Johor manufacturing sector sees RM145b investment over 2016

Johor Manufacturing

The Malaysian Investment Development Authority (MIDA) recently organised a Supply Chain Conference for the Southern Region in Johor Bahru. The event, graced by Yang Berbahagia Prof Datuk Ismail Ibrahim, Chief Executive of Iskandar Regional Development Authority (IRDA) who represented the Chief Minister of Johor. The conference was the third of its series for 2017 after Pahang (East Coast Region) and Penang (Northern Region).

According to Datuk N. Rajendran, Deputy Chief Executive Officer of MIDA in his welcoming remarks, the supply chain series was kick started with the national level conference held last year in December at the Ministry of International Trade and Industry (MITI). Following the successful outcome of the event, MIDA brought this supply chain conference to the various regions in Malaysia, focusing on the respective state’s economic strengths.

“We trust that this platform will further promote sustainable business linkages towards stimulating the growth of supply chains between the Multinational Corporations (MNCs) and Small-Medium Enterprises (SMEs) in Malaysia. We also hope that this initiative will open the right doors for these companies to form mutually beneficial strategic partnerships. Given the increased flow of foreign direct investments in recent years, there are now more opportunities than before for SMEs to venture into,” said Datuk Rajendran

The Southern region has become the home of many renowned global companies such as Lotte Chemical Titan, Hershey, Dyson, Seagate in Johor as well as Infineon, Honda, Konika Minolta, Xinyi Solar in Melaka. Their thriving businesses are well supported by local players as suppliers of raw materials, part, components and ancillary services. This modus operandi has served both parties well and has generally enhanced the robustness of the economy as a whole.

At the event, SMEs were urged to raise their efficiency levels, strengthen inter-firm linkages and respond timely to market changes to remain competitive. Local companies, particularly those in the labour intensive industries such as the furniture industry, could reap much benefit by embracing the potential of Industry 4.0 technologies including smart manufacturing, robotics and the internet of things (Iot) to significantly increase production volume and reduce dependency on foreign labour.

“Under the Budget 2015, the Automation Capital Allowance was introduced to encourage automation adoption in the manufacturing sector. The initiative provides automation capital allowance of 200% for high labour intensive industries like rubber products, plastics, wood, furniture and textiles. For this scheme, MIDA approved 32 applications in 2016. In line with the Ministry of Finance’s announcement to introduce specific incentives in relation to Industry 4.0 for this year’s Budget, MIDA is currently identifying suitable incentives to assist companies in their technological transformation journey,” added Datuk Rajendran.

Johor will soon have a dedicated industrial park for furniture industry in Muar. The furniture manufacturing is historically a labour-intensive industry and primarily dominated by SMEs. In line with the current direction towards automation and smart manufacturing, MIDA will work closely with Corporation (JCorp) and other relevant stakeholders to ensure the new Muar Furniture Park will have all the right value propositions to spur the adoption of Industry 4.0 among local companies. This will further reinforce Johor’s position as Malaysia’s main exporter of high-value added wooden furniture.

Johor will also be setting up a Robotic Future City following the signing of an agreement between JCorp and Siasun Robot Investment during the Prime Minister’s visit to Beijing in May this year. Once materialised, this RM15 billion project is poised to develop the robotic industry as well as spur the growth of various supply chains in the country.

MIDA’s Supply Chain Conference featured a panel discussion with key speakers from the Johor Petroleum Development Corporation Berhad (JPDC), Hershey Malaysia, Lotte Chemical Titan (M) Sdn. Bhd., Muar Furniture Association and was moderated by Mr. Prakash Nagarajan, from Iskandar Regional Development Authority (IRDA). Business Matching Sessions which involved more than 20 MNCs were also held later in the afternoon. Anchor companies that participated in the sessions include Pokka Malaysia Sdn. Bhd. BASF (M) Sdn. Bhd. Altech Chemicals Sdn. Bhd., Ciba Vision Johor Sdn. Bhd., JVC Kenwood Electronics Malaysia Sdn. Bhd. and Biocon Sdn. Bhd.

Johor is among the top recipients of investments in the manufacturing sector. As at 2016, a total of 4,464 projects with investments valued at RM145.2 billion have been implemented in the state. More than 500,000 locals have benefitted from these projects through employment. The state continued to sustain its position in 2016 as Johor emerged as the largest recipient of approved manufacturing projects last year with 165 projects worth RM26.4 billion. These projects are poised to generate more than 8,500 job opportunities for Malaysians.