Introduction

 

5.01 The attainment of the goals and objectives laid down in the Second Outline Perspective Plan (OPP2) towards realizing the vision of making Malaysia a fully developed nation by the year 2020 will necessitate the formulation and implementation of more effective strategies and programmes. The principal thrust will be to create a stronger foundation for the promotion of sustained growth with equity. Towards this end, the Government has formulated the New Development Policy (NDP). The NDP will be directed towards achieving a balanced, broad-based and internationally competitive economy while increasing opportunities for Malaysians to enhance their income and standard of living so as to reduce economic imbalances. The Government will continue with its pragmatic and flexible approach in the management of the economy so as to provide a favourable environment for growth to be achieved through high levels of investments and exports. Efforts to enhance the contribution of the private sector will be intensified through the continued implementation of the liberal policy towards private investment and by expanding public sector investment in infrastructure and human resource development as well as enhancing the technology base so as to enlarge the capacity for growth.

 

5.02 In line with the above thrusts, specific strategies for industry, agriculture and services will be emphasized. The industrial sector will continue to spearhead the growth of the economy. Hence, future policy thrust will be to strengthen the manufacturing base and diversify the exports of manufactured products. Although the contribution of the agriculture sector is expected to decline relative to other sectors, its role remains significant with expected improvements to be attained in productivity through modernizing and consolidating the small holdings sector and enhancing the linkages of this sector with the industrial sector. The development of the services sector will be given priority to enable it to play the role of a leading sector in the growth of the economy. The overall thrust of the sectoral strategies will be to raise the level of productivity growth and technology development so as to ensure the attainment of a stable and sustained economic expansion.

 

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Strategies And Programme Thrusts

 

5.03 The essence of the sectoral strategies is to promote further diversification and growth in value-added indigenous activities that will have widespread linkages across sectors. Towards this end, the Government will continue to improve upon the initiatives and measures which have been implemented to achieve growth and distributional objectives. High on the priority will be the consolidation and concentration of efforts to provide a greater degree of coherence to existing sectoral policies and programme thrusts. Concerted efforts will also be made to venture into new frontiers of development.

Manufacturing

 

5.04 The manufacturing sector is targeted to grow at 10.5 per cent per annum during the OPP2 period. The thrust for the sector's development will be to widen and strengthen its base with a view to lessening dependence on traditional growth subsectors, primarily textiles, electrical and electronics. Towards this end, the primary strategy will be to emphasize the identification of new sources of growth to further accelerate the expansion of the manufacturing sector. Efforts will be made to efficiently shift resources towards more promising and rapidly growing sectors which will lead towards greater diversification of products and markets. At the same time, emphasis will also be given to the development of new products based on continued research and applications of composite, new and advanced materials. These efforts will be supported by programmes aimed at improving comparative advantage by enhancing skills and technology development and upgrading the infrastructural support facilities.

 

5.05 Industrial deepening will be pursued in order to achieve greater value added and linkages, both vertical and horizontal, especially in the basic metal, fabricated metal, petroleum and transport equipment industries as well as nonmetallic mineral, rubber and timber-based industries. These industries, especially those related to engineering and metal fabrication are essential in providing the ancillary support and improving the linkages among industries. The continued expansion in manufacturing activities will provide a wider scope for industrial component industries such as moulds and dies to expand. At the same time, the domestic-oriented industries like vehicle parts and accessories are anticipated to expand further as a result of rising demand from domestic as well as external markets. Such increases in demand will also lead to increases in demand for related complementary products. For the electronics sector, the establishment of wafer-fabrication plants for example will enable greater backward integration and greater value-added electronic products away from mere assembly activities.

 

5.06 Emphasis will be placed on the development of value-added products with greater linkages through further downstream activities, especially of the resource-based industries such as wood and rubber products, food and beverages as well as chemicals and petrochemical products. With the establishment of a number of furniture complexes, greater value-added wood products are envisaged. Manufacturers of wood and wood products have also successfully penetrated new markets and introduced new products made from non-traditional timber species. The manufacture of sawn timber and plywood provide potentials for vertical linkages within the wood subsector through increased production of furniture and furniture components for the export market. The chemicals and petrochemical subsectors are also poised for greater downstream industrial activities.

 

5.07 The small- and medium-scale industries (SMIs) will be further promoted and upgraded, with the objective of making them an important and viable vehicle for industrial expansion and the creation of inter-industry linkages and support. The SMIs are expected to contribute significantly in terms of value added and labour absorption in the manufacturing sector to the level of 40 per cent and 50 per cent, respectively, within the next decade from the current position of 20 per cent and 30 per cent.

 

5.08 Several public agencies are involved actively in promoting SMIs by providing supporting services such as training, advisory, extension and research and development (R&D) related services as well as assistance in marketing activities through subcontracting and Government procurements. In addition to normal credit lending by commercial banks, the Government launched the ASEAN-Japanese Development Fund and the Industrial Technical Assistance Fund (ITAF) as major efforts to enable SMIs to have wider access to financing on attractive terms and conditions. While such existing support services and assistance will be continued, it is necessary to attain a more integrated approach for the development of SMIs. In this regard, preferential access to a wide range of business, technical and industrial facilities such as provision of credit, technical know-how and business premises will be better coordinated and rationalized among the various public agencies to reduce conflicting priorities and duplication of programmes. In addition, greater emphasis will be placed on improving the contribution of SMIs towards higher levels of efficiency and value added through changes in the mode of production. The major initiatives will include the identification and extension of support facilities and services to potential high growth industries, strengthening financial and non-financial support, improvement of product quality and internationalization of industries as well as strengthening further the modernization, management and technology development programmes. The private sector is expected to play an increasingly active role in the development of SMIS, while the public sector will primarily provide support in areas not covered by private sector initiatives, especially technical and financial assistance in R&D, technology and product development as well as feasibility and market studies.

 

5.09 Regional dispersal of industries will be accelerated, not only to achieve a more balanced distribution of investment but also to locate industries closer to the sources of labour and raw materials with a view to providing a better geographical spread of existing and new industries. The Federal and State administrative and planning machineries will be further strengthened to provide for a more integrated approach in the development of promoted areas so that they will be adequately equipped with the appropriate social and physical infrastructures. In this regard, an integrated approach for the development of industrial estates will be adopted to provide the necessary facilities and amenities. In addition, selected locations will be considered for industrial specialization taking into account their comparative resource endowment. In this context, the opening of new industrial zones and upgrading of existing ones, as well as the development of a few selected high technology industrial estates will assist in expanding growth opportunities for identified areas.

 

5.10 The Government will expedite the restructuring and rationalization of industries which have lagged behind in growth as a result of outmoded structures of production and technology and high costs of production. This will be done through the provision of special assistance and support. The principal objective of the rationalization strategy will be to ensure viability and sustained development of the selected industries through a process of mergers, acquisition, amalgamation of plants and financial restructuring.

 

5.11 The development of selected basic industries, particularly machinery and engineering, automobiles and chemicals, will form an integral part of the strategies to restructure the industrial sector. The expansion of these basic industries is expected to create new demand for intermediate and capital goods and services, and provide new opportunities for growth, industrial technology and inter-industry linkages. In particular, development in this area is expected to nurture SMIs in the manufacture of component parts and intermediate products.

 

5.12 Greater efforts at export promotion will also be undertaken. In this regard, efforts to market manufactured products will be intensified not only to traditional markets but, more importantly, to penetrate new markets. Aggressive marketing strategies, including joint ventures with international corporations having strong global market links, will continue to be developed. At the same time, local capability in international product promotion, product quality, design and packaging, as well as market research and intelligence will be improved.

 

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