Economist says goals modest, lauds backing for SMEs
KUALA LUMPUR: Economist Geoffrey Williams has described New Industrial Master Plan 2030 (NIMP 2030) goals as modest and might not fully meet the expectations of those hoping for a transformation plan.
“The RM95 billion is a budget for the full seven years and so is only RM13.5 billion per year or 0.75% of GDP. Only 10% will come from the government so the remaining 90% will be private sector investment which will likely have come anyway. So the additional push from the NIMP is difficult to see,” he told SunBiz.
Additionally, he noted that there may be concerns regarding transparency in the nine mission-based projects overall process.
Nevertheless, Williams commended NIMP 2030 for its emphasis on supporting SMEs.
“The main thing to improve is the underlying vision and approach. Fortunately Tengku
Zafrul also announced that the investment approach will be liberalised and this is necessary and positive,” he said, referring to Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.
On Friday, Prime Minister Datuk Seri Anwar Ibrahim unveiled NIMP 2030 to transform industry, with the government covering 10% of the bill to catalyse and incentivise it.
Anwar said NIMP 2030 will require a total investment of RM95 billion through its seven years, predominantly from the private sector mobilised from private equity, capital and financial markets.
The government will allocate “close to 10%” or RM8.2 billion to fund NIMP 2030 throughout its implementation period.
“Close to 10% will be allocated by the government to help catalyse and incentivise these investments via the NIMP Industrial Development Fund and the NIMP Strategic Co-investment Fund,” Anwar said.
“This indicates an increase of 61%, derived by NIMP 2030 interventions for high-impact sectors – E&E, chemical, electric vehicles, aerospace, pharmaceuticals and advanced materials, such as minerals and metal,” he added.
NIMP 2030 is the fourth edition of the Industrial Master Plan (IMP). Through strategies such as increasing economic complexity, strengthening domestic industrial linkages, and positioning Malaysian industries higher in the global value chain, NIMP 2030 targets to build Malaysia’s industrial capacity and resilience for longterm, sustainable growth.
Willams also commented on the plan to increase median salaries in the manufacturing sector by 128% from 2021 – to reach RM4,510 from RM1,976 – in NIMP 2030.
“Manufacturing has a very low share of value-added going to wages. Only one-third of manufacturing income goes to employees.
“In many cases companies rely on foreign workers in low-paid jobs. So to increase salaries manufacturers will have to change their business model and adopt a progressive wage for example,” he said.
Federation of Malaysian Manufacturers president Tan Sri Soh Thian Lai weighed in on the goal to increase median salaries in the manufacturing sector as well.
“The target of increasing salary, within a short time-frame by 2030, from RM2,000 to RM4,000, is a very tall order. The private sector needs to collaborate with the government to improve the remuneration for our workforce because we are now in a knowledge-based economy, and we would like all our workforce to be skillbased.
“So we believe that although the target is short in time, it is possible to achieve with cooperation from both the government and the private sectors,” he said.
Furthermore, Soh believes that the 10% allocation from the government is mainly intended to foster the growth and development of SMEs.
“They say RM2 billion is for ESG funds, this can help the SMEs become more equipped to face the challenges … because recently the European Union has set up many ESG laws.
“This 10%, although it is not big enough, serves as an impetus for the SMEs to move forward. And in between there are many budgets that the government can consider, new allocations,” he said.
Soh said the mission-based approach is the only way forward.
“Currently, our SMEs have not adopted the latest technology. So, the government’s mission-based approach has funds to support SMEs, with the hope that they can become export-oriented. That’s our wish,” he added.