Competitive Analysis
Information Technology Strengths and Weakness
Competitive Advantage of country in IT and other strong areas.
Malaysia is no longer a low labor cost semiconductor production base, relative to China or other new investment areas. However, industry and government sources expect that Malaysia's excellent foreign investment climate, experienced labor force, and strong relations between business and government will continue to make Malaysia an attractive site for higher-value semiconductor production. It is assumed, however, that Malaysia will increasingly shed production of low end items. 14
Investment in new IT manufacturing
Over the next three to five years, Malaysian semiconductor production is expected to become more automated and move upstream, as multinational electronics firms invest in wafer fabrication facilities. Near-term investment is expected to focus on increasingly sophisticated assembly and test equipment, required to raise labor productivity and produce higher value end items. The demand for more capable production equipment will increase. The industry's preferred route, instead, is to emphasize investment in more automated production equipment, requiring higher levels of technical competence from a smaller labor force. An example is a recently-opened Motorola-Philips collaboration in Seremban, a fully-automated semiconductor assembly operation from die bonding to electrical classification, fed by a single continuous leadframe. The plant requires no production operators, and has a total staff one-tenth the size of similar size plants elsewhere in Malaysia.
Malaysia no longer enjoys the low wage advantages that first attracted U.S. and Japanese multinationals to invest in semiconductor assembly operations in the early 1970s. This has led companies and the Malaysian government to address the question of Malaysia's future competitive position and place in the industry as new low wage producers open up, notably China.13Weaknesses
Shortage of IT professionals is acute at the national level. A recent survey conducted by Malaysian National Computer Confederation shows that IT user organizations need a 23% increase in IT professional over the current staffing level to meet their requirements. This has been caused by a lack of a clear IT plan. Without a cohesive training program, IT training at various levels is not integrated and the result is a mismatch between the demand and supply of IT skills.
Software development
Malaysia’s domestic software sales are small but growing, the largest growth is occurring in the sales of the large enterprise systems which are less vulnerable to piracy. Foreign software firms are working to undertake development in Malaysia and are undertaking the task of training their developers all the while trying to produce product. The focus of resources in the MSC, and the GoM’s plan to build a paperless administrative capital at Putrajaya, will fuel a domestic software boom in Kuala Lampur and will likely have a spill over affect to other high tech areas of the country, especially Penang. 14
