KUALA LUMPUR -- In the age of automation, Malaysia is making a wholesale transformation of its industrial landscapes and boosting its global competitiveness, according to the country’s top investment officer.

From semiconductors to oil and gas, food and beverages, the fourth-largest economy in Southeast Asia is incorporating the latest technologies in automation into the “smart manufacturing” processes, which cover a whole spectrum of industrial value chains.

“Smart manufacturing is the way forward for Malaysian industries,” said Dato Azman Mahmud, chief executive officer of the Malaysian Investment Development Authority, in an interview with The Korea Herald in Kuala Lumpur in late February. 

“Embracing new technologies and practices is key to overcoming the many challenges of today’s competitive global business environment,” he stressed, adding Malaysia welcomes Korea’s expertise and investment.

Established in 1967, MIDA is the government’s chief promotion agency under the Ministry of International Trade and Industry, acting as the first point of contact for foreign investors.

With the Malaysian economy moving up the value chain, its many industries are poised to produce complex and value-added products, Azman projected. The 11th Malaysia Plan (2016-20) has outlined the future direction of the country’s economic development, one driven by enhanced productivity through information communications technology and smart manufacturing.

Malaysia’s machinery and equipment industry is among the largest and strongest in the Association of Southeast Asian Nations, the CEO said.

Korea, for its part, has the world’s largest number of manufacturing robots per capita. The Korean government announced a plan last year to invest $438 million over the next five years in its robotics industry. 

The MIDA and ASEAN-Korea Center jointly organized a seminar on Malaysia’s smart manufacturing and related investment opportunities in Kuala Lumpur on Feb. 21. At the event, Azman addressed seven Korean companies specializing in industrial robots, which conducted one-on-one meetings with Malaysian firms and visited industrial parks in Malaysia.

Malaysia’s industrial ecosystem is dominated by small and medium-sized companies that provide customized products from design to logistics. There are over 35 systems integrating and engineering supporting companies in Malaysia, which deliver integrated automated solutions. Malaysian firms that are recognized globally include Vitrox, SRM Integration, Visdynamics and Walta Group.

“Our government offers various incentive packages to foreign investors that produce robotic tools, factory automation equipment and machinery and equipment,” the bureaucrat said. “We also grant automation capital allowances and soft loan schemes for automation and modernization in manufacturing.”

As ASEAN’s third-richest economy in terms of gross domestic product per capita, Malaysia offers a number of benefits to foreign investors, including political stability, high economic growth, an ideal location in the heart of ASEAN between India and China, advanced infrastructure and attractive and vibrant living environments, Azman highlighted. 

Various multinational corporations have invested in Malaysia, drawing on the ASEAN Economic Community that offers an integrated business environment. Malaysia also offers easy access to neighboring markets in Singapore, Indonesia, Thailand, Vietnam and China. Various infrastructure projects, such as the Pan-Borneo Highway, Kuala Lumpur-Singapore High Speed Rail and East Coast Rail, are either completed or in the works. 

Kuala Lumpur and Seoul established diplomatic relations in 1960. Since then, the two countries have strengthened economic ties, with Malaysia emulating the economic successes of Japan and Korea through its first “Look East Policy” of modernization and industrialization. The current government’s “Second Wave of Look East Policy” is geared toward broadening and deepening Malaysia-Korea relations in a knowledge-based economy.

As of December 2015, 347 manufacturing schemes worth $4.7 billion with the participation of Korean companies were implemented in Malaysia, employing over 50,000 people. Last year, MIDA approved an additional five projects with Korean companies worth $370 million in the electronics and electrical, petrochemical and wood products industries.

Major Korean enterprises that have invested in Malaysia include Lotte Chemical Titan Malaysia, Samsung Electronics, Hanhwa Q-Cells and Posco Kiswire.

By Joel Lee, Korea Herald Correspondent (joel@heraldcorp.com)