Go beyond assembly lines and semiconductors, Malaysia advised
KUALA LUMPUR : Malaysia should broaden its manufacturing ecosystem beyond assembly lines and semiconductors to fully capitalise on foreign investments, according to an international management consultant.
Ben Simpfendorfer, a partner at the consultancy Oliver Wyman, said solar panels, battery storage systems, heat pumps, and electrolysers are among the clean energy products that Malaysia could also start manufacturing given the huge potential they hold.
'There is a growing interest from Chinese firms in clean energy manufacturing,' he said.
Simpfendorfer, who is also the head of Oliver Wyman Forum, the consultancy's think tank, said Malaysia has to move beyond basic assembly work and set itself up as a complete manufacturing hub.
'It shouldn't be just another stop in the process,' he told FMT.
He said that while Malaysia has the opportunity to be a big winner in the reconfiguration of global supply chains, it needs to have a holistic master plan as well as an ecosystem that that has both breath and depth.
'That means building full vertical supply chains – not just isolated segments of manufacturing,' he said.
Simpfendorfer said the time has come for Malaysia to act given that it has already attracted investments from companies aiming to build resilience in their supply chains, particularly in semiconductors.
'The foundations here are very strong as Malaysia has a solid legal framework and robust foreign investment policy incentives but there's obviously more that can be done.
'The next stage in the process is to focus on building the ecosystem,' he said.
Simpfendorfer shared these insights after a roundtable in Kuala Lumpur with senior leaders from both the public and private sectors recently.
He noted that while many are uncertain about near-term possibilities, and some sectors are still in the 'wait-and-see' mode, long-term prospects in the region remain strong.
He singled out Malaysia as one of the countries that stand to benefit as supply chains are de-risked and Chinese interest grows amid global trade tensions.
'Malaysia has a unique window of opportunity as multinationals reconfigure their geographic footprints and rebalance supply chains,' he said.
Simpfendorfer said Asean is increasingly seen as the place to be, with few other regions offering the same scale and manufacturing base, with Mexico being the only other exception.
Last year, Malaysia crossed a milestone with RM378.5 billion in approved investments, the highest in the nation's history, with key strategic investments coming in from the US, Germany, China, Singapore and Hong Kong.
Preparing to stay in high-tariff world
He said some businesses are already making strategic plans to reconfigure their supply chains given that 'we are not returning to a low-tariff world'.
'With tariffs expected to be higher than before, now is the time to consider what future global supply chains might look like.
'Companies must plan for new trade corridors, such as China to Asean or Asean to India, and position themselves to capitalise on these opportunities,' he said.
With this in mind, he said, more firms need to focus on identifying emerging trade opportunities and positioning themselves to make the most of future possibilities.
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