Question

Explain Overview on the Main Industry in Malaysia

a) Agriculture ( 40 marks)

b) Manufacturing( 40 marks)

c) Services( 40 marks)

d) Construction( 40 marks)

e) Mining and Quarrying( 40 marks)

Answer 1

Agriculture remains an important sector of Malaysia's economy, contributing 12 percent to the national GDP and providing employment for 16 percent of the population. The British established large-scale plantations and introduced new commercial crops (rubber in 1876, palm oil in 1917, and cocoa in the 1950s). The 3 main crops—rubber, palm oil, and cocoa—have dominated agricultural exports ever since, although the Malaysian share of the world's production of these crops declined steadily during the last 2 decades. In addition to these products, Malaysian farmers produce a number of fruits and vegetables for the domestic market, including bananas, coconuts, durian, pineapples, rice, rambutan (a red, oval fruit grown on a tree of the same name in Southeast Asia), and others. The Malaysian tropical climate is very favorable for the production of various exotic fruits and vegetables, especially since Peninsular Malaysia seldom experiences hurricanes or droughts.

As rice is a staple foodstuff in the everyday diet of Malaysians and is a symbol of traditional Malay culture, the production of rice, which stood at 1.94 million metric tons in 1998, plays an important part in the country's agriculture. However, the overall production of rice does not satisfy the country's needs, and Malaysia imports rice from neighboring Thailand and Vietnam.

In 1999, Malaysia produced 10.55 million metric tons of palm oil, remaining one of the world's largest producers. Almost 85 percent or 8.8 million metric tons of this was exported to international market. Malaysia is one of the world's leading suppliers of rubber, producing 767,000 metric tons of rubber in 1999. However, in the 1990s, large plantation companies began to turn to the more profitable palm oil production. Malaysia also is the world's fourth-largest producer of cocoa, producing 84,000 metric tons in 1999.

Logging in the tropical rainforest is an important export revenue earner in East Malaysia and in the northern states of Peninsular Malaysia. In 2000, Malaysia produced 21.94 million cubic meters of sawed logs, earning RM1.7 billion (US$450 million) from exports. Malaysia sells more tropical logs and sawed tropical timber abroad than any other country, and is one of the biggest exporters of hardwood. Despite attempts at administrative control and strict requirements regarding reforestation in the early 1990s, logging companies often damage the fragile tropical environment. Sharp criticism from local and international environmentalist groups gradually led to bans on the direct export of timber from almost all states, except Sarawak and Sabah. In December 2000, the government and representatives of indigenous and environ-mentalist groups agreed that there is a need to adopt standards set by the international Forest Stewardship Council (FSC), which certifies that timber comes from well-managed forests and logging companies have to be responsible for reforestation.

Manufacturing has played a vital role in the economic transformation in Malaysia.

According to the Department of Statistics Malaysia a total of 1,028,301 persons are engaged in the local manufacturing sector, with an average monthly salary of RM3,122 paid per employee.

Some of the key sub-sectors within the manufacturing industry in Malaysia are:

• petroleum, chemical, rubber and plastic products
• food, beverages and tobacco
• electrical and electronic products.

To keep the Malaysian manufacturing on the right track, qualified engineers are needed. Among other roles, engineers working in the manufacturing business are responsible for the safe and efficient planning, management and maintenance of production methods and processes.

Typical areas of work

Research: this involves exploring new concepts or materials for products as well as making incremental improvements to existing products. Research engineers also try to find the next big thing that will give their organisation the edge in the market by introducing ideas for an improved product or through innovation of a new, advanced process.

Design: engineers design products with consideration of what the customer wants and the specialist processes needed to manufacture them. Increasingly, designers must consider the ‘whole life’ of the product and review how the product will be disposed of at the end of its life.

Development: the development process involves taking a product design or prototype and making it into a product that can be manufactured. Development engineers consider the scale of production (volume), availability of materials (and their cost), production safety, lead times, quality and overall cost.

Production: production engineers optimise manufacturing processes for safety and efficiency. It involves managing production teams, maintaining schedules, dealing with health, safety and environmental (SHE) hazards and troubleshooting production line issues.

Quality assurance: manufacturing organisations have strict quality controls and will adhere to a system. Engineers working in this area design and review quality systems, instruct and supervise staff as well as develop and carry out quality assurance tests on products. Engineers in manufacturing can also apply their skills in commercial roles such as marketing, supply chain, operations management, logistics, as well as sales and after-sales service.

Trends and developments in the Malaysian manufacturing industry

The Malaysian manufacturing business is diverse but has shown long-standing dominance in rubber and palm oil processing as well as in pharmaceuticals, medical technology and electronics, among others.

Despite the plunge of the Ringgit – which is currently in its lowest against the US dollar – Malaysia still has a significant car manufacturing industry, complete with state-of-the-art manufacturing and assembly plants, including:

Proton
Plants: Tanjung Malim (Persona and Preve models) and Shah Alam (Inspira, Exora, Saga and Satria Neo models)
DRB-Hicom
Plants: Pekan (Mercedes Benz, Volkswagen, Audi, Honda, Suzuki, Isuzu, Mitsubishi and Tata)
Perodua
Plant: Rawang (MyVi and Alza models)
Honda
Plant: Alor Gajah (City, Civic and CR-V models)
Nissan (under Tan Chong Motors)
Plants: Serendah (Grand Livina, Almera, Sylphy and Teana models) and Segambut (Serena model plus other SUVs)
Toyota
Plant: Shah Alam (Vios, Camry and Innova models)
Volvo
Plant: Shah Alam (S, V and XC models)
Land Rover, Mazda and BMW (under Inokom Corporation Sdn Bhd)
Plant: Kulim
Peugeot and Kia (under The Naza Group of Companies)
Plant: Shah Alam

Getting a graduate job in manufacturing engineering

The key engineering disciplines sought by manufacturing employers are:

• mechanical
• manufacturing
• electrical
• chemical/process
• materials
• control and instrumentation
• environmental.

However, engineers from other backgrounds may well find good job opportunities in this sector.

The services sector is also known as the tertiary sector. Services are defined in conventional economic literature as intangible goods. The tertiary sector of economy involves the provision of services to businesses as well as final consumers.

It has been internationally accepted that an adequate measure of the service sector contribution to the economy is 20% of total exports. In Malaysia the figure for 2007 and 2008, at Ringgit Malaysia (RM) 100.9billion and RM102billion respectively, came up to 17%.

As per World Trade Organization, eight developing countries are in the list of the world’s 30 largest exporters of services and Malaysia was ranked 30th in 2008. At present 7% of the services sector share of GDP consists of services provided by the Government. The remainder is the tradable services sector which has commercial and growth prospects.

Tourism has been valued at RM50billions and is one of the main services export earner. It grew by 5% in 2008.Other sectors with potential are information and communications technology, construction, Islamic financial services, education and training, management services, medical tourism, logistics and oil and gas services.

The investments made in services totaled RM 66.4billion in 2007 and RM 50.1 billion in 2008, exceeding the annual target of RM 5.8 billion set by the Third Industrial Master Plan.

Domestic investments make up more than 85% of investments in the services, whereas Foreign Direct Investment (FDI) is only 15%.The government is taking initiatives to increase the FDI in the service sector.

To begin with the government has liberalized equity conditions imposed on foreign investors and has eased the restrictions against the employment of foreign specialists and professionals in the services sector. The other initiatives include the liberalization of the 27 sub sectors of services in April 2009, followed by the liberalization of selected financial services and the de regulation of Foreign Investment Committee guidelines.

The government is of the view that liberalization would bring in new capital, expertise and technology, create employment and new opportunities for joint ventures between foreign and domestic services.

The Malaysian construction market is expected to register a CAGR of 4.7% over the forecast period, 2019 – 2024. The Malaysian construction industry registered an average annual growth rate of 7.9%, during 2010–2016. This growth was supported by the 10th Malaysian Plan 2011–2015, under which the government invested heavily in infrastructure, industrial parks, and residential buildings. In 2010, policies for public-private partnerships (PPPs) eased by the government to attract more investments for the country's infrastructural development. Between 2016 and 2017, the average growth rate was 7.1% per year.

The construction industry contributed 5.9 % to the GDP in 2017, while total industry growth for the year stood at 6.7 %. The new ruling Pakatan Harapan administration has initiated reviews of several mega projects and the Prime Minister, Tun Dr. Mahathir Mohamad, had stated that budget 2019 would see a cut in the development expenditure.

The Government’s vision 2020 project will also boost the subsector construction projects in the next few years supported by the government’s plan to improve the country’s transport network and tourism infrastructure and increase the volume of renewable projects. Moreover, government efforts to address the country’s housing shortage will help the industry to grow over the next five years.

The Malaysian construction market covers the growing construction projects in different sectors, like commercial construction, residential construction, industrial construction, infrastructure (transportation construction), and energy and utility construction, along with the construction details of every project like construction stage, new addition buildings, demolition, and new construction.

The Malaysian government has made considerable progress to expand and modernized its infrastructures throughout the country. This effort is evident by the five-year centralized economic development plan known as the Malaysia Plan, whereby public sector infrastructure development consistently holds the largest funding portion. Under the Eleventh Malaysia Plan for 2016-2020, sizeable investment on infrastructure in Malaysia is allocated for the transport and logistics sector to boost regional development.

Based on the Malaysia Trade Performance 2017 Report, Malaysia’s total trade increased by 19.4% of RM1.774 trillion compared to RM1.486 trillion in 2016. An increase in trade is expected to further raise the demand for the logistics industry and socio-economic need. Amongst the transport and logistics sector, the road is the main mode of domestic transport in Malaysia, accounting for well over nine-tenths of all transport in the country. In keeping abreast of the demand, the Ministry of Works has established the Highway Network Development Plan (HNDP) to be the main blueprint of road infrastructure planning across Malaysia.

Strategic public and private sector collaborations in implementation and financing will also further facilitate the Malaysia’s capital-intensive construction industry.

The previous government had announced a total 300,000 housing units through its various housing programs, such as 1Malaysia Civil Servants Housing project (PPA1M) which aimed to build 175,000 affordable housing units across the country, First House Deposit Financing, Program Rumah Mesra Rakyat, People's Housing Program (PPR), and Syarikat Perumahan Negara Berhad. These projects boost residential construction markets during the forecast period.

Several giant contractors were awarded many residential construction projects, such as Premier Mirach, a subsidiary of Mirach Energy, which was awarded a RM 20.5 million (USD 6.6 million) contract for a construction and development project in West Malaysia. The project comprises 213 units of single-storey terrace houses. Work had started on Nov 13, 2017, and aimed to be completed 30 months later.

Another construction project worth MYR 450.9 million (USD 105.1 million) from UOB Properties (KL) for the construction of the UOB Tower 2 office building in Kuala Lumpur, Malaysia. The UOB Tower 2 project also includes 27 levels of office space including a green lounge reception, a sky lounge and mechanical floors.

The Malaysian construction market is less competitive due to the presence of major international players holding a large share of the total market. Furthermore, the residential and transpot construction sectors have a huge potential for growth in the forecasted period which stimulates opportunities for other market players. The Malaysian construction market presents opportunities for growth during the forecast period, which is expected to further drive market competition. With a few players holding a significant share, the Malaysian construction market has observable level of consolidation.

Mining is one of the main industries in Malaysia. Malaysia produces aggregate, bauxite, clay, coal, copper, feldspar, gold, gravel, ilmenite, iron ore, kaolin, limestone, mica, monazite, sand, silica sand, struverite and tin.

Mining and quarrying is classified as one of the major economic sectors in Malaysia. It involves the activities relating to the extraction and processing of metallic and non-metallic minerals. The sector contracted 5.5 percent in 2011. The negative growth was largely attributed to falling output level from mature oil fields, shutdown of several production facilities for maintenance, and new fields production that are lower than forecast level.

The performance in the mining and quarrying sector rebounded into positive growth territory in 2012 with a growth of 1.4 percent recorded for 2012 on the back of recovery in crude oil and condensates production. Oil fields located in offshore Peninsular Malaysia and Sabah produced higher level of output in 2012 while several marginal and new oil fields had also began production in the same year. The sector is expected to expand by 2.2 percent in 2013 and 3.1 percent in 2014, supported by the continued improvement in the oil and gas sector.

Non-metallic minerals, also known as rock materials, extracted by quarrying industry forms the basis of construction materials which are essential to the building of houses, roads, bridges, factories and many others. There are over 300 quarry sites operating in Malaysia with majority of it located in the Peninsula.

There are different types of rock materials extracted from quarries. Most common types of rock material quarried in Malaysia are limestone and granite, sandstone, day and others.

Quarrying methods used for quarrying rock materials vary according to the type of rock and purpose of the rock is being quarried for. Methods employed are highly reliant on the use of machinery and equipment due to the bulk and size of rock materials handled.

Quarrying operations requires different machineries and equipment that are unique to the activities of each process. The machineries and equipment includes drilling machine, jaw crusher, cone crusher, impact crusher, screening equipment amongst others.

SCH Group is principally involved in the Malaysian quarrying industry as a supplier of quarrying equipment and machineries to Malaysia's quarry operators. They are an important market player that supplies supporting products and services vital for quarrying operations especially for rock extraction and quarry processes.

Malaysia's industrial non-metallic mineral production includes aggregates, clays, earth materials, feldspar, kaolin, limestone, mica, sand and gravel and silica. However, the quarrying industry is mainly dominated by the quarrying of aggregates, limestone, sand and gravel and clay.

The quarry equipment and machinery market is a support industry to quarry operations; therefore its performance, trends and outlook correlates with that of quarry operations, and the quarrying industry at large. In this case, demand for quarry products, and increased quarrying activity will likely result in establishment of new quarry sites, expansion of quarry sites or increased quarrying production; all of which would increase the demand of maintenance and repair services, replacement for the wear and tear parts and new or upgraded machineries.