Industry 4.0 Driving The 12th Malaysia Plan
By Neil Foo
On September 27, 2021, Malaysian Prime Minister Ismail Sabri announced that under the 12th Malaysia Plan, the government would aim to reach the high-income nation target by 2025, with an average monthly household income of about $2,500 (10,000 ringgit) and the raise of the quality of life.
Under the 12th Malaysia Plan, about US$100 billion (400 billion ringgit) will be allocated to promote the country’s development over the next five years. GDP will grow by an average of 4.5 to 5.5 per cent a year between 2021 and 2025.
Under the 12th Malaysia Plan, the Malaysia National Industrial 4.0 Policy – 4IR has become the main axis of the Malaysian government’s digital transformation of manufacturing and service industry, aiming to promote more systematic and comprehensive development in various fields such as manpower, processes, technology, and to become smarter and more powerful under the impetus of Industry 4.0.
The program focuses on the three major catalytic industries in the manufacturing industry – electronics and electrical (industrial electronics, consumer electronics, etc.), machinery and equipment (specialized equipment processing, power generation equipment, etc.), chemicals (petrochemicals, rubber products, etc.), and two key growth areas – aerospace (system integration, engineering, etc.) and medical equipment (smart wearables, medical facilities, etc.).
In the services sector, the focus will be on key hubs, logistics, ecosystems around e-commerce, green technologies and renewable energy, and waste management.
Malaysia, as the global semiconductor supply chain of production, there are currently more than 50 semiconductor plants established here, including Intel, Infineon, ST, NXP, Texas Instruments, On and other international semiconductor giants, contributing about 13% of the global capacity.
The recurrence of the epidemic, semiconductors as a key local technology supply chain has also been seriously affected, many semiconductor companies have encountered a shutdown dilemma.
Nonetheless, at present, Malaysia becomes one of the leading nations achieving the vaccination rate of 63% of the total population under the national vaccination program. Likewise, the capital city Kuala Lumpur is vaccinated as high as 80%!
Malaysia has developed the semiconductor and chip industry since the 1970s, semiconductors and chips are the backbone of the 4IR industry and SMART intelligence industry, so under the 12th Malaysia program will continue the competitive advantage of this industry!
The preferential policies granted by the Government of Malaysia to “Industry 4.0” enterprises include: up to 10 years of corporate income tax relief, up to 100%; Or 100% deduction for eligible capital expenditures is available for five years. This deduction fully offsets the statutory income of the business for each tax year.