Posts tagged electronics
There has been a ‘wave’ of foreign direct investment (FDI) into Malaysia this year, totaling RM31.7 billion (US$10.6 billion) to the end of July 2011. More than half of this has flowed to the manufacturing sector and the top sources are Japan, Singapore, the Netherlands and Taiwan.
Malaysia’s Minister of International Trade and Industry, Mustapa Mohamed, announced the figures and said government initiatives such as the Economic Transformation Programme (ETP) had attracted international interest. Domestic investment had also improved, with RM4.3 billion ($1.44 billion) also going to manufacturing projects.
Business Times reports a breakdown of manufacturing investments shows RM6.5 billion ($2.2 billion) went to electronics and electrical products, RM2.4 billion ($804 million) to basic metal products, RM1.7 billion ($570 million) to chemicals and chemical products, and RM1.1 billion ($369 million) to food manufacturing.
Mustapa also said the figures reflect a shift towards high-value-added, more capital intensive (investment per employee) industries as Malaysia became less competitive at the lower-pay end against countries like China and Vietnam. He promised more new opportunities and growth areas as the ETP chases its 2020 goal of RM1.2 trillion ($40.23 billion), 92% of which the government wants to come from the private sector.
Total investment in Malaysian projects, including both foreign and domestic, was RM47.2 billion ($15.8 billion) in 2010.
source & article: Business Times
“A combination of low cost and high technology” is the in-a-nutshell reason The Economist gives for the beginnings of Penang’s success in the healthcare and electronics industries. Penang state and its neighboring region on the mainland now account for 21% of Malaysia’s GDP as a result of its technology focus, as well as a strong rule of law, intellectual property protection and ease of doing business.
The road to technology riches was paved in the 1970s when Penang became Malaysia’s first free-trade zone, but the article also credits Penang’s current government for freeing up the local economy further by removing economic privileges and combating corruption and waste. For its part, the federal government has also invested heavily in Penang with massive infrastructure upgrades such as a duplication of the bridge to the mainland and extensions to the main seaport and international airport.
Penang has historically enjoyed a strategic trading position thanks both to its physical location between China, India and Southeast Asia, and the well-connected multi-ethnic mix that reflects this. High-tech industries have created a skilled local workforce of technicians and engineers, the capital Georgetown is enjoying a revival, and foreign companies are moving in once again.
source & article: The Economist
More good news of new Japanese investments for Malaysia as Prime Minister Najib Razak completed a short but high-level tour last week. Japanese firms have reportedly confirmed a commitment to RM3.8 billion (US$1.26 billion) in new investments between now and 2012, with another RM5.22 billion ($1.72 billion) to follow from 2013-15.
Key targets for investment are industries specializing in electrical and electronic goods, biomass, metallics and substrates used in the manufacture of hard drives. The total includes Tokuyama Corporation’s RM3.7 billion ($1.22 billion) investment in a polysilicon project in Bintulu, Sarawak state. Polysilicon is a vital ingredient in making electronics and solar photovoltaic (PV) cells.
During the tour, Najib met with Japanese Foreign Minister Takeaki Matsumoto, held discussions with representatives of the Japan-Malaysia Economic Association (Jameca) and delivered the keynote address at the 17th Nikkei International Conference.
Matsumoto apparently asked Najib to consider Japanese firms for major Malaysian infrastructure projects arising from the Economic Transformation Programme (ETP), such as the proposed Mass Rapid Transport system. He also expressed support for the new Malaysia-Japan International Institute of Technology, due to begin in September, and promised a special loan from his government to guarantee its success.
For its part, Malaysia has lifted a travel advisory it issued for its citizens going to Japan after the Fukushima nuclear incidents, and offered its expertise as an intermediary between Japanese firms seeking foreign investments of their own in lucrative Middle East markets.
source & article: Business Times
Electronics manufacturer Flextronics International Ltd will increase its Malaysian presence by 7,000 staff with new operations in Penang and Johor, according to Business Times. The company, which already has nine locations in Malaysia (five of which are in Penang), wants to add new admin support staff as well as technical and engineering talent to make everything from printers and cameras to solar photovoltaic cells.
A new Flextronics Global Services (FGS) facility in Senai, Johor, will begin operating in April and will provide asset and recovery services, repairing components for numerous high technology products. Flextronics said it chose the location due to its proximity to the Iskandar Malaysia development region, three sea ports and international airport. The area also boasts a well educated and multi-lingual workforce.
source & article: Business Times
International Enterprise (IE) Singapore expressed its optimism for Singapore’s trade outlook in 2011, reports the Straits Times, and actually increased its trade growth forecast to 8-10% from 6-8%. They gave these primary reasons for the upgrade:
- The International Monetary Fund has also raised its prediction for global economy growth from 4.2% to 4.4%, after seeing better than expected results at the end of 2010;
- Singapore’s domestic demand also grew and consumer spending was up 4.4% in Q4 2010, which in turn would boost exports;
- Rising oil prices and demand for electronics (electronics demand growth is expected to be lower in 2011 than 2010, but given that Asia-Pacific makes up 54% of the global semiconductor market, this will also help Singapore’s exports). Oil is now projected to reach US$90-100 a barrel in response to increased demand and political uncertainty in oil producing regions.
Having all but saturated the Japanese and Western markets for large flat panel TVs, manufacturers like Toshiba are turning their attention to Southeast Asia. Toshiba currently has an 8% market share in the region and wants to increase that to 20% and 1.2 million units sold, with a new product range developed specifically for the ASEAN market.
According to a Toshiba regional manager, the unique features included battery power for places with irregular power supply and signal boosting for places with unstable reception. Southeast Asian customers also like “powerful sounds”, he said. Each country in the area had different requirements and Toshiba needed to study them more deeply, producing TVs with specifications for each one. Toshiba already made Singapore its Asian TV headquarters earlier this year to prepare for the expected growth in demand.
source & article: Channel NewsAsia
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
Two stories point to positive consumer spending figures in Asia, which are also getting help from tourist traffic. Luxury retailers and designers like Singapore-based F J Benjamin have turned around from US$2 million losses in 2009 to $6.2 million profit this year thanks to a growing market and increased movement of people around the region, many from China. It also hopes to move further into the Chinese home market with its purchase of a $500,000 stake in designer Arcangel/Catherine Deane and wants to double the number of locations selling the brand in the next few years. F cJ Benjamin says it’s looking closely at tourism; finding where most shoppers are coming from and marketing to build the brands there before they leave home.
Others say Singapore isn’t quite there yet; needing to improve its retail service standards to join the ranks of elite fashion cities. A Singapore Management University Institute of Excellence survey shows standards have improved only slightly, and the city ranks slightly behind Hong Kong and Beijing in its number of major fashion retailers. Singapore’s more efficient tax regime, however, has kept prices generally lower than its neighbors.
Meanwhile, Asian spending on home technology is also rising fast, with the consumer electronics industry growing 17% in value on last year. LCD TVs are in hottest demand, accounting for 60% of the market’s value (up 10% on last year) and reaching total sales of US$5.3 billion. Portable media players, camcorders and home audio systems accounted for the rest of the purchases, according to GfK Asia Pte Ltd research.
sources: Channel NewsAsia and Business Times