And while the plan is a broad-based plan that targets the manufacturing sector, the bigger objective is a transformation of the country’s entire economy, said Wong Chew Hann, Head of Research at Maybank Investment Bank in Malaysia.

“The NIMP 2023 will play a key implementation and execution role in achieving the MADANI Economy’s targets such as boosting global competitiveness, raising labour share of GDP to 45 per cent in 10 years, and nurturing more SMEs as regional champions,” she said.

Wide-ranging impact

Unlike past master plans, which focused on specific sectors or industries, the NIMP 2030 will move to a “mission-based approach” in order to have a broader impact.

For example, economic incentives offered in the plan will not solely be based on investment value alone. Instead, they will also focus on investments that create high-income jobs, linkages with domestic industries, as well as more growth opportunities for SMEs.

In other words, the focus shifts to economy-wide objectives rather than on narrowly-defined sector-based targets. This, in turn, will help “advance economic complexity, accelerate the economy’s digitalisation and shift to high-value industries, as well as push for net zero,” said Ms Wong.

Still, the biggest winners of the plan are likely to be in four key areas – petrochemicals, semiconductors, automotive, and property.

Petrochemicals: advancing complexity and specialisation

As Malaysia’s third largest contributor to its trade of manufactured goods, the chemicals and petrochemical industry is a key focus area for the NIMP 2030, which is designed to complement the Chemical Industry Roadmap 2030 (CIR2030) launched in August 2023.

The Roadmap focuses on advancing the industry’s specialisation and sustainability, which will be key to achieving the goal of increasing its gross value add (GVA) to 4.5 per cent of the economy, up from the current 3.4 per cent.

In particular, the NIMP 2030 will focus on “deepening specialty chemicals verticals”. These high-margin bespoke formulations could be produced locally by Petronas Chemicals, which gained a foothold in specialty chemicals through two earlier acquisitions: Da Vinci Group, a silicone and lube oil manufacturer that is now known as BRB International, and Perstorp Holdings.

With the 2022 acquisition of Perstorp Holdings, a diversified Swedish specialties manufacturing company, Petronas Chemicals now has access to a diverse portfolio of patents and 130 products, of which over 20 are environmentally friendly.

Semiconductors: moving up the value chain

While the NIMP aims to enable digitalisation across all technology sectors, semiconductors will be a key area of focus.

The plan’s efforts to improve the complexity and margin profile of the indigenous semiconductor value chain centres on two key areas: chip and integrated circuit (IC) design and wafer fabrication.

This is in line with the Government’s plan to move the semiconductors sector up the value chain from back-end assembly and testing processes, to front-end design and wafer fabrication. It also aims to adapt to the complexity of existing back-end processes.

To boost the country’s capabilities in designing ICs on microchips - a highly technical process which requires niche specialisation and significant R&D expenditure, the Government will need to address challenges such as a talent shortage while strengthening R&D incentives and intellectual property (IP) protection. Similarly, there is a need for government incentives and government policies to support local wafer fabrication, as the setting-up wafer foundries or fabs is highly capital-intensive.

Automotive: building an Electric Vehicle (EV) ecosystem

The NIMP also aims to catalyse the growth and adoption of EVs to accelerate decarbonisation of the transport sector. This will boost growth of related sectors in equipment supply, charging infrastructure, and software development.

Such efforts include accelerating the installation of charging facilities and establishing a local EV supply chain. Tesla's planned investment in a network of Supercharger fast-charging stations across Malaysia is set to support the ecosystem’s development.

Property: new industrial zones and infrastructure

The property sector is expected to be a beneficiary of the NIMP’s push to promote high-value industries and exports, as this will drive demand for dedicated industrial zones and even infrastructure such as high-speed rail, according to Maybank Investment Bank research.

Demand for industrial properties has been strong especially after the re-opening of national borders in April 2022 due to rising demand from logistics and for warehouses, as well as due to trade and investment diversion from China.

We can expect more special industrial zones to be set up in the country to serve fast-growing industrial sectors. For example, the shift from lower-value outsourced semiconductor assembly and test towards high-value IC design will drive demand for new industrial parks in provinces like Penang, while a renewable energy (RE) industrial park will be built by UEM Group and INTRAMAS to develop 1 giga-watt of hybrid solar photovoltaic power.

Against this backdrop, the potential revival of the KL-SG High Speed Rail (HSR) project could support the NIMP’s aspirations.

Maybank Investment Bank analysts think that official discussions between the two Governments is likely to restart only in 2024. That means project implementation will only begin in 2025 at best.

The high-speed rail will improve accessibility and reduce travel time between the two countries, spurring economic activities that create new jobs. This in turn could boost property demand, especially developments near station stops, while catalysing the development potential of nearby plantation land.

Full steam ahead

All eyes will be on the implementation and progress of the NIMP 2030, which will serve as another key enabler for the MADANI Economy Framework along with the National Energy Transition Roadmap (NETR).

Launched in July 2023, the NETR aims to accelerate Malaysia’s green growth agenda and capitalise on its strong bioenergy potential, which complements the NIMP’s strong sustainability focus. Together, these two key initiatives will be positive in identifying new, long-term growth catalysts for the MADANI Economy.