In the fourth brief from our Emerging Markets series, we take a look at Malaysia, the country ranked number four in the Agility Emerging Markets Logistics Index.
Malaysia has retained its fourth place ranking in this year’s Index. The country has not been immune to the fall out from the global pandemic and many manufacturers were impacted by the ‘whiplash’ effect of supply and demand sourcing decisions by their overseas customers. This has resulted in a policy decision by the Malaysian government to place resilience at the heart of its next five year supply chain plan. This involves a focus on what it calls ‘local sourcing facilitation’, that is, encouraging and facilitating major manufacturers in the country to use domestic suppliers, often SMEs, rather than those located in other countries.
The government believes that ‘buy local’ policy will reduce supply chain disruptions such as export bans, border closures or, indeed, the impact of China’s zero tolerance approach to Covid which has been so damaging to GVCs across Asia. This will not only increase resilience, but the government believes that it will also create ‘spillover’ benefits cascading down to local businesses in the country.
At the same time as this, investment in transport and digital infrastructure is on-going from a wide-range of sources including government, non-governmental and commercial financial institutions and foreign businesses. The Port of Tanjung Pelepas (PTP) provides a good example of this with the announcement in 2022 that it was expanding its capacity by a million twenty-foot equivalent units (TEUs) through a joint investment by its owners, Malaysia’s MMC group and the Netherlands’ APM Terminals.
A significant proportion of Malaysia’s foreign investment has also come from China’s Belt & Road Initiative (BRI). This has attracted considerable controversy with fears that Malaysia would fall into a ‘debt-trap’ leaving it beholden to China. Indeed these fears resulted in a change of government. Nevertheless, since the programme’s creation, national and local governments in Malaysia have looked to the BRI for investment in critical infrastructure including ports, rail lines and industrial parks.
As is the case with many of the top ranking countries in the Index, Malaysia has developed an ‘Industry 4.0’ policy to focus its future supply chain strategy. This involves using digital technologies to increase productivity (‘by 30% by 2030’) whilst improving what it calls its ecological integrity and the quality of life of its people. This will involve:
• Equipping the workforce with Industry 4.0 skill sets
• Developing enhanced digitalized logistics systems to promote interoperability
• Increasing the robustness of the regulatory framework to support adoption of transportation and logistics-related technologies
• Improving mobility through development and adoption of centralized and open transport-related database, including traffic management
• Support R&D for Industry 4.0 technologies to develop low carbon mobility solutions
• Enhance efficiency in cyber security management to mitigate cyber risks
To find out more about Malaysia and our Index top ten (China, India, UAE, Vietnam and more):
Download our free report: Agility Emerging Markets Logistics Index
The Agility Emerging Markets Logistics Index from Agility & Ti Insights, ranks countries for overall competitiveness based on their logistics strengths, business climates and digital readiness – factors that make them attractive to logistics providers, freight forwarders, air and ocean carriers, distributors and investors.
Source: Agility & Ti Insights