Business Times has this article by Abdul Rahman Mamat (Malaysia’s secretary-general of the Ministry of International Trade and Industry) on how Malaysia is building its knowledge economy through the electrical and electronics (E&E) industry. Trying to compete with neighbors on labor costs won’t work as the economy grows; instead Malaysia’s strategy is to move up the value chain to application research & development, and design.

Under the government’s Economic Transformation Program (ETP) announced last week, the E&E industry will increase Gross National Income from today’s RM37 billion (US$12 billion) to RM90 billion by 2020, creating 150,000 skilled jobs in the process. It would prefer Malaysia moves away from being mere assemblers and testers and advises companies to not be concerned as lower-level jobs move to other countries.

Both local and international companies can work together in clusters to produce more positive results. Abdul lists a number of multinational companies as examples: in electronics, MEMC Electronics Material, Intel, Altera, Osram, Agilent and Infineon Technologies have “enhanced their operations”, as well as Agilent and Motorola.

The government sees solar technology as a major growth opportunity. Malaysia’s mature semiconductor design and manufacturing industry has seen advanced producers of LEDs and solar photovoltaic cells move to the country. This new energy technology industry is growing by 20% annually and Malaysia aims to become the world’s third-largest PV cell producer by 2011. Companies like First Solar, Q-Cells, SunPower, Tokuyama, Osram, Fuji, Rohm-Wako and Nichia have all arrived in Malaysia over the past three years.

Malaysia’s existing industries can also play a large part in providing reliable and quality materials supply, manpower and logistics. The challenge is to ensure these indirectly-related companies to maintain their competitive quality edge and convince them that this new technology indeed has a worldwide demand and will benefit the economy overall. The government is also concerned about the amount of talent available, and is working on training in both the industry and other educational institutions to build the skills necessary.

RM78 billion (US$25.3 billion) will be spent on the Malaysian E&E industry between now and 2020, with 88% of that total coming from the private sector.

source & article: Business Times