Are you thinking about outsourcing your manufacturing? Here are 10 reasons why choosing an EMS provider with a footprint in Malaysia can be a smart, strategic move.
1. Workforce
Malaysia boasts a skilled and diverse workforce with expertise in electronics, engineering, and technology. Its education system and business structures produce professionals who are highly trained in modern manufacturing techniques, ensuring that companies have access to a talented labour pool. This skilled workforce can significantly contribute to the success of an outsourcing partnership, providing the expertise needed for product development and production optimisation.
2. Infrastructure
In recent years the country has invested heavily in world-class infrastructure. This includes well-connected transportation networks, reliable utilities, and modern manufacturing facilities. The presence of advanced infrastructure reduces logistical risk and enables the swift movement of goods, people and data into and out of the country.
The National Industrial Master Plan (NIMP) 2030 promises even more focused investment and consolidation in the future, prioritising 6 main growth points, including reindustrialisation, green transition and public services.
There are paradigm shifts for an agile, resilient and thriving Malaysia. It is about maximising the indispensable middle position of Malaysia in the global supply chain; shifting from land/resource-based to tech-based capital"
Liew Chin Tong, Trade and Industry Deputy Minister quoted in The Edge Malaysia
3. IP protection
Malaysia has robust intellectual property protection laws, ensuring the safety of OEMs' proprietary technologies and innovations. It should be noted that competitive countries such as China have increasingly poor records around data security. The spying allegation levelled at Huawaei is worrying for many Western businesses and is leading many to look for alternative electronics partnerships beyond these shores. From this perspective, Malaysia promises a more familiar and resilient security environment in which to do business.
[The focus] used to be efficiency and cost (and that's why many manufacturing factories are in China). But now, efficiency and cost are balanced with the idea of resilience"
Liew Chin Tong, Trade and Industry Deputy Minister Quoted in The Edge Malaysia
4. Strategic location
Malaysia's strategic location in the heart of ASEAN makes it an ideal base for reaching the growing Southeast Asian markets. It offers easy access to key markets like Singapore, Indonesia, Thailand, and Vietnam. This strategic location can significantly reduce shipping and distribution costs and enhance market access. Given the geopolitical tensions rising between China and Taiwan threatening the West’s access to semiconductors, the stability and connectedness of Malaysia also makes it a strong alternative for companies looking to diversify their manufacturing and supply chain operations.
5. Government support for manufacturing
The Malaysian government actively encourages foreign investments in the manufacturing sector. For example, the 2023 budget provides enhanced tax incentives for key industries such as aerospace, shipbuilding, electric vehicles, and electrical and electronics. It also extends tax incentives for foreign workers in C-suite positions and manufacturing companies investing in automation equipment. These incentives aim to reduce the cost of setting up and running manufacturing operations, providing a favourable investment climate for OEMs.
6. Stable Exchange Rates
While the Malaysian Ringgit (MYR) does experience fluctuations like any currency, the government has mechanisms in place to avoid extreme volatility. A stable exchange rate is vital for manufacturers, especially those involved in export, as it aids in more accurate forecasting and pricing strategies.
7. Quality
EMS providers in Malaysia maintain operations equipped to meet the most robust quality requirements including ISO 9001, ISO 14001, and ISO 13485. It should be noted the Malaysian government has identified the highly regulated medical device sector as a priority in its Economic Transformation Programme. The country is building companies equipped with the most advanced clean rooms and testing facilities in the world (and staff that are highly skilled in governance and quality management) that can produce medical goods to the required international standards.
8. Environmental responsibility
In recent years Malaysia has been increasingly focused on environmental sustainability. The Malaysian Investment Development Authority (MIDA) is committed to becoming net-zero by 2050, with a 45% reduction in emissions by 2030. They have championed incentives like the Green Investment Tax Allowance and Green Income Tax Exemption to encourage investment in environmentally friendly technology and services.
9. English spoken
English is widely spoken and understood in Malaysia, making it easier for foreign companies to communicate with their EMS providers and conduct business operations. This language proficiency reduces communication barriers, simplifying collaboration and reducing the chances of misunderstandings or miscommunication.
10. A multicultural hub
Malaysia's multicultural environment makes it a welcoming and diverse place for businesses from around the world. It offers a blend of cultures, languages, and business practices, providing a comfortable environment for international business operations. This cultural diversity can ease collaboration and foster a working relationship between OEMs and their Malaysian partners.
In the last decade, Malaysia has been on a fast-track journey from a largely rural economy to a burgeoning high-tech hub. Its extraordinary history and strategic position in the world, together with its recent heavy investment in infrastructure and technical capabilities has made it a powerful proposition for Western firms looking to outsource manufacturing.
In these days of international opportunity and risk, it’s important to have a partner who can deliver globally and locally to respond to shifting market challenges. An electronics partner with a footprint in Malaysia can give you access to diverse skills and expertise in a region that is set to become ever more significant in the years to come. The country represents value for money and a stable ASEAN base from which to do business. Its rapid emergence as a high-tech manufacturing power reflects its potential future significance on the world's commercial stage.
