Following World War II the country of Japan began its economic miracle process. The country,which had virtually no natural resources of its own, became an economic powerhouse. They did it because of their systems and creating an environment where business was welcome and it could thrive.
By the 1970s Japan’s wages became competitive with the West and one of the country’s biggest advantages — low labor costs, was no longer as competitive. They then found themselves exporting to Malaysia (as the US had, a couple decades earlier, to Japan). Malaysia has long been seen as a great place to find industrious people and has long been in an innovator when it comes to manufacturing. That reputation is continuing.
Manufacturing in Malaysia is embracing ‘Industry 4.0’, which involves the integration of digital and physical technologies to improve business processes, operations, productivity, growth and innovation. Unlike previous eras, ‘Industry 4.0’ looks to create entirely new business models and modify (and improving) existing ones, according to the data and analytics company GlobalData.
Per capita, Malaysia is one of the world’s leading manufacturing countries. According to the Department of Statistics Malaysia (DOSM), the manufacturing sector employed more than one million people in 2016. An astonishing number for a country of 31 million. Malaysia External Trade Development Corporation (MATRADE) and DOSM report that the sector accounts for over 80% of all exports and 23% of GDP. However, manufacturers are under pressure and face significant challenges.
Dustin Kehoe, Technology Service Director of APAC at GlobalData, says: “On the supply side, the industry is seeing an increase in global commodity prices and diversification from traditional low-cost production markets. On the demand side, average order value is falling, the demand for customization is increasing and margins by and large are under pressure. “To address these challenges and drive the evolution of a technology-driven global economy, Malaysia is gearing up to launch the national policy by mid-2018. In the past, innovation was focused on one company. Industry 4.0 looks to extend these capabilities across the entire upstream and downstream supply chain. It focuses on the convergence of operational technology– hardware and software that monitor and control physical equipment and processes integrate with traditional IT systems.”
Industry 4.0 introduces what is referred to as ‘smart factory,’ in which cyber physical systems monitor real time physical progress of the factory and are able to make decisions in a decentralized manner. This is being driven by a number of factors in the technology space. These include autonomous robots, big data analytics, cloud computing, Internet of Things (IoT), additive manufacturing (3D Printing), system integration, cybersecurity, augmented reality and simulation.
Kehoe went on to point out that “The manufacturing sector in Malaysia will continue to adopt new technologies to help increase visibility in both production and process. Having more granularity in both areas through technology drives better quality control, such as fewer defects and overall business efficiency. Up time is very important for this industry. An unplanned outage can lead to significant delays and costs.
“In terms of technology, Artificial Intelligence (AI) will drive IoT adoption and the two technologies are converging. The integration of AI and IoT will lead to further innovation, automation and data management. Manufacturing will be among the early adopters of AI-enabled IoT. The first deployments are starting in areas such as machine sensors, advanced electronics and will gradually move to other areas such as robotics, driverless vehicles and drones.”
Although still considered a developing country, Malaysia’s growth in terms of GDP and Per Capita Income is among the fastest growing in the world. This move to “Industry 4.0” will only further enhance its reputation as a leader.