More US firms to set up shop in Malaysia amid shift in supply chain: Business council regional head

KUALA LUMPUR: Malaysia can expect more US firms to establish their presence here amid the ongoing US-China trade war.

“The shift of supply chain has been going on for some time and the trade war has just accelerated that shift,” US-Asean Business Council senior vice-president and regional managing director Michael W Michalak told a press conference at “The Potential of Industry 4.0 for Malaysian SMEs” workshop today.

Big US firms are expediting efforts to move more of their supply chains from China to neighbouring countries, including Malaysia, in light of Trump administration tariffs.

“The movement (of US firms) into Malaysia has been quite big,” International Trade and Industry Minister Datuk Darell Leiking said, adding that it is of importance to Malaysia that the country is able to provide what these investors expect, including an enhanced Industry 4.0 environment and conducive regulatory framework.

However, US Ambassador to Malaysia Kamala Shirin Lakhdhir opined that the Sino-US trade war is not the single factor for the shift of US firms to Malaysia, pointing out that the decisions to invest in Malaysia are based on a range of factors. For example, some of the US firms have decided to use Malaysia as a platform for their Asean or Asia-Pacific businesses.

“Some of them may be looking at what’s happening in the global economy, some maybe specific to Malaysia in terms of talent, infrastructure or connectivity. Each individual firm has a range of reasons why they are moving and where they may be expanding and not a single factor related to tariffs,” said Lakhdhir.

Meanwhile, Darell highlighted that there is a big disparity in the country in terms of the readiness for Industry 4.0.

As at June 30, 2019, 475 applications from small and medium enterprises (SMEs) for readiness assessment of Industy 4.0 were received. The breakdown of application by states are Selangor (205 applications), Johor (59), Penang (57), Perak (32), Kedah (25), Sarawak (22), Malacca (18), Negri Sembilan (18), Federal Territory (13), Kelantan (7), Sabah (7), Terengganu (7) and Pahang (5). Of these, 59 of them have been shortlisted.

“While the government wants to assist your readiness for Industry 4.0, the interest is not so much there for some parts of our states. We need to find out why are they not interested or not moving up the value chain to be ready for Industry 4.0,” said Darell.

He encouraged more collaboration between international cooperation and local SMEs to maximise the potential of Industry 4.0 and called upon SMEs to embrace new technologies and develop strategies that will enable them to transform and continuously remain competitive.

The workshop demonstrated the commitment of US multinational corporations in supporting the Malaysia National Policy on Industry 4.0 or more widely known as Industry4WRD, especially in strengthening SMEs and driving their digital transformation.

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