Solidiance Just Released a White Paper Titled "Malaysia's Automation Sector: Pursuit of Opportunities and Shift of Industrial Investment"
In Solidiance's latest white paper, they screened 198 automation vendors in Malaysia with 10 in-depth interviews on the business outlook and future industrial opportunities. The survey showed that firms radically turn away from manufacturing sectors such as oil & gas, electronics, and the automotive industries, and instead see the future in processing industries, e.g. chemicals and food processing.
The survey shows that firms have turned away from the manufacturing and production (oil and gas) sectors, and instead shift to future processing industries such as chemicals and food processing, as well as aftersales business and the IT industry. At this point, automation vendors in Malaysia will need to prepare and offer products and services outside their comfort zones.
Economic overview & investment trends
In recent years, the technical manufacturing, both in electronics and automotive, have significantly slowed down. Accounting for 33% of total exports, the electrical and electronics (E&E) industry has remained stagnant. Together with the recent price crisis in the oil industry, there has been an overall falling demand for industrial equipment suppliers. Other sectors, such as the chemical industry, may take the lead in the future.
On top of these economic trends, constant rise of investments are evident, but mostly in the services sector. There is a shift in the Malaysian economy as downstream processing, petrochemicals, and chemicals, see an apparent surge in investments, while top sectors such as transport and oil & gas are falling in investments.
Automation vendor survey
Solidiance screened 198 automation vendors with 10 in-depth interviews on their business outlook and future industrial priorities. The industries were grouped into three clusters:
a) “New hopes” - as these sectors appear to have suddenly high expectations in them
b) “Solid bets” - sectors that have performed well in the past and could be at least stable in the coming years
c) “Fallen from grace” - large sectors, once hailed power for growth, seem to have lost their importance here
The result shows that vendors appear to have re-orientated themselves towards new sectors while still eyeing manufacturing classics. Although future investments are hard to predict in these sectors, recent investment records seem to confirm that the new focus is on chemicals and food & beverage, while the decline in coming investments, for instance in oil & gas, is evident followed by the low oil prices.
Future industrial outlook & winning strategies
Trends are likely to continue in key sectors. The government and joint-venture driven investments in processing industries are likely to continue at least for the next 3-4 years. In oil & gas sector, upstream recovery is likely due after 2-3 years when global economic conditions favor higher energy prices. The local transport industry will have to restructure if ever to recover, meanwhile export sectors e.g. electronics will likely be stable as innovation from regional headquarters and growing global technology markets will favor investments.
With regards to strategies to win the market, the factual market access will count more than ever in the automation industry. The growth in chemicals, petroleum and petrochemicals are dominated by super projects – leading to a tendency of a few decision makers that will steer massive project volumes. Similarly, in small and not (yet) growing sectors like F&B, the access and presence in the underdeveloped market will play an important role in the survival mode and market capitalization.
Please download the complete white paper here:
Solidiance is a corporate strategy consulting firm with focus on Asia Pacific. We advise CEOs on make-or break deals, define new business models and accelerate Asia growth. Solidiance's expertise is focused on industrial applications, green technology, healthcare and technology sectors with offices in ten different Asian countries: China, India, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand, UAE, and Vietnam.
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