PETALING JAYA: Malaysia’s manufacturing sector is poised for a cautious recovery in 2025 as global trade dynamics and geopolitical shifts influence market trends.
While Malaysia’s manufacturing sector faces external risks such as geopolitical tensions and fluctuating commodity prices, experts agree that domestic resilience, supportive policies, and technological advancements in artificial intelligence (AI) and semiconductors will provide a solid foundation for growth.
Berjaya Mutual Bhd chief investment officer Datuk Dr Nazri Khan said Malaysia’s role as Asean Chair in 2025 would enhance its manufacturing exports and trade competitiveness.
“Regional trade agreements will allow Malaysia to shape policies, increase total trade, and boost competitiveness, particularly in manufactured goods. However, the global trade landscape is becoming increasingly complex,” Nazri told SunBiz.
He projects global semiconductor growth to be between 10% and 15% in 2025.
Supporting this optimism, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid highlighted a projected 4.7% growth rate for Malaysia’s manufacturing sector in 2025, supported by balanced contributions from export-oriented and domestic-oriented activities.
“Sectors like electrical and electronics, particularly semiconductors, are expected to benefit from AI-driven demand for high-powered microchips,” he said.
Despite external risks from geopolitical tensions and US policy shifts, he noted that Malaysia’s domestic resilience remains a strong pillar for growth. “Policies such as the National Energy Transition Roadmap, National Semiconductor Strategy and the 13th Malaysia Plan are expected to bolster the manufacturing ecosystem,“ he remarked.
Elaborating on AI-driven demand, the Federation of Malaysian Manufacturers president Tan Sri Soh Thian Lai underscored the rise of AI and the surging demand for semiconductors as key drivers to drive significant growth in manufacturing industries, particularly in export-oriented sectors within developing economies.
“This anticipated boom will not only reshape global supply chains but also bolster opportunities in logistics and advanced manufacturing, positioning semiconductor production as a critical growth engine in the year ahead,” he said.
Touching on rubber gloves, Malaysian Rubber Glove Manufacturers Association (Margma) president Oon Kim Hung said the industry is emerging from a challenging period marked by overstocking and plummeting average selling prices (ASP).
“However, the oversupply situation is easing, with ASP showing signs of improvement. Malaysian exports stand to benefit from the US tariff on Chinese goods, though competition from China remains intense. The sector’s direction will also hinge on geopolitical developments in the Middle East and the US economic policies under the Trump administration,” he said.
Oon predicts the demand for rubber gloves will pick up by late February 2025 as US orders gain momentum.
He noted, however that cost pressures, will remain a concern for manufacturers in 2025, driven by fluctuating raw material prices influenced by the recovery of China’s economy and the delayed implementation of the EU Deforestation Regulation (EUDR).
“While the EUDR delay offers temporary relief, its eventual enforcement could push demand for sustainable rubber and impact material costs,” he said.
Oon said Malaysian manufacturers are well-prepared to manage such challenges, barring unexpected spikes in raw material prices. “The government’s incentives for digital transformation and green technologies are also critical to fostering industry growth, provided policies are implemented predictably and with adequate consultation with stakeholders.”
He said labour shortages continue to pose challenges despite the rubber glove industry achieving high levels of automation, with 85% of production lines now automated. “Manufacturers have reduced workforce needs drastically, from 9.7 workers per million gloves in 2008 to just 2.0 workers now.”
The industry’s investments in robotics and AI to optimise production processes further, ensuring resilience in the face of workforce constraints, Oon said.
Malaysia University of Science and Technology Prof Emeritus Dr Barjoyai Bardai highlighted the implications of Indonesia joining the BRICS group as a full member, which could divert focus from frameworks such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.
“Malaysia must balance its strategies between these global trends while maintaining its leadership in Asean. This dual focus poses a significant challenge in shaping regional trade policies and retaining competitiveness in manufacturing,“ Barjoyai said.
