February 29, 2024

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Malaysia encouraged to emphasise more on technology

According to a recent report, a major research institute stated that Malaysia’s push towards sustained economic growth must be underpinned by more emphasis on more hi-tech manufacturing and more capital invested in technology.

If Malaysia’s potential for sustained economic growth in the future lies in its ability to harness innovation and improve productivity growth, “this structural change that is accompanying our deindustrialisation could work to our disadvantage”, it cautioned.

In the Institute’s State of the Household report, it stated that sub-sectors with the greater increases in the labour income share are associated with decreased investment in technology and higher increase in the proportion of low-skilled foreign workers hired.

The research institute also pointed out that the deindustrialisation of the Malaysian economy was reflected in the gradual decline in the share of the manufacturing sector after peaking in the early 2000s, replaced by the services sector.

The reported noted that, structurally, however, this has been accompanied by a transition away from a more capital-intensive to a more labour-intensive model — a structure that is skewed towards lower-skilled workers rather than investments in technology, and more traditional services sub-sectors rather than high-tech manufacturing.

The report’s findings highlight that the transition towards an economy that is simultaneously inclusive and productivity-driven could be wrought with trade-offs that would need to be carefully managed.

Generally, the increase in the labour income share in Malaysia has been broad-based, with all economic sectors experiencing increases to varying degrees, together with a higher share of self-employment in the workforce.

The report noted that the sub-sectors with the higher increase in labour income share are associated with decreased investment in technology and a higher increase in the proportion of low-skilled foreign workers hired.

However, the institute said in contrast to the global trend, Malaysia’s labour income share has instead been increasing since the official statistics were made available in 2005, together with declining household income inequality.

Between 2005 and 2016, including the income share going to self-employment, the labour income share has increased by 7.5 percentage points.

Based on its research, this increase in the labour income share in Malaysia can be explained by three factors:

more than a fifth of the increase in the labour income share since 2005 can be accounted for by the increasing share of the Malaysian workforce who are in self-employment.

The increase has been apparent in urban areas and amongst women joining the labour force.

There is a structural shift to economic sectors with a higher labour income share.

The share of the services sector in the Malaysian economy has been growing, particularly, in the more traditional services sub-sector such as the wholesale and retail trade.

Concurrently, the share of the manufacturing sector in the overall economy has been gradually declining, particularly in high-tech manufacturing.

Since the services sector has a higher labour income share relative to the manufacturing sector, this has led to an overall increase in the economy-wide labour income share. From 2005 to 2016, close to 30% of the increase in the labour income share can be attributed to this shift.

Almost half of the overall increase in the labour income share since 2005 can be attributed to the individual increases in the labour income share within all major economic sectors.

This, in turn, can be explained by the greater reliance on labour-intensive production in most economic sub-sectors.

The report found sub-sectors with the higher increase in labour income share are associated with decreased investment in technology and a higher increase in the proportion of low-skilled foreign workers hired.

PARTNER

Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

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CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Well-known for our strengths in system integration and consultation, CTC Global proves to be the preferred IT outsourcing destination for organizations all over Singapore today.

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Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

SUPPORTING ORGANISATION

SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

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HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

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IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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