By Vincent Tang, Vice President, Asia, Epicor
The manufacturing industry is experiencing a revolutionary transformation with emerging technologies taking the driver’s seat. According to a survey by Epicor, technologies that have been most adopted in manufacturing companies are artificial intelligence (AI) or automation, robotics, data analytics and big data, 3D printing, cloud computing, and augmented reality.
Malaysia’s New Industrial Master Plan 2030 (NIMP 2030) identifies manufacturing as one of the primary drivers of the country’s economic growth and development, accounting for 25% of the GDP and approximately 80% of the total exports. In fact, Malaysia’s manufacturing industry is set to grow 61% to RM587.5 billion in gross domestic product by 2030.
This serves to underscore the need for the Malaysian manufacturing sector as a whole to move forward with modernisation attempts. The current challenge is that the achievements in the manufacturing sector have been minimal, thus far. This has implications for its growth trajectory and its broader role in Malaysia’s economy.
This is where embracing automation and AI adoption can help boost competitiveness and productivity in the manufacturing sector. Manufacturers must drive their digital transformation agendas or lose out in a rapidly changing global landscape.
Malaysia’s Manufacturing Industry
Despite growing investments in initiatives to drive Industry 4.0, Malaysia’s manufacturing sector continues to struggle with legacy processes and technological gaps. Only 39% of workers globally in 2024 consider their workplace “very modern”, according to Epicor’s Future of Work in Manufacturing Report. The same report found that only 45% of workers and 57% of managers surveyed rated their morale as high.
A study by the Malaysia Productivity Corporation outlines the issues challenging productivity in the Malaysian manufacturing sector, including less exposure to improvement programs, limited awareness in expanding into advanced technologies, and a lack of resources and capital to invest in new technology.
AI and Automation Are Keys to Growth
To improve the situation, manufacturers can turn to AI and automation. After all, these have become crucial for businesses that want to stay competitive in Industry 4.0. Recognising this, the Malaysian government introduced several initiatives to put the country at the leading edge of digital manufacturing led by AI.
The National Industry 4.0 Policy Framework and the Digital Transformation Blueprint have targeted 30% AI adoption among local manufacturers by 2025. The government’s MyDIGITAL initiative also aims to have a minimum of 50% of data in manufacturing processes to be machine-readable by 2025.
This is significant in light of estimates made by the Malaysia Digital Economy Corporation (MDEC) that emerging technologies like generative AI can contribute an estimated USD 113.4 billion to the country’s productivity potential in the next five years.
Overcoming Workforce Challenges with AI
Another approach manufacturers can take to set up for successful digital transformation is reskilling their current talent base. Upskilling initiatives can benefit talent as well as organisations by enhancing the understanding of new technologies within an organisation.
The Ministry of Investment, Trade, and Industry (MITI) resolved to extend the suspension of the 80:20 local-to-foreign worker ratio requirement in the manufacturing sector. This gives manufacturers more flexibility in manpower management while encouraging a long-term shift towards automation and digitalisation, thus reducing the dependence on foreign labour.
With automation enabled by AI, manufacturers can realise measurable improvements in efficiency, productivity, and cost reduction. Operational modernisation can include digitising paper documents, automating daily processes, taking advantage of more data analysis, and adopting an ERP system as a hub of data insights.
The Advantages of Smarter Manufacturing
Success in the manufacturing sector goes beyond supply chain advances, productivity, and digitalisation. It also requires having a satisfied and dedicated group of talent working together to achieve business goals. Smarter manufacturing can make this happen. Through automation and AI, there can be a smoother workflow.
Manufacturers Should Act Now
The future of Malaysia’s manufacturing sector hinges on its ability to embrace AI and automation quickly. Government initiatives are helping to lay the foundations, but actual transformation ultimately needs to come from the manufacturers themselves. Those who willingly invest in AI-based solutions can enhance their operations and future-proof their organisations against global disruptions.
As Malaysia strives to achieve high-income status by 2030, the move to smart manufacturing will determine which manufacturers succeed in this evolving landscape.
