Malaysia newest industrial master plan has a stronger focus on deliverables, with a focus on action plans and the monitoring of implementation.
The views expressed in this commentary are the author’s personal views and do not reflect the views of the Ministry of Investments, Trade, and Industry (MITI) and the NIMP2030 Taskforce, of which she was a member. The Taskforce has been dismantled with the launch of NIMP 2030. The usual disclaimer applies.
Malaysia unveiled its New Industrial Master Plan (NIMP 2030) on 1 September. The plan aspires to chart Malaysia’s industrial transformation from 2023 till 2030. Compared to previous plans, the latest master plan is ambitious, with the incorporation of action plans and a focus on implementation. Given Malaysia’s patchy record with implementing previous policy documents, however, the key issue here is seeing things through fully.
The shorter duration of the plan compared to previous plans (which typically spanned across a decade or so) is due to the emergence of the Covid-19 pandemic as well as internal changes in administration. This redirected attention from the plan as it should have been launched in 2021.
It is crafted to overcome existing domestic challenges in manufacturing development, especially the decline and subsequent stagnation in manufacturing’s share in Malaysia’s Gross Domestic Product (GDP) and an external environment fuelled by escalating geopolitical tensions. These challenges are distilled into four grand missions that need to be addressed in order for Malaysia to reindustrialise. They are: increase economic complexity in production, advance digital adoption, champion net zero emissions, as well as safeguard economic security and inclusivity (Figure 1).
The four missions seek to achieve six specific visions. These are, namely, fostering economic complexity in production, creating a high income and skilled workforce, strengthening domestic linkages and existing clusters while supporting the emergence of new clusters, ensuring balanced industrial growth and sustainable development. The six visions match the National Investment Aspiration (NIA) Goals which was launched in October 2022. The NIA seeks to guide the investment policy of the country, and investments selected based on these goals will automatically meet the vision of the NIMP 2030.
… the NIMP30 distinguishes itself from previous industrial development plans is that it devotes one whole chapter on implementation. This is the Achilles heel of policy documents; in the past, plans were introduced endlessly, only to languish in implementation.
The NIMP has specific strategies (21 in total) and action plans (62), that are parked under each mission. The action plans have dedicated sectors for achieving the tasks assigned under each mission. For example, for mission 1 (Figure 1), one of the action plans is to attract global leaders to establish wafer fabrication in the semiconductor value chain in Malaysia.
The NIMP differs from the previous Industrial Master Plan (Third Industrial Master Plan (IMP3: 2006-2020) in six important ways. First, it is the first industrial master plan that does not use a sectoral approach in its industrial planning. Instead, it takes the four missions to promote future industrial development since all sectors have to contend with these cross-cutting issues.
Another way the NIMP differs from its predecessor is that it seeks to secure industrial development for economic security reasons rather than economic development per se. This reflects the current global trend of using industrial policy to address national economic security concerns in the midst of rising global tensions between great powers. While the plan seeks to position Malaysia as the Plus One partner for changes in global supply chains due to economic security reasons, it is also pressing for greater ASEAN integration as well as drumming up domestic investments that can help safeguard economic security for the country.
Third, the NIMP introduces action plans which were missing in the previous plan. Importantly, the action plans are also aligned with the plans of other Ministries so that implementation is eased since it is geared towards what is also prioritised in other Ministries. While the Ministry of Investment, Trade, and Industry (MITI) is the custodian of NIMP 2030 and its implementation, the cross-cutting or mission approach requires cooperation from other Ministries. For example, in mission 2, which is to tech-up for a digitally vibrant nation, MITI has to work collaboratively with other Ministries and agencies that are promoting digitalization, such as the Ministry of Science, Technology and Innovation (MOSTI), Ministry of Communications and Digital (KKD), and Malaysia Digital Economy Malaysia (MDEC). This reduces the coordination burden and duplication of efforts, as Malaysia has 28 ministries and multiple agencies under each ministry.
Another way the NIMP differs from its predecessor is the use of specific mission-based projects (MBPs) to catalyse a mission. This approach is neither new nor peculiar to the NIMP. Other policy documents that have used a similar approach include the National Energy Transition Roadmap, and the Chemical Industry Roadmap 2030. It is expected that the MBPs will crowd in investments from other proposed MBPs during the duration of the plan.
Fifth, the financing of the NIMP is also discussed, whereby two funds are proposed to be established, which are the NIMP 2030 Industrial Development Fund (“NIDF”) and the NIMP 2030 Strategic Co-Investment Fund (“NIMP 2030 CoSIF”). Other financing options include existing dedicated financing offered by Bank Negara Malaysia (BNM) such as its High Tech and Green Facility, SME Automation and Digitalisation Facility, and Low Carbon Transition Facility. There will also be funds from financing institutions which have been allocated for transition financing in their sustainability agenda. In total, it is estimated that the NIMP will need RM95 billion in investments over the entire duration of the plan.
The sixth way the NIMP 2030 distinguishes itself from previous industrial development plans is that it devotes one whole chapter to implementation. This is the Achilles heel of policy documents; in the past, plans were introduced endlessly, only to languish in implementation. It outlines a governance and monitoring mechanism. This is led by a National NIMP Council, which is supported by a NIMP Steering Committee, with participation from the private sector, as well as a secretariat (or the Delivery Management Unit). Performance will be monitored and measured by the DMU and displayed on a dashboard that will be established for this specific purpose. Progress will be published in periodic annual reports and a mid-term review at the end of 2026.
The NIMP seeks to overcome the weaknesses in previous plans, such as the lack of action plans and considerations for implementation. As always, the proof is in the pudding. It still remains to be seen whether the implementation can be actualised as planned. The forthcoming Budget will also indicate the government’s revealed priorities. It is also not guaranteed that catalytic projects will crowd in other projects and more private sector investments.
Figure 1: Four Grand Missions
Tham Siew Yean is Visiting Senior Fellow at the ISEAS – Yusof Ishak Institute and Professor Emeritus, Universiti Kebangsaan Malaysia.