THERE are 1,900 active companies in the electrical and electronics (E&E) sector spread across a diverse range of sub-sectors including the semiconductor and industrial electronic industries.
E&E has been instrumental in the development of the Northern Corridor Klang Valley, Johor and Sarawak, contributing significantly to the socio-economic development of the relevant communities.
Supplementing the impact of these industries are emerging sub-sectors such as solar photovoltaic technology and light emitting diodes.
However, the E&E sector faces significant challenges in maintaining growth with intense competition from China, Taiwan, Singapore and other Asian countries.
Over the last 10 years, E&E's share of Malaysian exports has gradually declined.
Of greater significance, however, is Malaysia's position in the value chain compared with its competitors.
Malaysia's E&E sector remains focused on assembly, the lower value-added part of the industry while Taiwan, South Korea and Singapore have captured the higher value-added activities in research and development, design and manufacturing.
To overcome the sector's challenges, last year's Economic Transformation Programme (ETP) Lab outlined a programme that provides the necessary focus on four sub-sectors.
These subsectors are integrated circuits solar photovoltaic, light emitting diodes and solid state lighting and integrated electronics, selected based on the high potential to significantly contribute towards Gross National Income (GNI) targets.
The E&E sector is also a diverse industry, offering products that have unique market characteristics and different global trends.
This diversity has resulted in haphazard development strategies that focus on short-term goals rather than a structured long-term approach that sustains GNI growth from foreign and local players.
As a result, there is a disproportionate allocation of attention and resources to established players, irrespective of their potential to contribute to sectorial growth for the long-term and efforts to nurture local players in emerging segments are hampered.
The Malaysian Investment Development Authority (Mida) has relocated QT Hightech, an equipment refurbishment company to Malaysia with the support of the Northern Corridor Implementation Authority (NCIA).
Moving forward, the Government intends to leverage on the investment by QT Hightech as an enabler to attract fabrication refurbishment companies to set up or expand their production capacity using both QT Hightech's equipment refurbishment and training facilities.
The goal is to bring in one new wafer fabrication company and approve one wafer fabrication expansion project by the end of 2012. Mida, with the help other government agencies, has attracted one selected major company to set up operations here and to increase the amount of silicon produced in Malaysia from six kilo tonnes to around 170 kilo tonnes in 2020.
Malaysia will also develop two local silicon firms.
To achieve the 10-fold increase in solar cell production, Mida has set a target of bring in at least one company every year for the next 10 years, with the capacity to produce a cumulative 2GW of wafers and cells.
The lead agency for this EPP is offering pioneer-status incentives to prospective wafer and and cell producers.
The Centre of Excellence for Machinery and Engineering Services is expected to be operational at the NCIA Technology Design Centre by first quarter of this year.
To leverage on this important enabler, Mida is leading the effort to create the national Machinery and Engineering Hub to consolidate the numerous small companies in Malaysia into a more potent global force.
For wireless communications, NCIA would establish a two-way radio shared service lab for local design firms. This will reduce their start-up costs and make Malaysia more attractive as a site for wireless communication design and outsourced services.