Selangor has built on its status as one of Malaysia's economic and logistics engines. In order to spearhead the growth of Selangor, Invest Selangor Board would focus on five core clusters that have the highest potential in driving Selangor economic growth and quality investments with added value for the people and the state. Selangor has been attracting growing interest in Foreign Direct Investments (FDI) for the past few years.
5 Key industries in Selangor and their contribution.
There are electrical and electronics, life sciences, food and beverages manufacturing, transport equipment, machinery and equipment. We will discuss the outlook of these 5 clusters that drives Selangor economy.
Why is there a global semiconductor shortage?
Semiconductors, known as microchips and integrated circuits (ICs), are essential components in every electronics product, whether a simple remote control unit for changing channels on the television or a supercomputer used to simulate weather patterns. The global semiconductor shortage started during the US-China Trade war where chip buyers made double bookings to secure their inventories. The Covid-19 pandemic has again put a strain on the global supply chains, and it is further pressured by the rising demand for consumer electronics as people around the world shift to the new norm.
The car industry was the first to be hit, with carmakers like GM, Ford and VW warning that the shortage can impact its sales and production. Besides, the chip shortage also spread to consumer electronics products, where strong demand for laptops, next-generation gaming consoles and other devices had already suffered from tightened inventory. Nobody sees the shortage is over by 2021, and many expect it to extend into 2022.
Coming back to Malaysia, our electrical and electronics (E&E) cluster also play significant roles in the global semiconductor supply chain. The E&E cluster is an important sector, made up 22% of Selangor’s total manufacturing output.
The E&E sub sector has benefited from the global demand for the Internet of Things (IoT) and the need for new semiconductors applications in digitalisation, mobility, connectivity, energy efficiency and miniaturisation. Malaysia’s IoT market expects to reach RM42.5 billion in investments by 2025 as efforts and initiatives focus on system integration, big data, electric vehicles and advanced energy storage. We have well-established companies such as NXP Semiconductors, Nippon Electric Glass and many more.
“Selangor is also home to Cyberjaya, Malaysia’s center of innovation and digital transformation. Cyberview Sdn Bhd, the Tech Hub developer of Cyberjaya, outlined its role in developing a more holistic tech ecosystem comprising commercial and digital activities, where the development of new innovations and emerging technologies may be tested and subsequently commercialized, all within the ready ecosystem in Cyberjaya itself,” the Invest Selangor CEO Hasan explained.
How does the life sciences industry open up real estate opportunities?
The life sciences industry includes the pharmaceutical, biotechnology, medical equipment, food science and healthcare sectors. The life science industry is experiencing rapid expansion in Asia-Pacific due to rising demand from ageing populations. The need for specialised R&D facilities is growing to research diseases. When the pandemic hits globally, the increased investment in finding vaccines to combat Covid-19 has again accelerated the need for medical facilities. Many companies have the Covid-19 vaccine formula, and they localise the manufacturing process of vaccines and manufacture it at a large scale to help the country reach herd immunity. Thus, many companies are finding large spacious spaces to set up their R&D facilities.
To supply and distribute vaccines, the companies such as Pharmaniaga and Duopharma must have well-equipped logistics, warehouse and distribution capabilities.
Many vaccine centres require ultra-cold storage to store vaccines, such as Pfizer; thus it creates the rising need for cold storage space.
How does food consumption behaviour change the food manufacturing industry?
The COVID-19 pandemic introduced unexpected stresses on food systems, creating many immediate challenges. COVID-19 has led to a drastic shift in consumer demand away from restaurants towards food consumed at home or takeaway, and this shift requires essential changes in the way food supply chains operate. Meanwhile, since we are all stuck at home, sales of frozen and packaged foods increased dramatically. Thus, to cater to the rising needs for frozen and packaged food, there is an increasing need for cold storage warehouses with proper hygiene and maintenance procedures. The cold storage areas for such items often have design requirements that are built into the space to handle specific supplies efficiently.
Besides, the pandemic has also led to disruptions in food processing industries, which have been affected by rules on social distancing, labour shortages due to sickness, and lockdown measures to contain the spread of the virus.
Selangor is a Muslim-majority state and also place great emphasis on the manufacturing of Halal certified food. The global Halal market is estimated to be at RM9.2 trillion in which the Malaysian market for Halal product food consumed is close to RM40 billion. The concept of Halal food is associated with high-quality food cleanliness, sanitation and compliance with religious requirements, including certification by the Department of Islamic Development Malaysia (JAKIM). There are 30% of Halal certified companies in Selangor.
How will the transportation industry be performing?
There is a behavioural change for transportation during the pandemic. Public transport has been impacted poorly due to social distancing and work from home. However, the rising demand for online shopping and food delivery has increased for trucks and bikes. There is now a shortage of truck and delivery drivers globally. The sale of private vehicles drops as people stay at home to work, so many don’t see a key need to buy or change a car.
How can Machinery and Equipment (M&E) bounce back from the pandemic?
The M&E industry has been impacted poorly by the pandemic. Companies with asset-heavy structure are badly hit. Some resorted to offering solution-based services such as sending service personnel to customer sites for equipment installation and maintenance.
Some see targeted opportunities in energy transition and sustainability in wind power, sustainable packaging, energy-efficient tools, and heating, ventilation, and air-conditioning systems. They pivot their strategy to focus on parts for electric cars where there is a growing demand.
Although M&E only contributes 3% of Selangor GDP, this industry is an excellent opportunity to tap as Electric cars are a growing market globally. According to the low carbon footprint by Malaysia by Malaysian Green Technology And Climate Change Centre, the Malaysian government has provided full tax relief for electric vehicle cars. It serves as a starting point to encourage EV buyers to consider the purchase. Of course, there is much room for improvements, such as establishing more charging infrastructure before buyers decide.
How can IndustrialMalaysia help you scout for the best industrial property deals?
We help our SME companies locate, identify and secure land for a particular use. We also bring in experienced talent and expertise to assist our clients throughout the industrial property purchase journey to get the best deal. Keen to also explore Selangor business hub, we have experts focusing on establishing their warehouses and factories in industrial areas in Selangor.
Want to know more? Reach out to us at hello@industrialmalaysia.com.my.