Today's Pick (19/03/12/047/741) Study: Malaysia must move up the value chain

Study: Malaysia must move up the value chain

MALAYSIA needs to move up the value chain in its solar and medical devices industries if it wants to fulfil its high-income aspirations, a study has revealed.

In its 2011 final report, titled "Moving up the Value Chain", the Economic Planning Unit and the World Bank stated that Malaysia's prospective comparative advantage in manufacturing will need to be increasingly redefined in terms of unique value, rather than low cost.

The study noted, "This will require Malaysia companies stepping to the fore through innovation and building of a 'made-in-Malaysia' brand.

"It will also require domestic companies to better link-up with the well-established base of foreign multinational manufacturers, so as to extract greater value-added from Malaysia's integration in cross-border production networking," it added.

Stating that "moving up the value chain" is a highly-complex undertaking, the study said the move requires a fundamental reorientation towards innovation as the fundamental driver of growth, which in turn is supported by a healthy level of investments in human and physical capital.

"This process should not be confused with simply producing the same mix of products more efficiently and neither should it be construed as implying a shift in focus towards anything high-tech."

Instead, it said that the term moving up the value chain entails new, more complex and more skill-intensive activities in the manufacturing of products and requiring that these to be carried out at world-class standards of quality, productivity and competitiveness.

"As long as higher value is created, it does not matter whether these final products are low-tech, medium-tech or high-tech," it noted.

For Malaysia to move up the value chain in its solar and medical devices industries, the study has proposed that a coherent policy programme to be devised that would incorporate, among others:

EXPLOITING opportunities to develop upstream and downstream linkages between firms in the centre of the cluster and firms producing ancillary goods and services;

HELPING firms move from lower-value added third- and second-tier positions in global supply chains to higher-value added second- and first-tier positions;

PROMOTING supplier development programmes that help firms develop various types of skills ranging from management, technology acquisition, quality control to strategic planning; and

FOSTERING the establishment of private sector-led institutions that can help identify technology acquisition opportunities, marketing opportunities and employee training opportunities.

Date : 19 March 2012
Source : Business Times
Today's Pick (19/03/12/047/741)