Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : PUTRA WORLD TRADE CENTRE,
KUALA LUMPUR
Tarikh/Date : 21/03/96
Tajuk/Title : THE SONY CORPORATION CONVENTION
It gives me great pleasure to be here this
morning to officiate this first Sony Corporation
Convention. I would like to thank Sony Corporation
for inviting me here today.
2. I have been told that one of the objectives of
this two-day convention is to increase Sony's local
procurement of parts and raw materials. It is
heartening to note that this procurement exercise is
intended not only for its operations in Malaysia but
also for its manufacturing facilities worldwide.
3. The Malaysian Government certainly welcomes
this move as it will help us reduce the deficit in
the balance of payment, particularly with Japan. Of
course production of these parts in Malaysia will
help reduce cost and render your products more
competitive. There is no reason why it pays to
manufacture the final products in Malaysia but it
does not pay to produce the components of these
products in Malaysia. If the volume is inadequate
and I believe this is not the case, the components
can actually be exported. After all microchips are
components and Malaysia produces the best and the
cheapest for the world market. Based on Malaysian
consumption alone, there would not have been any
microchips production in this country.
4. The electronics industry in Malaysia has come a
long way since the 1970's when large multinational
corporations flooded our shores in search of low
cost labour. Malaysia was then the natural choice,
given its abundant and easily trainable labour
force. Despite the belief among certain quarters at
the time that many of these large corporations would
soon leave, they have not done so. Instead they
went on to establish multiple operations in the
country and upgraded the level of sophistication in
manufacturing techniques. Malaysian workers have
risen to the challenge and have coped with the
necessary new skills. Only those who continue to
rely on low-grade labour are facing problems of
getting workers.
5. The Sony Corporation is one example of a
company which has expanded and diversified its
operations to a significant extent over the years.
Starting with an initial capital investment of about
RM2 million, the Sony Group of Companies currently
have investments totalling more than RM125 million
in the Malaysian manufacturing sector. This is
testimony to the confidence they have in Malaysia as
a profitable manufacturing base.
6. From simple assembly-type operations in the
early days, the Malaysian electronics industry is
fast becoming an increasingly sophisticated
industry, producing more value-added products
largely and more importantly, for the export market.
As a result, Malaysia is currently among the largest
manufacturers and exporters of electronic products
in the world. The importance of this sector to the
economy is reflected in the fact that the electronic
products industry is among the largest foreign
exchange earners in the manufacturing sector. Total
export earnings of electronic products for 1994 and
the first nine months of 1995 amounted to RM66.4
billion and RM61.1 billion respectively.
7. In 1995, the Ministry of International Trade
and Industry approved the establishment of some 174
electronic projects in the manufacturing sector.
Total proposed capital investment from these
projects amounted to approximately RM3.1 billion.
Of this total, RM943.5 million represented
investment in the electronic components sub-sector,
RM202.8 million represented investment in the
consumer electronics sub-sector while the
remaining RM1.94 billion represented investment in
the industrial electronics sub-sector.
8. The electronics industry in Malaysia produces a
diverse range of products. Semiconductor devices
form the largest share of the products manufactured.
Among the semiconductor devices produced are linear
and digital integrated circuits, micro-processors,
optoelectronics, discrete devices, hybrids etc.
Other electronic devices produced are capacitors,
relays, switches, quartz crystals/oscillators, audio
and video cassette mechanisms, etc. The consumer
and industrial electronic products manufactured
include TV receivers, audio products, mobile radios,
paging systems, satellite receivers, personal
computers, disk drives, monitors, keyboards and
printers.
9. Despite the fact that Malaysia is a major
producer of electronic products, the industry is
still very much dependent on imported inputs.
Accordingly, serious efforts need to be undertaken
by companies in this industry to produce or source
these inputs locally. In this context, Sony's
effort to increase the local sourcing of their parts
and components is commendable. Such conscious
efforts will certainly help to increase the local
contents in the finished products and also spur the
development of Malaysian Small and Medium Industries
(SMIs).
10. The Government has established the Vendor
Development Programme (VDP) to enable Malaysian SMIs
to become manufacturers and suppliers of industrial
components, machinery and equipment used by large
scale industries and multinational corporations.
The Government has in 1992, introduced the
Electrical and Electronics Components Scheme in the
consumer electronics sub-sector under this Vendor
Development Programme. At present there are 38
anchor companies under the Electrical and
Electronics Components Scheme, including Sony.
These schemes have been successful judging from the
increasing number of SMI vendors which have secured
orders from the anchor companies. This proves that
with the right encouragement and guidance, Malaysian
SMIs can develop into reliable and quality vendors.
I have been told that currently the Sony group in
Malaysia has some 15 SMI suppliers under them and
has plans to develop more SMI suppliers in the
future. Such commitment is certainly worth
emulating by other companies in the industry.
11. The success of the Malaysian electronics
industry relies heavily on its research and
development (R&D) activities. To date, a number of
MNCs have located their R&D activities within their
Malaysian operations but more needs to be done. To
encourage more R&D activities to be undertaken
locally, the Government offers a set of attractive
fiscal incentives. It is our hope that more
manufacturers in the industry will avail themselves
of these incentives in order to enhance their
capabilities in R&D. This capability will enable
them to be in the forefront of product and process
innovation, capable of producing original parts and
supplying intermediate and capital goods for both
domestic use and export.
12. In this context, I am glad to note that Sony
Corporation is already carrying out R&D activities
at their three R&D facilities in the country to
cater for the growing demand of sophisticated
consumers. It is hoped that Sony Corporation will
continue to invest in its R&D operations in Malaysia
and develop a core of well-trained Malaysians in the
area of high technology, R&D and management.
13. The Malaysian electronics industry is well
poised to face the challenges of the future. While
the domestic environment continues to be favourable
for expansion, external factors demand ever-
increasing competitiveness both in quality and in
price. This can be met by greater sophistication in
production techniques and maximisation of Malaysian
worker inputs. Given proper training Malaysian
workers can adapt easily to the supervision and
maintenance of automation in production and
robotics.
14. I would like to congratulate Sony Corporation
for their efforts in organising this convention as
this will help create more linkages with local
suppliers and enhance local contents in the
electronics industry. I hope that Malaysian
companies will seize this opportunity to take
advantage of the business potentials available and
to participate actively in the industry. I would
also like to urge other electronics MNCs operating
in Malaysia to undertake greater integration of
their activities in the Malaysian industrial scene.
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