving electronic and electrical industry

There are a lot of related current issues with our country’s electronic and electrical industry nowadays. We found that there some issues that we have to keep an eye on as it bring some significant effects to the future of this industry which can directly affect the economics of our country. As a matter of fact, one of the best ways to improve our electronic and electrical industry is by practicing and applying solar energy on the electrical or electronic appliances. As we all know, solar energy is one of the best energy that can help to preserve our environment which is also known as the most eco-friendly form of energy which can be utilized in order to support any kind of electronic and electrical appliances. People all over the world have come conscious regarding the safety of the environment and they are looking for ways of utilizing this solar energy. Therefore, it is a very good idea when applying solar energy on the technology gadgets.

In this new era, there are many different kinds of method to apply solar energy into the electronic and electrical appliances, which can be found in the market, such as solar power chargers, solar power heaters and so on. One of the most important advantages of these solar power electrical appliances is that they are easily carried to different places as the sunlight are available everywhere and people don’t have to search for plug. What people have to do with such appliances is access to someplace with sunlight. People can also decide to take these solar power appliances even when they are going on a vacation or on some kind of long trip. These can be like solar power chargers for cell phones and laptops which are very convenient for the students and lecturer who need to travel all the time. The need to carry extra batteries will not arise when a solar power battery charger is available. Most gadgets and appliances can be charged by making use of a solar power battery charger. The main advantage of these solar power high technology gadgets are that they can be used many times for charging purposes without having to pay for the extra power.

Another strong reason to support the factors that applying solar energy on the electrical and electronic appliances is that the sunlight are free of charges and it doesn’t cause any harmful pollution to the environment. Furthermore, although solar power is an energy source that we have only recently tapped into, it may easily become the most important energy source of the future. For your information, solar power is a renewable and natural resource therefore it is non-polluting. Unlike oil, solar power does not emit greenhouse gases or carcinogens into the air which can destroy our ozone layer. In fact, light and energy from the sun costs nothing. Once you purchase the equipment to collect and convert energy from the sun, it costs you nothing to run. This is because solar cells require little maintenance which might able to last a lifetime.

Besides, in order to improve the electronic and electrical industry, a country’s government play a very important role as the improvement of this industry can also bring the development of a country’s economic. The country’s government should always have some subsidiaries for electronic industry to carry out their research and development. The purpose the government subsidies this industry to carry out all kind of research activities is to encourage them to produce some outstanding products that create a chaotic in this industry globally. Providing reasonable subsidiaries for this sector which consider as one of the major sector in a country can really help to encourage the electronic industry to grow drastically. The entrepreneur will feel confident and enthusiasms to discover and create new knowledge about scientific and technological ideas of electronic gadgets for the purpose of uncovering and enabling development of valuable new products, processes, and services. In an industry that is changing fast, firms must continually revise their design and range of products. This is necessary due to continuous technology change and development as well as other competitors and the changing preference of customers. Without an R&D program, a firm must rely on strategic alliances, acquisitions, and networks to tap into the innovations of others. The government or the country have to be very understand with this situation and willing to provide solution if they wanted to have a better electronic and electrical industry. Last but not least, ones should never forget that research and development is one of great importance in business as the level of competition, production processes and methods are rapidly increasing around the world among the industries. There are few significant importances in the field of marketing where companies keep an eagle eye on competitors and customers in order to keep pace with modern trends and analyze the needs, demands and desires of their customers. Hence, through R&D, the entrepreneurs of this industry can get ready to compete with other countries’ competitors with a higher return of revenues.


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