“Market Watch 2012”
Electrical & Electronic Industry in Malaysia
General information about Malaysia
Malaysia is centrally located within the Association of South-East Asian Nations (ASEAN).
Consisting of two regions separated by the South China Sea — the Malaysian Peninsula and the
states of Sabah and Sarawak on the island of Borneo — Malaysia is a federation of 13 states and
three federal territories. The former British colony gained its independence in 1957. Since
Independence, Malaysia has adopted the political system of a parliamentary democracy with a
constitutional monarch whose position is rotated every five years between each of the nine
hereditary state rulers. The political scene has been characterized by an extra-ordinary degree of
political stability and continuity through an encompassing national coalition of political parties.
Its territory comprises approx. 330,000 sq km, four fifths of which are covered by tropical
rainforest. Due to its bio-diverse range of flora and fauna offering excellent beaches and brilliant
scenery, the country is one of the region‘s key touristic destinations. Malaysia is a multi-ethnic,
multicultural and multilingual society with 28.66 million members. Ethnic Malays make up the
majority of the population at 57.1% followed by Chinese at 24.6%, Indian at 7.3% and other local
ethnicities at 11%. The Malaysian constitution guarantees freedom of religion, although Islam is
the largest and official religion. Approx. 61.3% of the population practice Islam, 19.8% Buddhism,
9.2% Christianity, 6.3% Hinduism, and 2.6% practice Confucianism and other traditional Chinese
religions. The official language of Malaysia is Bahasa Malaysia, but English as well as Chinese are
the business languages.
Economical Overview
Malaysia is a dynamic country which is constantly evolving. Being a middle-income country,
Malaysia has transformed itself since the 1970s from a producer of raw materials into an
emerging multi-sector economy spurred on by high technology, knowledge-based and capital-
intensive industries. Malaysia‘s Economic Performance ranking improved to 7th place out of 59
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economies this year compared with 12th position in 2007.1 It is one of the 20 largest trading
nations worldwide and was headed of Taiwan, Sweden, Canada, Australia, the United Kingdom
and Switzerland.2 The World Competitiveness Yearbook 2011 Report released by the Institute for
Management Development (IMD) continued to rank Malaysia as among the top 5 most competitive
nations in the Asia-Pacific region, taking 6th position in the 20 million population category and 2nd
position after Taiwan in the GDP per capita less than US$20,000 category.3 Moreover, the country
is the 21th largest exporter among all trading nations worldwide.
Strategically located in the heart of South-East Asia, Malaysia offers a cost-competitive location
for investors intending to set up offshore operations in order to manufacture advanced
technological products for both regional and international markets. In addition, Malaysia has a
market-oriented economy which is supported by pro-business government policies. Last year, the
Malaysian Government launched the Economic Transformation Programme (ETP) which is
managed by PEMANDU (Performance Management & Delivery Unit) under the patronage of the
Prime Minister.4 The ETP identifies 12 National Key Economic Areas (NKEAs) which are drivers of
economic activities that have the potential to materially contribute to the growth of Malaysia. Its
objective — also known as ―Vision 2020‖ — is to transform Malaysia into a ―high income country‖
by year 2020. The programme will lift Malaysia‘s Gross National Income (GNI) to US$523 billion by
2020, and raise per capita income from US$6,700 to at least US$15,000, meeting the World Bank's
threshold for high income nation.5 To achieve the targets set, Malaysia needs an annual growth of
GNI of 6%. There are plans to revitalize Malaysia's private sector, to grow the service sector from
58 to 65% and to create 3.3 million new jobs.6 The Government will also introduce other
transformation plans in 2012.7
In Malaysia, the 2011 GDP growth edged lower to 4.0 percent year-on-year due to a weaker
domestic demand. Further implementation of ETP projects and a RM232.8 billion 2012 Budget
1 “Malaysia’s economy attains 7th position”, New Straits Times, 20th May 2011. 2 Ibid. 3 Ibid. 4 See www.pemandu.gov.my . 5 Forbes.com, 21st September 2011. 6 Ibid. 7 “Malaysia Budget 2012 Main Highlights”, www.financesentral.com accessed on 21st November 2011.
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tabled by Prime Minister Datuk Seri Najib Razak will boost domestic demand, but unlikely to
offset underperformance in net exports.8
Economical Key facts Malaysia9
Currency: 1 Ringgit (RM) = 100 Sen
Exchange rates: 1 EURO = RM4.3; 1 US$ = RM3.2 (17.11.2011)
GDP (billion RM): 2009: 679.94; 2010: 765.97; 2011: 829.34
GDP - real growth rate: 2010: 7.2%; 2011: 4.0%, 2012: 5.0% (est.)10
Inflation rate: 3.3-3.5 % (est. 2012 IMF)
Exports: RM513.59 billion (Jan- Sep 2011)
Exports - commodities: Electronics 34.5%; petroleum & products 9.9%; palm
oil 9.3%; chemical products 6.9%; machinery 3,4%;
manufactures of metal 3.0%; rubber products 2.6
Exports – partners: Singapore 13.3%, China 12.5%, Japan 10.5%, USA 9.5%,
Thailand 5.3%, Hong Kong 5.1%, Germany: 2.7%
Imports: RM424.37billion (Jan – Sep 2011)
Imports - commodities: Electronics 31.2%, petroleum & products 10.1%,
chemical products 9.2%, machinery 8.0%,
manufactures of metal 5.9%, transport equipment
5.1%, iron & steel products 4.3%, optical & scientific
equipment 3.2%, processed food 2.2%, other products
20.8%
Imports - partners: Japan 12.6%, China 12.6%, Singapore 11.4%, USA
10.6%, Thailand 6.2%, Germany 4.0%
Unemployment rate: 3.0% (2011)11
Average wage 2011: Project manager IT: RM8,415, lecturer/speaker:
RM3,459, mechanical engineer: RM3,070, account
executive: RM2,572, plantation worker: RM85012
8 Malaysian Economic outlook by Malaysian Institute of Economic Research (MIER), www.mier.org.my/outlook accessed on 21st
November 2011 & “Malaysia Budget 2012 Main Highlights” (Finance Sentral 2011). 9 Malaysia External Trade Development Corporation (MATRADE), www.matrade.com.my . 10 Malaysian Institute of Economic Research (MIER), www.mier.org/outlook/ accessed on18th November 2011. 11 Bank Negara Malaysia, Economic and Financial Data for Malaysia, last updated on 14th November 2011.
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Population below poverty line: 3,6%13
Bilateral Trade: Malaysia & Germany
Malaysia is EU‘s second largest trading partner inside ASEAN, behind Singapore, with bilateral
trade in goods reaching 31.9 billion Euros in 2010 and the EU‘s 22nd largest trading partner.
Germany enjoys intensive trade relations with Malaysia and is one of the main foreign investors in
Malaysia, while among members of the European Union, Germany is Malaysia‘s leading trade
partner.14 Besides, Malaysia ranks 2nd as a consumer of German products among the ASEAN
countries.
The Electric & Electronic Industry in Malaysia
Introduction to the Electric & Electronic Industry
The strong E&E industry in Malaysia is a result of the Government‘s initiatives to promote labor-
intensive and export-oriented industries. Since the establishment of the first semiconductor plant
in Penang in 1972, Malaysia has become a major global manufacturing hub for the electrical and
electronics industry, as attested by the large number of multinational companies (MNCs) from
USA, Japan, Europe, Taiwan and Korea which have chosen Malaysia as their base. Unsurprisingly,
the E&E sector has grown into Malaysia‘s largest contributor to output, employment, investments
and exports (35% of total exports15)16.
The presence of leading electronic manufacturing services (EMS) companies such as Flectronics,
Solectron, Celestica, Jabil, Plexus and Sanmina-SCI provides opportunities for local companies to
be part of their supply chain in the supply of equipment, materials, parts and components, and
dedicated services such as contract design, burn-in testing, failure analysis and rapid prototyping.
Other local supporting industries focus on activities such as moulds, tools and dies, metal
stamping, surface treatment, plastic injection moulding and M&E (Mechanical & Electrical).
Nowadays, there are more than 50 companies operating as contract manufacturing services (CMS)
or EMS companies.
12 www.payscale.com/research/MY/Conutry=Malaysia/Salary accessed on 21th November 2011. 13 Index Mundi, www.indexmundi.com/g?r.aspx?v=69 accessed on 18th November 2011. 14 http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/malaysia/ accessed on 21st November 2011. 15 Dato’ Noharuddin Nardin, Chief Executive Officer of MATRADE, trademart magazine, May/June 2011 16 Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013
“Market Watch 2012”, Electrical & Electronic Industry in Malaysia
5
The key to sustaining a healthy growth within this key sub-sector is surely automation and
harnessing innovation talents that can take the E&E industry to the next level17.
Major sub-sectors of the E&E industry include
Electronic components
Industrial electronics
Consumer electronics
Electrical products
Top Malaysian companies based on market capitalization in E&E sector
Company Market capitalization in mln US$
Revenue in mln US$
Malaysian Pacific Industries 299 464
Hong Leong Industries 272 933
Panasonic Manufacturing Malaysia 206 175
Unisern 173 370
ETI Tech Corporation 156 25
Table 1 - Top Malaysian companies based on market capitalization in E&E sector18
Malaysia‘s success can be attributed to a winning combination of pull factors: a stable
government, good economic policies, topnotch infrastructure and a skilled knowledge workforce.
As a result, Malaysia has developed significant expertise for the manufacture of a wide range of
semiconductor devices, high-end consumer electronic and information and communication
technology products19. Based on the Malaysian Industry Development Authority‘s (MIDA) records,
from a total of just four companies with 577 employees and a total output value of RM25 million
in 1970, today the E&E industry has expanded to more than 1,695 companies with total
investment of RM108 billion and a workforce of more than 600,000 people20.
Investment-Projects Approved by E&E Sector
Domestic Investment (US$) in mln
Foreign Investment (US$) in mln
Total Proposed Capital Investment (US$) in mln
Jan. - Oct. 2011 419.4 2.450.7 2.870.0
2010 471.2 3.844.9 4.316.1 Table 1 - Investment-Projects approved in the E&E sector
21
17 Dato’ Noharuddin Nardin, Chief Executive Officer of MATRADE, trademart magazine, May/June 2011 18 Bloomberg, December 2010 19 Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013 20 Malaysian Investment Development Authority (MIDA) www.mida.gov.my, 15.12.2011 21 Malaysian Investment Development Authority (MIDA) www.mida.gov.my, 15.12.2011
“Market Watch 2012”, Electrical & Electronic Industry in Malaysia
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Performance of the Electric & Electronic Industry
In 2010, the E&E industry is the leading sector in Malaysia‘s manufacturing sector, contributing
significantly to the country‘s manufacturing output (31%, in 2008: 29.3%), exports (48.7%, in
2008: 55.9%) and employment (33.7%, in 2008: 28.8%).
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$75.4 billion) and the industry created employment opportunities for
336.408 people (in 2008: 296,870) 22.
Chart 2 - Malaysia's export Index in E&E sector (2008 = 100%)
23
Siemens, Bosch and Infineon are just some of the well-known companies, who have moved their
production to Malaysia. Based on a statement by The German Electrical and Electronic
Manufacturers‘ Association (ZVEI), Asia will stay the growth region of the future, with China
leading the pack. Smaller nations like Malaysia will get their fair share of this development if
they continue to offer economic and political stability.
The industry has moved up the value chain into the manufacture of high-end products and has
moved away from labour-intensive to more capital-intensive operations. The capital investment
per employee (CIPE) ratio showed a growth from RM79,149 per employee in 1995 to RM333,830
per employee in 2000 and RM578,469 per employee in 2007. These include intensification of
research and development efforts and outsource non-core activities domestically.
22 Malaysian Investment Development Authority (MIDA) www.mida.gov.my, 15.12.2011 23 OCBC Bank, www.ocbc.com, 20.12.2011
0
50
100
150
Jan
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-09
May
-09
Jul-
09
Sep
-09
No
v-0
9
Jan
-10
Mar
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v-1
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Malaysia Export of E&E by Index (Sep. 2008 = 100), OCDC Bank
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Malaysia’s Exports and Imports in the E&E Sector
Diagramm 1 - Malaysia's Exports to World by Product (HS Code) in mln US$ and %Change
\
Diagram 1 – Malaysia’s Imports and Exports of E&E Products24
85XX Electrical machinery and equipment and parts thereof; sound recorders and reproducers,
television image and sound recorders and reproducers, and parts and accessories
8517 Telephone sets, including telephones for cellular networks or for other wireless networks
8527 Reception apparatus for radio-broadcasting
8528 Monitors and projectors
8529 Parts suitable for use solely or principally with the apparatus of headings 85.25 to 85.28.
8534 Printed circuits.
8536 Electrical apparatus for switching or protecting electrical circuits
8537 Boards, panels, consoles, desks, cabinets and other bases
8541 Diodes, transistors and similar semiconductor devices
8542 Electronic integrated circuits.
8543 Electrical machines and apparatus
Table 2 - HS Code as use in Diagramms above
Electronics Sector
Accounting for almost 90% of the E&E industry in Malaysia, the electronics sector is the main
contributor to Malaysia`s gross domestic product (GDP) growth. More than 1.600 companies have
emerged within the electronics industry, encompassing three broad subsectors i.e. electronics
components, consumer electronic and industrial electronics25.
24
WTA, World Trade Atlas, 05.01.2012 25
Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013
“Market Watch 2012”, Electrical & Electronic Industry in Malaysia
8
Diagram 2 - Malaysia's production of Electronics 2005-2010 in mln RM26
Figure 1 - Malaysia's Exports of Electronic Products in 2010 in Million RM27
Over the years, Malaysia's electronics industry has developed significant capabilities and skills for
the manufacture of a wide range of semiconductor devices, high-end consumer electronic and
information and communication technology (ICT) products. International Trade and Industry
Minister Datuk Seri Mustapa Mohamed said upon realization of the already signed memoranda
following the 10th Malaysian plan, the partnerships had the potential of generating RM1.9bil in
investments over the next five years and creating 6,500 new jobs by 2020.
Electronic Components
The electronic components are the most important sub-sector and accounted for 44.6 per cent of
the total investment approved in the electronics sector in 2010.
Within the electronics components subsector, semiconductor devices are the largest contributor,
comprising more than 30% share of the E&E exports. Malaysia is currently the world‘s leading
location for semiconductor assembly and test operations, with more than 70 mostly multinational
companies (MNCs) specialising in these devices28
. Semiconductor products constituted of export
26
Yearbook of World Electronics Data Volume 2 2011 27 Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013 28 Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013
0
50000
100000
2005 2006 2007 2008 2009 2010
Malaysia's production of Electronics in mln RM
Computing Industrial Communications Consumer Components
105500
93300
25800
Malaysia's Exports of Electronic Products in 2010 in mln RM
Electronic components
Industrial electronics
Consumer electronics
“Market Watch 2012”, Electrical & Electronic Industry in Malaysia
9
value RM97,856.5million (US$32,837.75million). It contributes 92.7 per cent of the total export of
electronic components or 43.6 per cent of the total electronics export for 201029.
Although the manufacture of semiconductor devices and electronic components sector still
dominates the E&E industry landscape, clear changes have been observes in its composition.
Semiconductor companies have moved beyond basic operations such as assembly, testing and
packaging of semiconductors to high value-added activities such as cutting and polishing of silicon
wafers, IC design and wafer fabrication. The global trend in the segment has led to many
semiconductor companies undertaking specialisation and adopting new technologies such as
nano-technology in their manufacturing processes.
The present of many large MNCs has also created another positive trend: a very sizeable local
market for components and supporting/ancillary industries. There now exists a strong network of
inter- and intra-industry linkages in the electronics industry. Since the inception of the Industrial
Linkage Programme in 1997, a total of 170 small and medium-size local companies have forged
linkages with larger companies and MNCs, notably in the areas of electronics, machinery,
fabricated metal products and engineering support industries. Another rising trend is the
emergence of local companies that form part of these MNCs supply chain. Currently at least 50
companies operate as contract manufacturing services (CMS) or electronic manufacturing services
(EMS).
In other words, the electronics sector is shifting into higher value-added products and activities,
which make sense, in the light of rapid globalisation and increasing cost pressures. Many MNCs
have already upgraded their operations into integrated manufacturing centres (IMCs), which fuse
the manufacturing concept with research and development, product design and development,
marketing and distribution activities30.
Industrial Electronics
This sub-sector consists of multimedia and information technology products such as computers,
computer peripherals, telecommunication products and office equipment. The Industrial
electronics sub-sector accounted for 24 per cent of the total investment approved in the
electronics sector in 2010. In 2010, the majority of the investments approved amounting to RM2.6
billion were from Electronic Manufacturing Services (EMS) companies producing low volume high
29 Malaysian Investment Development Authority (MIDA) www.mida.gov.my, 15.12.2011 30
Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013
“Market Watch 2012”, Electrical & Electronic Industry in Malaysia
10
mix products for various applications such as medical, aerospace, oil and gas and
telecommunication31
.
Consumer Electronics
Malaysia‘s consumer electronics devices market, defined as the addressable market for
computing devices, mobile handsets and AV devices, was projected at about US$10.7mln in 2011.
This is expected to increase to US$13.5bn 2015, driven by rising incomes and growing
affordability of key products. Demand will grow at a CAGR of about 6%, as Malaysian consumers
regain confidence. Economic growth will moderate in 2011 and 2012, but overall Malaysian
spending on consumer electronics will remain robust in key product segments such as LED TV
sets. Malaysia also emerged in 2010 as one of the fastest-growing regional smart phone markets.
Vendors will continue to target products innovation to drive revenues, with growth areas
including smart phones, notebooks and HDTV32.
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
(USD8.7 billion)33.
Multinational companies such as Apple Computer Systems Malaysia, Samsung Malaysia Electronics
and Canon Marketing continued to have a stronghold on consumer electronics in Malaysia. Due to
their strong brand equity, they were able to record high value growth. In addition, the sheer
amount of competition between these companies has driven down prices, making consumer
electronics more affordable than ever before34. Offering consumers the benefit of in-store
customer service as well as the opportunity to preview products before buying, specialist
retailers such as Senheng Electric and Harvey Norman 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. Increasing affluence will ensure that more consumers
are able to afford to buy consumer electronics. Reaching new levels of convenience and
entertainment, products such as cameras and smartphones will continue to see strong growth.
31 Malaysian Investment Development Authority (MIDA) www.mida.gov.my, 15.12.2011 32 http://www.researchandmarkets.com/reports/1885013/ 33 Malaysian Investment Development Authority (MIDA) www.mida.gov.my, 15.12.2011 34 http://www.euromonitor.com/consumer-electronics-in-malaysia, 05.01.2011
“Market Watch 2012”, Electrical & Electronic Industry in Malaysia
11
However, goods such as DVD players and camcorders are predicted to experience a slowdown in
demand as their functions have been superseded by newer technologies.35
Air Ventilation devices are expected to account for about 10% of Malaysian consumer electronics
spending over BMI‘s fiveyear forecast period. Malaysia‘s domestic AV device market is projected
at US$905mn in 2011. The market is expected to grow at a CAGR of 4% between 2011-2015, to a
value of US$1.1bn in 2015. In 2010 LED backlit models in the 40- and 42-inch range were popular,
fuelled by promotions from retailers. Malaysian mobile handset sales accounted for about 65% of
Malaysian consumer electronics spending in 2010. Malaysian market handset sales are expected to
grow to 9.0mln units in 2015, as mobile subscriber penetration passes 124%. Growth will be
slower than in the preceding five years due to slowing subscriber growth, but opportunities in
Malaysia‘s youthful market will be driven by demand for smart phones, which in 2011 could
account for two thirds of Malaysian handset sales36.
Electrical Sector
Dominated by domestic companies, the electrical sector began in the 1960s as a solution to
reduce the imports of household appliances, electrical fittings, wires and cables and automotive
batteries37.
Broadly speaking, the electrical sector can be classified into three main subsectors: 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, especially
Japanese, companies. Increased investment in R&D centers has paid off handsomely: Malaysia is
now one of the world‘s largest exporters of home air-conditioners. Malaysian brands such as
Pensonic, Khind, and i-Berhard have become household names not only locally, but also in the
ASEAN region and the Middle East. Local company, OYL, also a major exporter of air-conditioners,
exports over 50% of its production to Europe, USA, Australia, the Middle East and Africa and also
serves as an OEM for MNCs and ODM for reputable brands like York, Fedders and Lennox. There
are also many local contract assemblers who produce consumer appliances for big-name foreign
brands such as LG, Electrolux, Kelvinator, GE, Elba and Samsung38.
35 http://www.euromonitor.com/consumer-electronics-in-malaysia, 05.01.2011 36 http://www.researchandmarkets.com/reports/1885013/ 37
Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013 38
Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013
“Market Watch 2012”, Electrical & Electronic Industry in Malaysia
12
Figure 2 - Malaysia's Exports of Electrical Products in 2010 in mln RM39
The major electrical products produced are household appliances such as air-conditioners,
refrigerators, washing machines, vacuum cleaners and other electrical 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, Leader Cable 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 201040.
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, expected
to records a compound annual growth rate (CAGR) of over 11% in the 2001-2010 periods41.
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 industry42.
Towards greener Technology
Malaysia recognizes the enormous growth potential of the solar energy sector and is putting in
place attractive incentives and support facilities to realize its development. Malaysia is ready to
create a globally competitive solar industry cluster. To date, Malaysia has attracted five foreign
direct investments, worth up to RM13.8bil, to set up solar PV manufacturing facilities in Malaysia.
These include US-based companies First Solar Inc at the Kulim Hi Tech Park (KHTP) and US-based
39
Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013 40 Malaysian Investment Development Authority (MIDA) www.mida.gov.my, 15.12.2011 41
Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013 42
Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013
15100
6000
6100
Malaysia's Exports of Electrical Products in 2010 in mln RM
Industrial electrical
Electrical components
Electrical consumer
“Market Watch 2012”, Electrical & Electronic Industry in Malaysia
13
SunPower Corp in Malacca, the China-based ReneSola in Johor Baru, the German company Q-Cells
in Selangor Science Park 2, and the Japanese firm Tokuyama Corp in Sarawak.
With the current unprecedented increase in fuel costs and the impact of global warming, the
demand for renewable energy and also energy efficient products and systems is booming. With an
estimated growth of 20-25 % per annum, a bright future exists for this sector of the industry.
Realising the potential, the Ministry of Energy, Green Technology and Water is putting special
efforts in the solar energy sector in the country and has launched several programmes such as
Malaysian Energy Efficiency Improvement Programme (MIEEIP) and Centre for Education and
Training in Renewable Energy and Energy Efficiency (CETREE) and the Feed-in Tariff for
renewable energy production. This project is aimed at intensifying the usage of rewable energy
or solar energy as an alternative source of electricity as well as to jump start local capabilities
and development of the solar industry in Malaysia. Since its launching, MIDA and Malaysian Energy
Centre have been collaborating to further promote the industry by identifying major players to
invest in the country.
The first approach is the most intuitive. Large researches show that there are energy saving
potentials up to 80% in lighting, 30 % in ventilation, 10 % in lifts and escalators, 70 % in water and
space heating and 80 % in cooking equipment43. With the ever growing energy costs it is only a
question of time until the investment capital is outpaced by the amount of saved energy costs. In
this context such initial investment can face both risks at once and contribute to both an
economical and ecological advancement.
Performance contracting is an alternative that may help to overcome the barriers of the capital
investment and therefore minimizing the associated risks. It leverages the energy saved for
installing energy efficient equipment and throughout that pays for the capital investment. The
charged energy service company measures and verifies the saved energy costs which will be
shared between the owner and the company to payback the project costs. The performance
contract runs until the total payback of the initial project costs.
These two ways underline the growing possibility and ability of Malaysian electrical & electronic
companies to face two contrasting problems at once. But besides facing difficulties they create
knowledge and experience for the growing global key market in the future.
43
The Electrical and Electronics Association of Malaysia, http://www.teeam.com/
“Market Watch 2012”, Electrical & Electronic Industry in Malaysia
14
Outlook
With a sterling track record of nearly four decades, the future of the E&E industry in Malaysia
looks bright. Industry players involved in both the front-end and back-end of the semiconductor
supply chain informed encouraging demand trend. The overall demand for solid-state drives is
very promising and based on the growing needs of the enterprise solid-state drive industry, as
well as consumer solid-state drive devices. Flash memory applications such as secure digital
cards, USB flash drives and MP3 players will continue to be the drivers of growth. The country has
the intellectual and physical resources to provide for its continuity, evidenced by the ever-
increasing pool of MNCs who have shifted their key products, processes and other manufacturing
related activities from their home bases to Malaysia, as well as the many success stories of local
companies44.
Figure 3 - Malaysia's Market Development and Forecast in E&E Subsectors in mln US$45
44
Malaysia External Trade Development Corporation (MATRADE), Electrical and Electronics Directory 2011-2013 45
Yearbook of World Electronics Data Volume 2 2011
1
10
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2007 2008 2009 2010 2011 2012 2013
Malaysia Market development and Forecast by E&E Subsectors in mln US$, Yearbook of World electronics Data, Volume 2, 2011
Electronic Data Processing Office Equipment Control & Instrumentation
Medical & Industrial Communication & Radar Telecommunications
Consumer Components TOTAL
“Market Watch 2012”, Electrical & Electronic Industry in Malaysia
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Important Malaysian Electrical & Electronic Trade Fairs 2012
Contact:
Mr. Thomas Brandt at: [email protected]
Ms. Chuah Sue Wei at: [email protected]
We hope the market report serves you with actual information on the Malaysian market. Our
core business is to establish contacts, finding distribution partners, project acquisitions, etc. our
“Office-in Office” will give you a permanent address to develop the market. Please contact us
for further information.
NEPCON Malaysia
Date: 12th – 14th June 2012
Venue: Penang International Sports Arena (PISA)