SUMMARY

● The New Industrial Master Plan 2030 (NIMP 2030) aims to revolutionise Malaysia’s manufacturing sector and transform the nation into an industrialised high-income country. It focuses on national strategic direction, a reference for investors and to feature the role of government in shaping the economy. It laid out a broad plan for Malaysia to become a global leader in industrial development, generate wealth nationwide, and enhance its position in the global value chain.

● Though lofty, we commend the NIMP 2030 as a comprehensive and strategic plan to drive towards prosperity and to optimise the true potential of Malaysia’s economy through uplifting its manufacturing and services sectors.

● The performance of the previous Industrial Master Plan 3 (2006-2020) was broadly mixed, given the adverse effect of COVID-19 on the domestic and global economy. Nonetheless, the performance of key indicators has continued to improve until 2022 as the nation moves to the endemic phase.

● Despite the positive progress in industrialisation performance over the years, the government acknowledges key challenges in future development: a marginal improvement in economic complexity, stagnant labour productivity, skills mismatch, and talent shortage.

● The report identified three megatrends that will affect the future of trade and investment globally, including Malaysia, in the coming decade: geopolitical shift-focus on economic security, digitalisation, and climate change.

● Achieving high-impact growth is highly emphasised in NIMP 2030 with top line annual growth target of 6.5% for valueadded manufacturing GDP and 2.3% for employment growth. In addition, the median salary for the manufacturing sector is projected to grow 9.6% per annum, reaching RM4,510 by 2030.

● Six goals have been identified to achieve the top-line NIMP 20230 target and of highest priority is increasing economic complexity and creating high-value job opportunities among others. The goals would be guided by the NIA's five key pillars and Environmental, Social and Governance (ESG).

● Multiple action plans has been proposed to incentivise high-growth industries to expand both the quantity and complexity of the products they export while tackling challenges which include limited Research and Development (R&D) investment and reliance on low-skilled labour.

● Although the pace is still slow, the report stated that Malaysia is gradually reducing its dependence on foreign low-skilled workers to create the demand for more high-skilled jobs, enhance labor productivity and promote economic growth through the adoption of digital technologies.

● In addition to promoting and expediting the adoption of renewable energy to reduce carbon emissions, the government is also planning to stimulate the emergence of new environmentally sustainable economic sectors. Still, we believe a lot of effort and resources needed for Malaysia to be on track to achieve its zero-net emission goal by 2050.

● To tackle the issue of climate change, Malaysia is employing a multifaceted strategy that includes both structural and non-structural adaptation measures. With increased investments in green energy, there is a possibility that Malaysia can align itself with the international goal of limiting global warming to 1.5°C.

● Please see the appendices for the key highlights.

Overview

● On Sept 1, the Madani Government released the NIMP 2030, succeeding the IMP3 (2006-2020) to elevate Malaysia to be among the top global industrial players. Previous plans boosted Malaysians’ living standards and greatly increased Gross National Income per person, rising 34 times from 1967 to 2019, making Malaysia one of the fastest-growing economies.

● The development of NIMP 2030 is driven by the goal of establishing a stronger industrial sector as a crucial step toward achieving socioeconomic prosperity. The master plan also represents a collaborative effort between the government and the private sector, jointly owned to leverage the collective expertise and resources. The NIMP 2030 serves to offer national strategic guidance, insights to potential investors and feature the government’s role in shaping the economy.

● NIMP 2030 includes 21 Sectoral Plans as supplementary references which offer sector-specific insights. The sectors are supported by an array of services to assist in various aspects of the manufacturing process. The implementation of NIMP 2030 is estimated to require a total investment of RM95.0b through its seven years, with the bulk of it coming from the private sector (private equity, capital and financial markets), while close to 10.0% will be allocated by the government.

● The NIMP 2030 defines distinct missions for achieving its goals with these important outlines:
– Ekonomi MADANI as the true north for Malaysia’s economic development: Establishing Malaysia as the economic leader of Asia by developing an economy centred on knowledge and innovation, as well as increasing the people’s standard of living by putting their welfare first and achieving this through high-paying jobs, equitable opportunity, and extensive social welfare.
– Five key pillars with ESG as the overarching theme: The NIMP 2030 identified six key Goals, guided by the National Investment Aspirations’ (NIA) 5 key pillars that can drive economic complexity, create high value job opportunities, extend economic linkages, develop new existing cluster, improve inclusivity and enhance ESG practices. These key pillars are important strengthen the sectors’ reputation and long-term sustainability.
– Address challenges for the nation to achieve the goals relevant to all sectors: While there has been some advancement in the industrial and services industries over time, these are key challenges in industrialisation development in Malaysia.
– 32 existing and upcoming policies across the Government: In addition to a thorough stakeholder engagement process, the NIMP 2030 is in line with 32 relevant policies and roadmaps to guarantee uniformity and comprehensiveness in public policy. The successful execution of the NIMP 2030 Strategies and Action Plans across Ministries, Agencies, Government-linked Companies, and the private sector entities based on well-defined enablers and goals and objectives is contingent upon stakeholder support and alignment.

● Though lofty, we commend the NIMP 2030 as a comprehensive and strategic plan to drive the economy towards prosperity and to optimise the true potential of Malaysia’s economy through uplifting the manufacturing and services sectors. While the government focuses on mission-based approach to drive the industry transformation, it has to be wary of the ongoing global economic uncertainty and the vagaries of geopolitics given that most missions relies heavily on international relationship along with technological and skills transfer.

Source: Kenanga Research - 4 Sept 2023