ASSIGNMENT BEEB2023

A211

GROUP D (9)

TOPIC: THE IMPACT OF INDUSTRIAL REVOLUTION 4.0 ON THE

MANUFACTURING EXPORT SECTOR FROM 2011 UNTIL 2020

SUBMITED BY:

1) MUHAMMAD HAZIQ BIN AHMAD SAH HAR (277208)

2) MUHAMMAD SHAMIL NAZLEEN BIN ZULKIFLI (278048)
3) HAWANI ATHIRAH BINTI MOHD ZAINOL ABIDIN (278548)
4) DEWI MASITAH BINTI ZAENI (279636)
5) MUHAMMAD IRFAN BIN NAZRI (281553)

SUBMITTED TO:
IR , IR 4 baru
DR. ANIZAH BINTI MD ALI bermula 2017

DATE OF SUBMISSION:

DECEMBER 30, 2021 (THURSDAY)

 CONTENTS

Introduction………………………………………………………………………………….1-3

Research Background……………………………………………………………….1-2

Research Question……………………………………………………………………..2

Research Objective………………………………………………………………….2-3

Important of Study……………………………………………………………………..3

Literature Review……………………………………………………………………………...4

Analysis Review…………………………………………………………………………...5-23

Objective 1…………………………………………………………………………5-12

Objective 2………………………………………………………………………..13-17

Objective 3………………………………………………………………………..18-23

Conclusion and Recommendation……………………………………………………………24

Reference ………………………………………………………………………………...25-28
1.0 INTRODUCTION

1.1 Research Background

Malaysia is one of the countries that practice an open economic market. According to

Suhiliah (2019), open economic can define as an economic activities that performing an

international trade, including export and import of goods and service. In this study, we will be

focus on the Malaysia’s manufactured export sector. Export is an activity of selling goods

and service to other countries (Suhiliah, 2019)

Since 1970’s, Malaysia’s economy had been transformed from primary activities

(mining and agriculture) to manufacturing sector. According to Willy C. (2012),

manufacturing provides an essential role for learning and developing process skills and

capabilities of industries that are important to the country’s economic future. Since Malaysia

had practice an open economy, the target to get a surplus for trade balance was important for

economic growth which total export exceeds total import. According to Thomas R. (2021),

since 1970’s Malaysia’s manufactured had grown rapidly, with aim of producing goods for

export, while shifting away from import substitution.

According to Minister of International Trade and Industry (MITI), the expansion on

the demand of export goods, is due to the increasing on the demand of manufactured goods

especially electric and electronic (E&E) product. Because of that, manufacturing had become

the important role and backbone of Malaysia’s economic growth, as it give the largest

contribution on total export compare to other sector such as agriculture and mining sector.

Apart from that, this study also emphasize about the impact of Industrial Revolution

4.0 to the manufacturing export as the development in Industrial Revolution, from 3.0 to 4.0

had a lot of contribution on the growth of manufacturing sector. Industrial Revolution 4.0 was

1
introduced in the country in 2016 with the concept of Internet of Things (IOT) after the

Industrial Revolution 3.0 with the concept of Digital Revolution. According to Ebru (2017),

“the application of new technologies in the manufacturing environment is ushering a new era

referred to as the 4th industrial revolution, and this digital transformation appeals to

companies due to various competitive advantages it provides”. try cari fakta yang
berkaitan: RQ ; how
IR effect the
1.2 Research Question manufac....

There are 3 research questions for this study, which include:

i. What are the contribution and the growth rate of manufacturing sector in Malaysian
1.how IR -->
export from 2011 until 2020? Manufac...
2. what the growth
ii. ofaperformance
What are the factors that influence the manufacturing as of Malaysian
major sector on
manufac.....
export from 2011-2020?

iii. What is the effect of Industrial Revolution 4.0 to the manufacturing export sector

from 2011-2020?

RO relate semula
1.3 Research Objective dgn RQ

The objective of this research is mainly to discover deeper about the impact of industrial

revolution 4.0 on the manufacturing sector in Malaysia precisely in the period from 2011 to

2020.

Specifically, we want to:

i. Analysis the contribution and the growth rate of manufacturing sector in Malaysian

export from 2011 until 2020

ii. Identify the factors that influence the manufacturing as a major sector on Malaysian

export from 2011-2020

2
 iii. Studying the effect of Industrial Revolution 4.0 to the manufacturing export sector

from 2011-2020

1.4 Important of Study salah

The basis of the industrial revolution 4.0 on how rapidly the revolution advancing and

widening through economic sectors hence contributing into the manufacturing sector as the

main exportation sector for Malaysian export. The value of manufacturing sector on how it

affects a nation’s economy, how it plays a vital role towards the economic growth,

sustainability and competitiveness in export’s affair. As not all people realize, the

manufacturing sector impressively growing years by years thanks to the advancing revolution

as it really matters a lot in keeping our export productivity at its finest while trade

relationship getting stronger and unbreakable, especially countries that are dependable onto

each other in import export matter. As we are discovering deeper about the contribution and

growth rate of manufactured export, we can be informed of why it is really a big deal for the

sake of country economics’ backbone in terms of nation’s welfare and economic growth and

sustainability. Moreover, some of the factors that influence the manufacturing sectors

becoming main exportation for Malaysia can be recognized through this study. By

recognizing the influencing factors, it can bring in more grips for understanding the

seriousness of the contribution manufacturing sector by way of industrial revolution’s impact.

On top of that, we can observe effect of Industrial Revolution 4.0 to the labor productivity

which directly affects the growth and share of the manufacturing sector not only for

Malaysian export, but also massive contributing to the gross domestic product of the country.

Thereupon, by studying this topic of the impact of industrial revolution 4.0 on the

manufacturing sector in Malaysia expectantly can trigger the society to realize the importance

of this topic in the same way getting appreciated.

3
 terlalu sikit

semak semula cara

tulisan rujukan dalm
2.0 LITERATURE REVIEW
teks
There are some research articles we have reviewed to obtain background knowledge

on this topic and to explore what has been done already. Those articles being used as our

references for this topic and all the collected data are included as evidence. For instance,

Industrial Revolution 4.0 also known as IR 4.0 and it is defined as successful techniques,

manufacturing procedures, and information technology integration which refer to the

digitalization manufacturing industry. Previous research has shown that the IR 4.0 technique

integration enhances operational performance, which includes Internet of things, advanced

manufacturing, robotic systems, artificial intelligence, big data analytics, and cloud

computing( Lee, K. Norasmiha Mohd Nor, Fadillah Ismail, 2021). The implementation of IR

4.0 technology may significantly influence the manufacturing performance, and other IR 4.0

technology also could accomplish a colossal enhancement in product improvement and

service innovation (Lee, K et al. 2021)

Majority of the studies demonstrated and explained the reason behind the up and

down trend of import and export in particular trading sector such as electrical and electronics

(E&E), petroleum and natural gas, and agriculture throughout certain years. Some of the

research pointed out that the manufacturing sector already the most vital and should be

focused by government as the main contributor of country’s export. (World Integrated Trade

Solution, 2019). Besides, this sector also shows consistency in growth rate every year in

share of the export also growth in nation’s gross domestic product. At the same time, the

growth trend seems to become unexpectedly rise, stable and solid as years went by. Thus, we

decided to discuss more about the impact of IR 4.0 that supposing to offer more and wider

research for the performance of the manufacturing sector that occurs respectively in Malaysia

export in the period of a decade from 2011 until 2020.

4
3.0 ANALYTICAL REVIEW

3.1 ANALYSIS THE CONTRIBUTION & GROWTH RATE OF MANUFACTURING

SECTOR IN MALAYSIAN EXPORT FROM 2011 UNTIL 2020

Figure atau table?

Table 1: The Share of Manufacturing Sector in Malaysian Export (2011-2020)

MANUFACTURING EXPORT SHARE GROWTH RATE OF SHARE

YEAR YEAR (RM) (%) (%)
2011 694 548 504 182 72.59
2012 702 188 519 067 73.92 1.83
2013 719 815 548 344 76.18 3.06
2014 765 417 587 175 76.71 0.7
2015 777 355 625 429 80.46 4.89
2016 786 964 645 768 82.06 1.99
2017 937 927 765 858 81.65 -0.5
2018 1 003 587 837 071 83.41 2.16
2019 995 072 840 586 84.47 1.27
2020 943 761 808 851 85.71 1.47
Source: Economic Report 2020

Figure 1: The Share & Growth Rate for Manufacturing Sector in Malaysian Export from

2011 until 2020

The Share & Growth Rate of Manufactured

Export to Malaysian Export from 2011 until 2020
Share of Manufactured Export to Total Export

Growth Rate of Manufactured export share

90 6
4.89 85.71
84.47 5
85 83.41
82.06 81.65 4
3.06
80 3
76.71 80.46 1.99 2.16
1.83
(%)

1.47
(%)

75 1.27 2
72.59 76.18
73.92 1
70 -0.5
0.7 0
65 -1
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

SHARE (%) GROWTH RATE OF SHARE (%)

5
 Table 1 shows the total export, manufactured export, shares and growth rate of

manufactured goods in Malaysian export from 2011 until 2020. From the table above, we can

observe that the total export in Malaysia is increasing from 2011 until 2018, but start in 2019,

the total export was decrease which decline to RM 995,072 billion in 2019 and RM 943,761

billion in 2020. However, the total export of manufactured goods shows an increasing

number from 2011 until 2020 and the share of manufactured export also was above 70% in

average. Meanwhile, the growth rate of the share shows a fluctuation trend which is not

consistent from 2011 until 2020.

From table 1, the total of Malaysia export in 2011 is RM 694,548 billion and RM

504,182 billion is from the manufactured export which indicates about 72.59% from the total

export. The value of RM 504,182 billion was from electrical and electronics (E&E) and non-

electrical and electronic (non-E&E) product which contain about RM 236,535 billion

(46.91%) and RM 267,647 billion (53.09%) respectively.

Based on Malaysia economic report (2011), E&E product was show a decreasing rate

compare to the previous year. This is due to the lower shipment of electronic equipment and

parts and because of the decreasing on the demand from development country such as United

State (U.S) and Europe. As an evidence, the value for electronic equipment and parts in 2011

is RM 75,069 billion which is much lower than 2010 (RM 96,587 billion) that indicate about

22.28% decreasing rate. Meanwhile, for non-E&E product it contributes more than half of the

total export of manufactured goods. This is happened because of the increasing on price and

higher external demand especially for petroleum product.

Next, in 2012, the total export was RM 702,188 billion and as much as RM 517,067

billion was from manufactured export. The share of manufactured export to the total export

was above 70% which in detail is 73.93%. From the total of manufactured export, RM

6
231,225 billion (44.55%) was from E&E product and RM 287,842 billion (55.45%) was from

non E&E product. In addition, the growth rate of the share of manufacturing sector to the

total export is 1.83% which shows a positive or increasing rate compare from 2011.

The positive trends happened because of the increasing on the value and share of non-

E&E product which mount up to 4.45%. This is due to the increasing on the external demand,

especially from Asian region such as China, Japan, Thailand and Singapore. The export

income from petroleum product shows a significant increase compares to 2011 which from

RM 40,102 billion in 2011 to RM 54,818 billion in 2012. The expansion is because of the

higher global oil price due to the political unrest in the Middle East and increase in demand

from China and India. Furthermore, an income from rubber product also showing an

increasing value, from RM 18,205 billion in 2011 to RM 20,140 billion in 2012. This is

because of the higher sales due to the stronger US dollar and lower price on raw materials.

The growth also was contributed by the higher demand for materials of rubber and rubber

glove, especially from China, Germany, Japan, Thailand and US (Economic Report, 2012).

On the year of 2013, the total export maintain positive and increase by RM 17,627

billion which increase about 2.51%. Moreover, the total export for manufactured goods also

showing an increasing value from RM 519,067 billion in 2012 to RM 548,344 billion in 2013

that indicate an increasing around 3.06%. Manufactured export also gives a lot of

contribution to the increasing in total Malaysia export which indicate about 76.18%. The

reason behind of this is, because of expansion on non-E&E product. Based on the economic

report (2013), the export for chemical and chemical product show an increasing rate compare

to 2012 which is increase by 3.01% due to the higher export revenue from China, Indonesia

and Thailand.

7
 However, the growth rate of expansion in the share of manufacturing sector is not

really high. This is because of a lower demand from development country (US, China and

Singapore) in E&E product from RM 237,106 billion on 2012 to RM 23,160 billion on 2013

that indicate a decreasing around 2.51%. The demand of E&E product that shows a declining

rate is home electrical appliances, telecommunication equipment and electrical audio video

product (Ministry of International Trade and Industry, MITI, 2013).

Move on to the next year which is in 2014, the total export still showing an increasing

value which is RM 765,417 billion compare to RM 719,815 billion in 2013. However, the

share of manufacturing sector to the total export was increased but at a decreasing rate which

is from 3.06% (RM 548,344 billion) to 0.70% (RM 587,175 billion). Even though the value

for both E&E and non-E&E product were increases in term of value, but the share for non-

E&E product showed a increasing at a declining rate which is from 56.77% on 2013 to

56.38% in 2014.

The reason of this is because of the growth rate for the export of petroleum product

was increased slowly which is, in 2013 the growth rate for export petroleum product was

24.59% meanwhile, in 2014 the growth rate just 2.91%. In addition, according to economic

report (2014), export for rubber product also was dropped from RM 18,943 billion to RM

18,003 billion due to slower export sales of rubber glove for medical purpose from Germany,

UK and Brazil. Malaysia also gets a fierce competition from China in term of selling the

rubber glove at lower price.

Next, in 2015, the total export maintains increase compare to previous year which

increase by RM 12,208 billion. The total export for manufactured goods was increase from

RM 587,175 billion in 2014 to RM625,429 in 2015. The increasing in total export is mainly

was contributed from the export of manufactured goods as it contributes about 80.46% of the

8
total export. In directly, it makes the growth rate of the share of manufactured export to total

export increase from 0.7% to 4.89%. The export for E&E product was RM 277,922 billion

and for non-E&E product was RM 345,507 billion.

Even though, the global market was not stable but the export for E&E product was

increase by 8.50% which from RM 256,145 billion to RM 277,922 billion that make the

increasing on manufactured export. The demand for E&E product which is semiconductor

product was higher at this period especially from US, Singapore, China and European Union

(German and Netherland). Apart from that, other manufactured good that make a contribution

on the increasing on manufactured export in 2015 include chemicals and chemical product,

machinery, appliances and parts, manufactures of metal, optical and scientific equipment,

rubber product, processed food, wood products, textiles, clothing and footwear, manufactures

of plastics, transport equipment, jewellery, non-metallic mineral product, beverage and

tobacco, paper and pulp products and other manufactured goods (MITI, 2015).

In 2016, the total export and manufactured export was increase which is RM 786,964

billion and RM 645,768 billion respectively. The share of manufactured export still in higher

position than others sector which is 82.06%. However, the contribution of manufactured

export to the total export was increase at the decreasing rate that indicate in the growth rate of

the share of manufactured export which is from 4.89% dropped to 1.99% in 2016. This is due

to the slow increase in non-E&E export product which is from RM 345,507 billion (55.56%

of contribution on manufactured export) to RM 357,958 billion (55.43% of contribution on

manufactured export).

The growth of petroleum product was increase at a very slow rate which is by 0.25%

only (RM 54,528 billion in 2015 to RM 54,662 billion in 2016). Based on Ministry of

International Trade and Industry (MITI), the manufacturing export sector had to face a very

9
challenging year in 2016 as the global economic was slowdown, depreciation of the currency

which refer to Ringgit Malaysia (RM) and volatility of oil price. Moreover, the export of iron

and steel product was declined significantly as the lower demand from Singapore, India,

Australia, Republic of Korea and US which is from RM 8,644 billion in 2015 to RM 6,936

billion in 2016.

Move on to 2017, as usual, the total export was increase from RM 786,964 billion to

RM 937,927 billion which increase about 19.18% compare to 2016. Manufactured export

also was increase by RM 120,090 billion which from RM 645,768 billion to RM 765,858

billion. However, the share of manufactured export to the total export was declined, that

indicate in the negative sign in the growth rate of the share of manufactured export to the

total export, which is -0.5%. This is due to the slightly declining in export of jewellery (RM

7,185 billion: 2016 to RM 6,714 billion: 2017) and beverage and tobacco (RM 4,650 billion:

2016 to RM 4,213 billion: 2017).

Next, in 2018, the total export had reached over 7-digit number which in detail

increases to RM 1,003,587 billion. Furthermore, the manufactured export also makes a

positive sign as the contribution of manufactured export to the total export return to positive

rate. In 2018, the total of manufactured export was RM 873,071 billion and the share to the

total export was increase to 83.41%.

In the E&E export product, semiconductor product remained the key driver of E&E

export volume. Based on the report from Central Bank of Malaysia (BNM) report (2018), the

greater use of semiconductor in the automotive, medical technology and consumer electronics

industries continued to generate strong underlying demand for E&E products. The increasing

on the value of non-E&E export product was due to the sustained on the demand for

chemicals, petroleum product, metal product and optical and scientific equipment.

10
 Move on to 2019, the total export start to decrease by RM 8,515 billion compare to

last year. Even though the total export declined, the total of manufactured export showing an

opposite way as the value was increased from RM 837,071 billion (83.41%) in 2018 to RM

840,586 billion (84.47%). Apart from that, the growth rate of the share of manufactured

export was increased at decreasing rate which indicates at the decreasing on the growth rate

from 2.16% in 2018 to 1.27% in 2019.

Declining in the petroleum export product is one of the main causes that make the

total manufactured export growth slowly in 2019. The export of petroleum product that

contribute about 15% on average in non-E&E product was dropped by RM 4,650 billion

which from RM 76,161 billion in 2018 to RM 71,511 in 2019. Based on MITI report (2019),

this is due to the declining in the refined petroleum product as the export volume rose 2.7%.

Furthermore, rubber product also fell by RM 650 billion as the shipment of natural rubber is

contract 18.4% mainly on account of lower price and weak demand.

In 2020, the total export recorded as much as RM 943,761 billion that indicate a

decreasing value compare to 2019 due to the global economy deepest recession because of

the pandemic Covid-19. As the total export dropped, the manufactured export also declined

from RM 840,586 billion in 2019 to RM 808,851 billion in 2020. The Covid-19 pandemic

had effect the economic activities as most of manufacturing activities had to stop temporary

especially when Movement Control Order (MCO) period. Although important activities such

as food production were able to operate, but they need to follow the Standard Operating

Procedure (SOP) to limit the use of time operation and workers which limiting the domestic

supply.

ini melaporkan
bukannya analisis.
ubahsuai
persembahan.
11 pecahkan ikut
subkomponen
 However, the growth rate of the share of manufactured export to the total export

remains increase up to 1.47% which is from 84.47% in 2019 to 85.71% in 2020. Based on

BNM report (2020), this is because the impact on the export just for certain goods, but for

E&E product and rubber product, found to be more resilient in 2020 as the global demand for

semiconductor equipment in telecommunication, medical devices, and segments cloud

computing had been increase since operating restriction are lifted by the end of second

quarter of 2020.

In conclusion, we can state that manufactured sector is one of the essential sectors as

it contributes more than 70% to total Malaysia export. Indirectly, this will help the country to

make a surplus trade balance which the total export always more than total import. In

addition, the most contribution of the growth on manufactured export was from non-E&E

product as it gives about 50% from the total manufactured export.

12
 ini boleh insert
untuk hujahan mgp
drop or rise in trend
3.2 IDENTIFY THE FACTOR THAT INFLUENCE MANUFACTURING AS A

MAJOR SECTOR IN MALAYSIAN EXPORT FROM 2011-2020

Malaysia's manufacturing sector has grown rapidly since the early 1980s, when the

country's economy shifted from agriculture to industry. Various initiatives have been

developed as part of industrial policies and master plans to diversify the economy and reduce

dependence on commodities. The manufacturing sector in the country has evolved from an

industrial production process to an integrated concept that incorporates all levels of the

production system and commercial activities as a result of this initiative. From 2011 to 2018,

the manufacturing sector contributed significantly to economic growth, growing at a rate of

6% per year. The manufacturing sector's contribution to GDP climbed from 8.6% in 1960 to

22.4 percent in 2018. (DOSM, 2019). Malaysia is growing non-resource-based sectors, such

as E&E, automotive, and metals, alongside resource-based businesses like palm oil

processing and petroleum refining. There are factors that cause the manufacturing sector to be

the highest sector in the contribution of Malaysian exports such as,

Among the factors that make the manufacturing sector a major contributor to

Malaysia's exports according to MITI report (2012) is the development of the global

economy and mega trends around the world. This is driven by new technologies creating new

prospects for the manufacturing sector especially for the value and high-tech sectors such as

the provision of urban infrastructure, smart products, e-mobility, advanced medical devices

and high precision equipment. Based on the MITI report (2012), we can see that in 2012,

global economic uncertainties continued to affect the external environment leading to a

decline in demand for manufactured goods. Malaysian producers, especially in high value-

added production, face increasing competition from producers in developing economies such

as China and ASEAN countries. Despite these challenges, the manufactured export remains

the sector with the highest export contribution. This is because the manufacturing sector will

13
take advantage of megatrends such as growth for the green sector and e-connectivity to

achieve new directions for future growth. Following disruptions caused by natural disasters in

Japan and Thailand in 2011, the manufacturing of Malaysia's major export-oriented clusters,

such as electrical and electronics (E&E) products, particularly semiconductors, has

undergone a recovery.

In addition, in 2013, the performance of the manufacturing industry recorded positive

export and investment results across most key sectors as the external environment in the

second half of 2013 improved. Based on the MITI report (2013), manufactured goods

continued to dominate exports with a share of 76.18% of total exports or RM548.344 billion.

E&E products, refined petroleum products, Liquefied Natural Gas (LNG), chemicals and

chemical products, and palm oil were the top five exports in 2013. Following the recovery in

the E&E cycle, exports of E&E products increased by 2.49% to RM236.982 billion in 2013.

The growth driven mostly by an increase in exports of semiconductor devices and integrated

circuits (ICs). Exports of refined petroleum products increased by 26.9% in the oil and gas

industry, from RM51.5 billion in 2012 to RM65.4 billion in 2013. Singapore remained the

main export destination for refined petroleum products, accounting for 42.3 per cent of total

exports. LNG exports increased 5.5 per cent to RM59.2 billion, up from RM56.2 billion a

year earlier. Higher exports to Japan, South Korea and China contributed to the growth. Japan

remains Malaysia's main LNG export destination, accounting for 67.9% of the country's total

LNG exports. After Qatar, Malaysia is listed as the second largest exporter of LNG in the

world.

Next, the factor that makes the manufacturing sector the highest contributor to exports

is because the manufacturing sector has helped in increasing full employment. This is

because according to Rahmah Ismail (2009) in her study to look at the impact of human

capital on labor output and productivity found that labor plays an important role to the growth

14
of labor output and productivity. We can look at the statistics that show the total employment

by industry in the selected year which is 2011 to 2016. According to labor force statistics, the

working population by industry (MSIC 2008) and unemployment 2010-2016, Malaysia

showed an increase in total employment from 2011 to in 2016 in the manufacturing sector

which was 2,244,000 in 2011 and 2,390,600 people in 2016. The statistics also show that the

total labor force in the manufacturing sector is the highest in all working population by

sector. High and constant demand from foreign countries can be met. This caused

productivity in the manufacturing sector to increase during 2011-2016 and further affected

the value of exports of goods in the manufacturing sector which increased from 2011 which

is RM504.2 billion to RM645.7 billion in 2016. The large number of employments in the

manufacturing sector causes the manufacturing sector to dominate in the contribution of

exports and become the main contributor to exports every year.

The next factor is the result of changes in the economic structure of the country. Since

1970, the contribution of the agricultural sector to GDP and employment has decreased and

instead the contribution of modern sectors such as the manufacturing, construction and

services sectors has increased rapidly. Employment opportunities in the modern sector have

increased especially in the manufacturing sector. This indicates that the manufacturing sub-

sector has increased and caused it to be the production of the highest export goods. Based on

the MITI report (2011-2020), we can see where the top five sub-sectors have experienced an

increase in the production of export goods from 2011-2020 namely electrical and electronic

products, petroleum products, chemicals and chemical products, metal fabrication products

and, machinery, equipment and appliances. According to the MITI report (2011, 2015, 2020),

in line with the advancement of technology, the production of export goods of the

manufacturing sector has increased from 2011 with a total of RM504.2 billion increased to

RM625.4 billion in 2015 and increased to RM849.5 billion in 2020. This shows that each

15
sub-sector in the manufacturing sector experienced an increase in productivity production.

For example, electrical and electronic products in 2011, exports of goods amounted to

RM237.1 billion. Subsequently, in 2015, exports of E&E products increased to RM277.9

billion and in 2018 the products increased to RM381.5 billion. Compared to the agricultural

sector also experienced an increase from 2011-2020, but the volume of exports of goods is

small compared to the manufacturing sector. In 2011 the agriculture sector recorded exports

of goods of RM69.9 billion increased to RM101.3 billion in 2015 and in 2020 increased to

RM131.7 billion. This can show that the manufacturing sector dominates in the export of

goods which is a major contributor.

Last but not least, according to the MITI report (2018), the next factor is the national

policy on industry 4.0. The industry 4WRD policy is a national policy to achieve

transformation in the manufacturing and services sector for the period 2018 to 2025. This is

done to make Malaysia a strategic partner in Asia Pacific in smart manufacturing and

services. In addition, this policy can also make Malaysia a major destination for high-tech

investment and also a provider of comprehensive solutions for advanced technology. With

this policy, stakeholders will be attracted to industry 4.0 technologies and further increase the

attractiveness to Malaysia as a location of choice in smart manufacturing. With this policy,

Malaysia can also provide initiatives and improve them such as talent and manpower,

infrastructure to support the industry in adopting industry 4.0. This enables Malaysia to

increase and strengthen productivity, cost efficiency and others for the manufacturing sector.

Based on MITI report (2018 and 2020), we can see where the year the start of this policy was

implemented in 2018 showed exports of goods in the manufacturing sector recorded at RM

837.1 billion and further increased to RM849.5 billion in 2020. This record shows that

government policy has had a positive impact on the manufacturing sector until able to

maintain its position in being the highest contributor in export goods.

16
 The conclusion we can conclude is that the manufacturing sector is the main sector

that dominates exports out of the country where its contribution remains at the highest

position from 2011 to 2020. This sector grows in line with national progress where there are

factors that can affect exports. Therefore, the authorities must play an important role to

maintain and improve the performance of the manufacturing sector in contributing revenue to

the country and become a sector that has a high attractiveness from stakeholders so that

Malaysia becomes a developed and successful industry in the future.

IR 4 boleh
diterjemahkan
mellaui pelaburan
dalam teknologi
dan modal........

17
3.3 STUDYING THE EFFECT OF INDUSTRIAL REVOLUTION 4.0 TO THE

MANUFACTURING EXPORT SECTOR.

Industrial Revolution 4.0 was introduced in the country in 2016 with the concept of

Internet of Things (IOT) after the Industrial Revolution 3.0 with the concept of Digital

Revolution. Since the concept of industrial revolution 4.0 was raised, various assumptions

and speculations have arisen from all quarters. This is because the world is facing

increasingly sophisticated technological changes. Technology is a very important component

to the country's manufacturing sector because it is a point where it can lead to major changes

to the country's economic position. Despite that, Malaysia has to face various issues and

challenges in ensuring that the development of this technology moves in line with the

development of society's needs and wants. Here are the issues of the Industrial Revolution 4.0

that the government has to face in the country's manufacturing sector.

CHALLENGES:

a. LOW LABOR PRODUCTIVITY

Productivity is the most important factor in the long -term growth of a country.

High-productivity countries are able to adapt quickly to the challenges of

microeconomic change as well as fundamental shifts brought about by technological

advances. According to the Economic Planning Unit (EPU) in 2015 labor productivity

will increase from RM94, 923 to RM98, 768 according to the 2011 base year.

However, based on the 2013/2014 productivity report by the Malaysian Productivity

Corporation (MPC), Malaysia's productivity growth rate is still low. at 2.3%

compared to developing countries such as neighboring Thailand which is 2.5%. This

is because most of manufacturing sectors have innovated by using technologies that

require less labor in producing their products.

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b. SHORTAGE OF SKILLED LABOR

According to the World Economic Forum, about 37% of their employees do

not have basic digital skills. This shows that although Europe is a developed country,

there are still low -skilled workers. What's more, a developing country like Malaysia

should have the same problem. Previously, the government’s objective was to create

jobs by attracting foreign investors (FDI) who focused on labor intensive. With the

advent of the Industrial Revolution 4.0 where a combination of systems and digital

technology, reliance on less skilled labor is no longer necessary following this new

technological shift which requires a highly skilled labor force in operating machines.

c. DECLINE IN NATIONAL COMPETITIVENESS

According to the Ministry of International Trade and Industry (MITI), the

export contribution of the manufacturing sector has declined from 83.3% in 2000 to

76.7% in 2013. This clearly shows that the percentage reduction in international trade

can indicate the country's competitiveness is declining. Advances in science and

technology have resulted in shorter product cycles. To remain competitive, the

manufacturing sector needs to constantly innovate and improve product features and

quality. However, most manufacturers have low innovation capacity due to lack of

resources and knowledge as well as reluctance to change.

d. CYBER SECURITY THREATS

The introduction of the Internet of Things (IoT) in this Industrial Revolution

4.0 has combined physical and cyber systems. This has led to criminal threats such as

hacking which leads to security risks of a company. A study conducted by Eclipse IoT

Developer found an increase in security issues in 2019 of 38% compared to 2018

19
 30%. Meanwhile, in 2017, a cyber-attack from ‘The WannaCry ransomware’ has

destroyed more than 200,000 computers in 150 countries. The attack has caused the

manufacturing industry in the country to lose data due to computer malfunctions. This

clearly shows that the more technology improves, the higher the threat of crime.

e. DEMOGRAPHIC OF WORKPLACE WILL CHANGE

The development of the manufacturing sector has indirectly encouraged

technology transfer. Technology transfer refers to the transfer of skills, expertise, and

techniques through the process of learning, training, experience, and imitation from

one country to another. This will generate a production process and skills

development can also be improved. In addition, research and development (R&D) can

be carried out. This is because the development of the manufacturing industry

depends a lot on high technological advances and new innovations to maintain

competitiveness in the international market.

OPPORTUNITIES

a. INCREASE EFFICIENCY AND PRODUCTIVITY

Based on the 11th Malaysia Plan, the industry is encouraged to generate

productivity through automation, which is to reduce reliance on low-skilled labor and

increase reliance on high-skilled labor. For example, based on the MITI 2020 report, a

total of 22% has been contributed by the manufacturing sector to the country's GDP.

According to him, exports have increased by 1.1% and imports have decreased by

6.4%. It shows that the performance of the country's manufacturing sector is good

where the value of exports exceeds imports. It is actually very clear the use of

technology that Industry 4.0. Based on the Malaysian Administrative Modernization

20
 and Management Planning Unit (MAMPU) 2016 report, the impact of the use of

technology in the manufacturing sector has increased manufacturing productivity per

employee by 30% from RM106,647 and increased the contribution of the

manufacturing sector to the national economy from RM254.7 billion to RM392

billion. This shows that the use of technology can benefit to the manufacturing

industry for productivity generation.

b. REDUCE OPERATING COSTS

Based on the MITI 2018 report, Malaysia’s national Applied Research and

Development Center (MIMOS) has been launched which is one of the national

policies in Industry 4.0 has been launched to improve in the manufacturing and

services sectors. Within this MIMOS was launched the Intelligent Manufacturing

Services Platform (SMISP) aimed at developing cost effective, flexible and reliable

technology solutions to accelerate the adoption of Industry 4.0 technology and

enhance the Industry 4.0 technology ecosystem to support the manufacturing sector.

Most production by the manufacturing sector will no longer depend on a lot of labor

intensive. This will obviously be able to reduce the operating costs of a production.

c. CREATE VARIOUS EMPLOYMENT OPPORTUNITIES

The technological diversity after the advent of the Industrial Revolution 4.0

has created a variety of new careers. According to the McKinsey Global Institute, it is

estimated that by 2030, 400 million to 800 million jobs will be replaced. According to

Klaus Schwab based on his book 'The Fourth Industrial Revolution', Industry 4.0 has

changed the way we work and live. As such, there are nine pillars of Industry 4.0

namely simulation and virtual reality, vertical and horizontal system integration,

21
 Internet of Things (IoT) industry, cybersecurity, cloud computing, additive

manufacturing, supply chain, big data analysis and robot automation. This clearly

shows that various new fields of work have been introduced since the emergence of

Industry 4.0.

d. CHAINS BETWEEN SECTORS

The chain between sectors is the manufacturing sector being the link between

two sectors. For example, fresh oil palm bunches are produced by the agricultural

sector. Later, the fresh oil palm bunches were used by the manufacturing sector for

the production of vegetable oil. Next, it will be sold by the service sector to

consumers. This shows the importance of the manufacturing sector for the production

of more diverse and complex outputs for domestic productivity. Based on the analysis

of the Ministry of Finance (MoF) shows that vegetable oil has supported the growth

of other industries in terms of backward chain at 2.55 points. Accordingly, vegetable

oil has been a significant contributor to economic growth to the high inter-sectoral

chain.

e. UP SKILL LOCAL TALENT

The technological diversity after the advent of the Industrial Revolution 4.0

has created a variety of new careers. According to the McKinsey Global Institute

(MGI), it is estimated that by 2030, 400 million to 800 million jobs will be replaced.

In 2019 and 2020, MITI has implemented the Readiness Assessment (RA) program

and the Industry4WRD Intervention Fund program (Intervention Fund) to open

opportunities for Small and Medium Enterprises (SMEs) to adapt technology to this

Industry4.0. A total of 808 SMEs have been selected for the RA program while for

22
the Intervention Fund program has been allocated a total of RM35 Million which

covers the cost of skills training and improvement of manufacturing processes as well

as the application of Industry4.0 technology by the company.

In conclusion, the Industrial Revolution 4.0 has given many issues to the

country’s manufacturing sector since its inception. This is due to the change in

technology itself which is becoming more advanced in line with the will of society.

Despite this, the government has taken the opportunity to implement various new

policies in the 11th Malaysia Plan to restructure the country's strategy to achieve the

country's goals and direction in the future.

kamu boleh juga

buat blok sebelum
dan selepas IR 4

23
4.0 CONCLUSION AND RECOMMENDATION

The conclusion we can conclude is that the manufacturing sector is the main sector

that dominates exports out of the country where its contribution remains at the highest

position from 2011 to 2020. This sector grows in line with national progress where there are

factors that can affect exports. Therefore, the authorities must play an important role to

maintain and improve the performance of the manufacturing sector in contributing revenue to

the country.

The current and future features of the industry 4.0 concept, which demonstrated that

the connection of humans, objects, and systems that forms dynamic, real-time optimized, and

self-organizing, cross-company value creation networks impacts all organizational processes

when the company decides to adopt this new way of producing. For example, it necessitates

increasing data quantities and real-time availability, which necessitates the development of

new infrastructure. As a result, organizations will be able to satisfy the expectations of their

consumers while also producing value. Nonetheless, most businesses are hesitant to begin

their digital transformation processes due to substantial implementation challenges such as

financial uncertainty and a lack of professional knowledge.

A few suggestions that we justify to government in increasing exports of the

manufacturing sector, such as pursuing an export promotion approach. The government

vigorously backed exporting enterprises with a variety of incentive measures, including

preferential treatment in credit allocation and the taxation system. Moreover, risks and

uncertainties have far-reaching consequences for economic growth because private

enterprises cannot invest in high-risk ventures. One bad draw from a random experiment will

drive the investor away in the absence of a well-functioning financial market that allows the

risk associated with capital investment to be shared.

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ATTACHMENT

Diagram 1: News Report

Diagram 2: Ministry of International Trade and Industry Report 2020

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Diagram 3: Export of Manufactured Good

30