Can the AE&E (advanced electrical and electronics) sector fulfil the government’s expectations as a key driver in the JS-SEZ?
With its proximity to Singapore’s innovation ecosystem, Johor is well-positioned to attract multinational corporations (MNCs) seeking to establish advanced manufacturing and R&D hubs in South-East Asia.
The government’s focus on high-value industries aligns with AE&E’s strengths, particularly in fostering regional industrial linkages and accelerating Malaysia’s shift up the value chain. However, while the sector’s growth trajectory is promising, its success will depend on overcoming key structural and operational challenges.
Tan Sri Soh Thian Lai PresidentFederation of Malaysian Manufacturers
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What key obstacles prevent AE&E from meeting its full potential?
The AE&E sector requires a highly skilled workforce with expertise in semiconductor fabrication, precision engineering, and artificial intelligence (AI)-driven automation. Competition for talent remains intense, particularly with regional players such as Singapore, South Korea, and Taiwan offering attractive opportunities for high-skilled professionals.
Also, while Johor has an established E&E ecosystem, AE&E demands more advanced infrastructure, including semiconductor foundries, high-tech research labs and precision manufacturing facilities. The lack of integrated supply chain networks could hinder the sector’s efficiency.
AE&E also thrives on continuous innovation and intellectual property development. Malaysia’s R&D expenditure as a percentage of GDP remains low compared with regional competitors, limiting the sector’s ability to develop homegrown technology solutions.
While Malaysia offers various incentives for high-tech industries, AE&E firms may require more targeted and customised support, including long-term tax incentives, streamlined approvals for high-tech projects, and closer alignment with Singapore’s innovation strategies.
AE&E businesses require seamless cross-border movement of raw materials, components, and talent. Delays in customs clearance, regulatory bottlenecks, or mismatches in standards between Malaysia and Singapore could pose barriers to growth.
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What needs to be done to help AE&E become a true driver of growth in the JS-SEZ?
Strengthen the talent pipeline: Establish industry-driven training programmes in collaboration with universities, technical institutes and MNCs to upskill local talent in semiconductor manufacturing, precision engineering and AI-driven automation.
Enhance R&D and innovation capabilities: Increase public and private sector investment in R&D, particularly in semiconductor design, advanced materials and high-tech manufacturing. Incentivise firms to establish regional R&D centres in Johor.
Build a resilient supply chain: Develop an integrated AE&E supply chain by attracting global semiconductor fabrication, precision engineering, and materials science players. Strengthening logistics infrastructure will be critical in optimising efficiency.
Deepen Malaysia-Singapore collaboration: Leverage Singapore’s advanced manufacturing ecosystem to create a seamless industrial corridor.
Refine investment incentives and regulatory frameworks: Offer tailored investment incentives for AE&E firms, including tax breaks, grants and expedited approval processes for high-tech projects. Align regulatory standards with Singapore to facilitate smoother trade and technology exchanges.
