A survey of 21 major electronics companies has found that the sector’s exports had plunged 26 percent to RM51.8 billion in 2010 compared to the year before.

This continues a trend with the 2009 figure showing a 15.8 percent drop in exports.  

NONEMalaysian American Electronics Industry (MAEI) chairperson Wong Siew Hai said this is mainly due to personal computer (PC) companies, which make up about 50 percent of the electronics export value, taking manufacturing out of the country.

“The companies have found that it is easier for them ... to just deal with subcontractors, who are located mostly in China,” he explained, when presenting the annual survey results today.

On the flipside, Wong said this indicates that Malaysia is moving away from simple manufacturing to more value-added products higher up the production line.

He said the companies, which contribute to the bulk of sales from the electronics industry, are now opting to use Malaysia as a base for design and development, as well as to provide global services and support.

azlan“The growth is tremendous in these areas but unfortunately this is not captured in the export figures… Taking the PC-related companies out of the equation, electronics exports (from semiconductors and other components) have actually grown by 26.3 percent,” he said.  

The move up the value chain, he said, is expected to recoup the loss of exports and to expand future exports beyond the losses recorded today.

Moving into higher value manufacturing, however, would require a large pool of talent - an area which remains the electronics industry’s biggest challenge yet.

The number of foreign ‘knowledge’ workers rose by 11 percent this year, but this is hardly enough to fill the need in the growing design and development aspects of the business.

“Our graduates are not bad. In fact those who have grade point averages of 3.5 and above are actually very good but the numbers are too small. Those below that level need more training, for which we hope the government can provide funds.”

‘Develop and retain talent’

azlanMAEI members also advocate the use of permanent residency to attract and retain foreign ‘knowledge’ workers as well as to provide work permits to foreign students who graduate with good grades or are pursuing postgraduate degrees.

However, Wong said attracting talent (Malaysian or otherwise) should be a secondary strategy since “it is harder, as people have different plans for their lives”.

“The focus should be on developing and retaining talent…and it should be industry-specific,” he said, advocating also greater collaboration between academia and industry.

The electrical and electronics industry makes up 54 percent of the manufacturing industry in Malaysia and provides employment to at least one million people or about 30 percent of the manufacturing workforce.

“Where the inNONEdustry goes is, by and large, where the Malaysian economy will go,” said American Malaysian Chamber of Commerce (Amcham) president Nicholas Zeffreys (left in photo) who was present today.

The MAEI, a committee of Amcham, consists of 21 members including electronics giants Western Digital and Texas Instruments and computer manufacturer Dell.