chapter 6 - Malaysia Productivity Corporation ( MPC)

Furthermore, it can be observed that the expansion of the manufacturing sector during this period was
highly dependent on foreign capital as well as foreign workers due to the level of technology employed
though FDI played a dominant role in export oriented industries such as E&E. Thus, if Malaysia fails to
undertake major structural changes to reduce labour usage (in particular foreign workers) and capital
inputs, the manufacturing sector may likely lose its comparative advantage to other countries. For
that reason since 2000, the Government has taken corrective measures by de-emphasising low valueadded
unskilled labour activities and in contrast, promoting high value-added technology as well as
skilled-based manufacturing projects. The new orientation to a high value-added technology has led
to the recognition of human resource development as an important policy issue. In fact, recent calls
for a national minimum wage in Malaysia have highlighted the Government’s policy towards reducing
foreign workers.
Additionally, the Government also offered fiscal incentives for workers’ retraining programmes and
enhanced research and development capabilities. Dependence on foreign workers, therefore, would
have to continue in the interim, although their composition would progressively incorporate with more
skilled categories. Nonetheless, the Government is now putting in place more stringent controls on the
recruitment of foreign workers. In fact, during the Ninth Malaysia Plan period (2006-10), the focus of the
manufacturing sector was to upscale the sector towards higher value added activities.
Interesting to note, during the course of the structural changes in the economy and the emphasis towards
human resource development, the workforce transition in the manufacturing sector has been gaining
momentum among others, involving an increasing proportion of high income employment category and
more Malaysians are being employed in more highly skilled and higher income occupations. For instance,
projects approved by Malaysian Investment Development Authority (MIDA) in 2010 when implemented,
are expected to create a total of 97,319 employment opportunities of which 74.2% or 72,221 will be in
the high income category. Furthermore, an increasing number of Malaysian managers and engineers
are being employed in industries such as solar, advance electronics, medical devices, aerospace as well
as oil and gas. Research and development (R&D) and design and development (D&D) activities was also
observed within the sector. In line with this new development, the Government had also improved the
education system by increasing the scientific, technological and business orientation of the schools’ and
universities’ curriculum and at the same time, enhancing intermediate-level technical education.
Contributed by: Associate Professor Dr. Zulkifly Osman
School of Economics
Faculty of Economics & Management
National University of Malaysia (UKM)
Productivity Report 2011/2012
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