MALAYSIA'S electrical and electronics industry will soon restore its sparkle in the manufacturing sector as old-time investors shift into the new gadget markets.
"Be assured that the shine is still very much there and we will get back ahead of the curve," says Malaysian Investment Development Authority (Mida) chief executive officer Datuk Noharuddin Nordin.
"The momentum has to be stepped up though, and Mida is strengthening its capability further - not only in facilitating but also leading the changes with incentive packages for companies to speed up the adaptation," he said.
Many of these companies, which are large manufacturing facilities, have got into the act by converting into logistics hub for their global operations.
Mida can play the role of policy advocacy as it assists those companies that have ventured into gadgets in the realms of health and finance, among others.
Noharuddin said E&E will continue to remain relevant and reign as a major contributor to the gross domestic product in the medium term, providing employment opportunities as well as increased opportunities for local companies.
"We talk about ecosystems these days and there are emerging sectors that Malaysia is making good progress in, and integrating them into the already diverse ecosystem."
Top on the list are solar photovoltaic technology and light emitting diodes (LEDs), which currently enjoy a 20 per cent annual growth globally.
"We have a strong base of companies poised to capture global growth in their manufacturing capacity."
Another interesting development within the local semiconductor and LED clusters is a growing number of local companies undertaking R&D and manufacturing for multinational corporations.
Unlike FDIs, these developments are categorised under the services industry, which means the figures will be captured under the balance of payments.
Last year, the size of investments in the E&E sector shrank to RM3.98 billion from RM20.06 billion in 2011 but this is a transition that Malaysia is prepared to go through as it turns away labour intensive-type investments.
"Efforts have been put forth to further strengthen and move up the value chain of the industry through intensification of R&D and outsource non-core activities domestically."
Through the Collaborative Research in Engineering, Science and Technology Centre, R&D projects have taken off.
Noharuddin said domestic players have also taken a major step in moving up the value chain, not only in the downstream part, but also the front-end and back-end activities in the R&D and manufacturing of intermediate products, such as LED packages and thermal substrates.
Four decades ago, the industry attracted seven players - Clarion and Bosch ( consumer products) and AMD, HP, Intel, Litronix and National Semiconductor (components), which gave rise to a labour-intensive industry.
"Most of that has changed and what is desired is the futuristic fablite, fabless, miniaturisation, flexible electronics, electric vehicle, laser video display, cryogenic and SMART electronics, to name a few," Noharuddin said.
As manpower requirements still tops foreign investors' demands, Mida has stepped in to help fulfil these needs.
There are also the generous R&D and training grants extended to companies to continue to "improvise" the quality of human capital.