The Surge of Malaysia’s Manufacturing Sector: Insights from the Economic Census 2023

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The recently published Economic Census 2023 report provides a detailed overview of Malaysia’s manufacturing sector. It highlights the sector’s strong growth trajectory, showcasing its resilience and dynamism. According to the Department of Statistics Malaysia (DOSM), the sector’s gross output value experienced an impressive annual increase of 7.5%, reaching RM1.89 trillion in 2022 compared to 2015. This significant growth has important implications for Malaysia’s economy and underlines the crucial role of the manufacturing sector in the country’s economic development.

Driving Forces Behind the Growth

Chief Statistician Datuk Seri Mohd Uzir Mahidin attributes this substantial growth to key sub-sectors, particularly petroleum, chemical, rubber, and plastic products. This sub-sector experienced a remarkable increase in gross output, jumping from RM299.1 billion in 2015 to RM 579.6 billion in 2022. The electrical, electronic, and optical products sub-sector also made substantial contributions, with a 29.6% share of the gross output value, escalating from RM321.18 billion in 2015 to RM560.7 billion in 2022.

These sectors have benefited significantly from the global surge in demand for medical supplies and electronic devices, especially during and after the COVID-19 pandemic. The resilience and adaptability of these industries amid global challenges have played a crucial role in driving the overall growth of Malaysia’s manufacturing sector.

Expanding Industrial Footprint

The Economic Census 2023 also reveals an expansion in manufacturing establishments. In 2022 there were 54,505 manufacturing establishments, a 1.5% increase from 49,101 in 2015. According to the Malaysian Standard Industrial Classification, these establishments are spread across 254 industries, reflecting a diverse and comprehensive industrial base.

This growth in establishments signifies not only an increase in production capacity but also an expansion of employment opportunities within the sector. The rise in the number of establishments suggests a healthy industrial ecosystem that can support sustained economic growth.

Value Addition and Intermediate Input

In line with the increase in gross output, the intermediate input for the manufacturing sector rose by 7.6% annually, reaching RM1.48 trillion in 2022, up from RM 884.8 billion in 2015. This increase is primarily driven by higher local producer prices and the global rise in crude oil and commodity prices during the period.

The value added by the manufacturing sector also marked an annual growth of 7.1%, reaching RM 414.9 billion in 2022 from RM257.1 billion in 2015. The petroleum, chemical, rubber, and plastic products sub-sector was a major contributor, with a 33.2% share and an 8.5% growth rate. The electrical, electronic, and optical products sub-sector followed closely, with a 29.0% share and an 8.3% growth rate, while the food products sub-sector grew by 7.5%, contributing 11.1% to the value added.

Employment and Wages

The census report also sheds light on employment and wage trends within the manufacturing sector. Salaries and wages paid expanded by 5.8% annually, totaling RM97.2 billion in 2022. The average monthly salary and wages stood at RM3,513. Notably, the electrical, electronic, and optical products sub-sector recorded the highest average salary at RM4,361 per month, whereas the textiles, clothing, and leather products sub-sector had the lowest, at RM2,249 per month.

Skilled workers received the highest average salaries at RM8,068 per month, highlighting the premium placed on expertise and technical proficiency within the sector. Semi-skilled and low-skilled workers earned RM2,578 and RM2,030 per month, respectively, underscoring the wage disparity based on skill levels.

Agro-Based Products Manufacturing

The Economic Census 2023 also highlights the performance of the agriculture-based industry, with 14,323 establishments involved in agro-based products manufacturing in 2022. The majority (57.9%) were involved in food-based products, while the rest produced non-food-based products. The gross output of non-food-based products was RM267.2 billion, making up 73.4% of the total output of the agriculture-based industry, whereas food-based products contributed RM96.7 billion.

Regional Contributions

In terms of regional economic performance, nearly 70% of the gross output in the manufacturing sector was contributed by Selangor, Johor, Pulau Pinang, and Sarawak. Selangor led with a 27.3% share, followed by Johor (16.7%), Pulau Pinang (16.0%), and Sarawak (9.3%). These states also registered higher annual growth rates than the national level, with Pulau Pinang leading at 10.0%.

The Economic Census 2023 report provides a detailed overview of Malaysia’s thriving manufacturing sector, illustrating significant growth, diversification, and resilience. The sector’s strong performance, supported by key sub-sectors and an expanding industrial base, underscores its crucial role in Malaysia’s economy. As Malaysia faces global economic challenges, the findings from this report offer valuable insights for strategic planning and policy-making to sustain and further enhance the sector’s growth trajectory.