Malaysia needs to bridge the digital divide to strengthen its position in GVC
KUALA LUMPUR: Malaysia needs to build more digital infrastructure and bridge the digital divide, focus on capacity building and best practices, develop skilled workers and ensure fair participation in the digital trade zone to strengthen its position in the global value chain (GVC).
The ASEAN-Japan Center (AJC) has issued Paper 6 for the “Global Value Chain in ASEAN” series examining Malaysia, finding that national policies to improve the value chain have led to less dependence on foreign inputs and more use of Malaysian products in exports to other countries, mostly for parts and components of electrical and electronic equipment.
“This will enable small and medium businesses to thrive and contribute to GVC and the regional value chain,” he said in a statement.
He said value -added combined in other countries’ exports increased to 29 per cent in 2019 from 18 per cent in 1995, a positive indication that Malaysia had gradually shifted from low value -added activities to higher value -added functions.
Malaysia’s involvement in GVC has increased its overall exports and production and the study shows that before 1995, Malaysia was more specialized in final assembly or final production stage close to the intermediate stage of GVC and thus tended to produce low added value.
Malaysia has become an important regional and global contributor of electrical and electronic components and subsystems as well as a provider of business services by leveraging on its domestic inputs and capacity.
“The share of foreign value added in exports has declined to 36 per cent in 2019 from 39 per cent in 1990.
“ASEAN, China, Japan and the United States are trade and investment partners that contribute significantly to Malaysia’s foreign value added in exports,” he said.