GEORGE TOWN (Oct 2): Malaysian manufacturers must accelerate the adoption of automation to boost productivity and reduce their dependence on foreign labour, said Deputy Investment, Trade and Industry Minister Sim Tze Tzin.
He said the government has gradually reduced the foreign workforce quota from about 20% previously to 15%.
Foreign workers currently account for 13% of the total workforce. The government targets to further reduce this to 10% by 2030.
This gradual reduction will give businesses time to do so but it is happening too slowly, he said.
“Every sector is being informed about it. Everyone knows it’s going to be difficult. Businesses understand this; we are not reducing it overnight but gradually,” he told reporters after launching the Malaysia Smart Manufacturing Awards (MSMA) 2027 here on Friday.
This is necessary because excessive reliance on foreign workers may have the effect of discouraging companies from investing in automation and upgrading their manufacturing processes.
“Industries will not automate when it is easy to get foreign labour. They do not push their capabilities higher or move their manufacturing process to a higher level. So we remain as a middle-income level nation,” he said.
Sim said Malaysia has remained in the middle-income trap for more than 30 years. It needs to raise productivity, skill sets and economic complexity to move towards a high-income economy.
Government analysis of productivity trends in Malaysia, South Korea and Singapore showed that the three countries followed similar trajectories in the 1970s and 1980s, with South Korea and Singapore recording stronger productivity growth in the 1990s.
Sim said it is imperative to address this issue. Malaysia has to move towards high-income nation status and towards advanced technology for the people’s income level to rise, he said.
Automation enables companies to operate with fewer workers, while raising the skill sets will improve wage levels.
He said manufacturers should not wait until 2030 to automate. It is not that manufacturers are not doing their part to make that transition, but they are transitioning into automation too slowly.
“Start doing it now. Do not wait until 2030,” he said.
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