‘Enhance digital infrastructure to strengthen Malaysian GVCs’
KUALA LUMPUR: Malaysia needs to build more digital infrastructure and bridge the digital divide, focus on capacity building and best practices, develop skilled workers, and ensuring fair entry into digital trade zones to strengthen its position in the global value chains (GVCs).
Asean-Japan Centre (AJC) has issued Paper 6 of the ‘Global Value Chains in Asean’ series which looked at Malaysia, found that the country’s policies to move up the value chain have led to less dependence on foreign inputs and more use of Malaysian products in other countries’ exports, mostly for parts and components of electrical and electronic equipment.
“This would enable small and medium-sized businesses to thrive and contribute to GVCs and regional value chains,” it said in a statement.
The value-added incorporated in other countries’ exports increased to 29 per cent in 2019 from 18 per cent in 1995, which is a positive sign that Malaysia has been gradually moving away from lower value-added activities, or backward linkage participation, to higher valueadded functions, or forward linkage participation,” it said in a statement.
Malaysia’s involvement in GVCs has boosted its export volume and overall production and the study revealed that prior to 1995, Malaysia was more specialised in final assembly or final production stages concentrated near the middle stages of GVCs and therefore tended to produce low value added.
Malaysia has become an important contributor of electrical and electronic components and subsystems and a significant business services provider at regional and global levels by leveraging on its domestic inputs and capacities.
“The share of foreign valueadded in exports has declined to 36 per cent in 2019 compared with 39 per cent in 1990. Asean, China, Japan and the United States were the trade and investment partners which contributed significantly to Malaysian foreign value added in exports,” it added.