Malaysia remains significantly behind its target of establishing 3,000 smart factories by 2030, with only 93 manufacturers currently recognized for smart manufacturing, according to Deputy Investment, Trade and Industry Minister Sim Tze Tzin. An additional 161 manufacturers are expected to receive recognition by the end of this year, raising the total to 254, still far short of the national goal.
Sim made the remarks during the launch of the Malaysia Smart Manufacturing Awards 2027, held in George Town on October 2. The awards program, now in its third year, acknowledges manufacturers advancing in automation and digitalization efforts.
Highlighting the urgency for increased adoption of Industry 4.0 technologies, Sim urged manufacturers across sectors—including semiconductor, automotive, and furniture industries—to accelerate automation. The New Industrial Master Plan 2030 promotes the integration of advanced technologies such as artificial intelligence, the Internet of Things, and robotics to enhance manufacturing productivity.
A key driver behind the push for automation is the government’s objective to reduce reliance on foreign labor to 10% by 2030, down from the current 13%. Sim warned that easy access to foreign workers has historically discouraged companies from upgrading to automated processes or elevating their production capabilities.
Citing examples from advanced economies such as South Korea, Japan, Taiwan, and China, Sim emphasized the importance of investing in sophisticated manufacturing and automation to remain competitive. He noted that automation can lead to workforce upskilling and wage improvements for Malaysian workers.
Some manufacturers have already implemented automation measures, enabling job reductions in certain operations—for instance, reducing labor requirements from five workers to two or from three workers to one. Nevertheless, Sim stressed the need for broader and deeper adoption across the industry.
To facilitate the transition, manufacturers are encouraged to seek assistance from government agencies including the Investment, Trade and Industry Ministry, Malaysian Industrial Development Finance Bhd, and Sirim Bhd. These organizations provide support to companies aiming to automate and modernize their production systems as Malaysia works toward its industrial transformation goals.