10th productivity report

Transcription

10TH PRODUCTIVITY REPORT
NATIONAL PRODUCTIVITY CORPORATION
All rights reserved
No part of this publication may be reproduced, stored in a retrieval system
or transmitted, in any form or any means, electronics, mechanical, photocopying,
recording or otherwise, without the prior permission of the
National Productivity Corporation
June 2003
For further technical information refer to:
Director General
(Perbadanan Produktiviti Negara)
P.O. Box 64, Jalan Sultan
46904 Petaling Jaya, Malaysia.
Tel: 03-79557266, 79578068
Fax: 03-79540795
http//www.npc.org.my
Price: RM35.00
Designed by SG Design, No. 61C, Jalan SG 3/10, Taman Sri Gombak, 68100 Batu Caves, Selangor Darul Ehsan. Tel: 03-61861882
Statutory Requirements
In accordance with Section 7 of the National Productivity Council (Incorporation) (Amendment) Act 1991, National
Productivity Corporation hereby publishes and submit to the Minister of International Trade and Industry the status of
productivity in Malaysia.
TAN SRI DATO’ AZMAN HASHIM
Chairman
Board of Directors
MINISTER OF INTERNATIONAL TRADE AND
INDUSTRY MALAYSIA
FOREWORD
The Malaysian economy grew stronger in 2002 attributed to improvement in consumer spending, continued recovery in
the investment activity and the expansion in public sector expenditure. With this positive development, there was marked
improvement in capacity utilisation in industries. Productivity grew by 2.5% supporting a GDP growth of 4.2%.
Internationally, Malaysia’s productivity growth was relatively higher than that of several major countries of the
organisation for Economic Cooperation and Development (OECD) as well as selected Asian countries.
As the economy becomes more competitive, it is necessary to improve the efficiency in the utilisation and management
of productive resources. The effective utilisation of productive resources would ensure the continuous growth of Total
Factor Productivity (TFP) and its contribution to the economic growth. At the micro levels, industries will have to build
capabilities to compete with foreign competitors in the domestic market and enhance their export competitiveness.
Productivity improvement is central to economic growth and competitiveness. Efforts are required to upgrade skills,
adoption of better management systems, upgrading of R&D and S&T as well as producing high quality and customised
goods meeting internationally recognised quality standards.
The government will continue to assume the pivotal role in providing and creating the required infrastructure and
conducive environment to provide impetus for higher growth. This Productivity Report 2002, will be useful to decision
makers both in the public and private sectors, investors, academicians and the business community at large. It provides
major productivity indicators, analysis of current productivity issues; thus serving as useful reference materials for
strategy planning and formation.
DATO’ SERI RAFIDAH AZIZ
Minister of International Trade and Industry
Malaysia
CHAIRMAN’S STATEMENT
The National Productivity Corporation (NPC) is entrusted with the responsibility of enhancing productivity and quality of
the country towards achieving higher national economic growth. NPC publishes the Productivity Report on an annual
basis in accordance with the requirements of the NPC (Incorporation) (Amendment) Act 1991. The Productivity Report
2002 is the tenth annual report in the series published.
The Report provides an in-depth analysis of Malaysia’s productivity and economic performance at the national level and
compares it internationally with selected OECD and Asian countries as well as provides measures of total factor
productivity (TFP), sources of TFP growth. It also evaluates the performance of the manufacturing, services and
agriculture sectors, examines the productivity and competitiveness of small and medium industries and recommends
strategies for enhancing its competitiveness through productivity.
Current productivity and quality related issues such as Total Factor Productivity and its determinants, benchmarking and
best practices, utilisation of IT, multiskilling, knowledge workforce, logistics system, productivity linked wage system,
collective agreement, quality control circles, information communication technology sector and public sector productivity
performance are also discussed. The Report provides a comprehensive and authoritative reference to all concerned with
productivity and quality enhancement.
In 2002, Malaysia’s real gross domestic product (GDP) grew by 4.2% compared with 0.4% in the preceding year. In line
with the better economic performance, Malaysia’s productivity rose by a faster 2.5% last year from a marginal 0.3% in
2001. The higher capacity utilisation and improved operational and cost efficiency also contributed to the better
productivity performance in 2002. Generally, all the major sectors of the economy had shown increased productivity
primarily manufacturing, construction and services. Comparatively, Malaysia’s productivity growth also exceeded several
of the major industralised nations such as Japan, Germany, the United Kingdom, France, Taiwan and Hong Kong.
While Malaysia is facing external economic and political uncertainties, the firm commitment of the Government to sustain
economic growth would help maintain productivity performance of the country in 2003. In this regard, NPC would also
intensify efforts to ensure the enhancement of productivity and competitiveness of the nation.
I would like to mention that NPC’s progress is the result of the close cooperation between the private and public sectors.
It also reflects the full dedication and commitment of all Board members, the management team and staff of NPC and also
the NPC Consultative Panels. The various government ministries and agencies, particularly the Ministry of International
Trade and Industry, have also contributed by providing continued support, guidance and assistance. I would like to
express my sincere gratitude and appreciation to all the respective parties.
Y BHG TAN SRI DATO’ AZMAN HASHIM
Chairman
The National Productivity Corporation (NPC) was established to assume an important role
in the enhancement of productivity and quality of the country towards achieving a higher
national economic growth.
To realise the above, NPC has formulated a strategic operation based on
the following vision, mission and objectives.
VISION
To be a world-class productivity and quality institution.
MISSION
To contribute significantly towards the productivity and quality enhancement
of the nation for balanced economic growth.
OBJECTIVES
To provide input in the area of productivity and quality for policy formulation and planning.
To enhance organisational and human resources development towards culture of excellence.
To lead the productivity and quality movement.
STRATEGIES
Research in strategic P&Q areas towards enhancing competitiveness.
Promoting human resource development in building knowledge-based society.
Promoting organisational excellence and best practices to enhance productivity and competitiveness.
Providing comprehensive productivity data and information.
Promoting the application of ICT in industries for P&Q enhancement.
Networking with other P&Q institutions locally and internationally.
CONTENTS
●
FOREWARD
●
CHAIRMAN’S STATEMENT (Belum ada)
●
Vision, Mission, Objectives And Strategies
●
REPORT HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i
●
CHAPTER 1
MALAYSIA’S PRODUCTIVITY PERFORMANCE
Trends in Productivity and Economic Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Productivity Performance of Selected Economic Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Productivity Outlook for 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
●
CHAPTER 2
INTERNATIONAL PRODUCTIVITY COMPARISON
Relative Productivity Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Sectoral Comparison Among Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Productivity Growth in the Manufacturing Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Productivity Growth in the Services Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
●
CHAPTER 3
TOTAL FACTOR PRODUCTIVITY
Sources of Total Factor Productivity Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Box 1: Total Factor Productivity and Its Determinants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
●
CHAPTER 4
PRODUCTIVITY PERFORMANCE OF THE MANUFACTURING SECTOR
Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Added Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Productivity Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Total Factor Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Box 2: Knowledge Workforce For Higher Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
CONTENTS
●
CHAPTER 5
PRODUCTIVITY PERFORMANCE OF THE SELECTED MANUFACTURING SUB-SECTORS
Electrical and Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Food Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Textiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Footwear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Wearing Apparel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Transport Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Fabricated Metal Product (Except Machinery & Equipment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
Machinery (Except Electrical machinery Product) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
Rubber Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Industrial Chemical and Other Chemical Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
Wood and Wood Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Furniture and Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Iron and Steel Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Ceramic Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
Plastic Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Box 3: Innovative Capability: A New Challenge For Higher Productivity . . . . . . . . . . . . . . . . . . . . . . . . .72
Box 4: Utilisation of IT/AMT in the Electrical & Electronic Sub-Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Box 5: Productivity Performance of the Construction Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
●
CHAPTER 6
PRODUCTIVITY PERFORMANCE OF THE SERVICES SECTOR
Performance of the Services Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Productivity Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Banking Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90
Performance of Malaysian Port . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94
Box 6: Productivity and Quality Improvement Through Multi-skilling . . . . . . . . . . . . . . . . . . . . . . . . . . . .102
Box 7: Efficiency Of Logistics System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
Box 8: Benchmarking For Private Hospitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
●
CHAPTER 7
PRODUCTIVITY PERFORMANCE OF THE AGRICULTURE SECTOR
Productivity Trends of The Agriculture Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .117
Issues in The Agriculture Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120
Outlook For 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121
CONTENTS
●
CHAPTER 8
PRODUCTIVITY PERFORMANCE OF THE SMALL AND MEDIUM SCALE INDUSTRY IN THE
MANUFACTURING SECTOR
Productivity Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125
●
CHAPTER 9
STRATEGIES TO ENHANCE COMPETITIVENESS THROUGH PRODUCTIVITY AND QUALITY . . . . . . . . . . . . .131
Box 9:
Box 10:
Box 11:
Box 12:
Box 13:
Box 14:
Box 15:
●
Productivity-Linked Wage System in Collective Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . .135
Productivity-Linked Wage Systems For Long Term Competitiveness . . . . . . . . . . . . . . . . . . . . .139
Improving Performance Through Quality Control Circles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .141
Quality Management Excellant Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .146
National Productivity Corporation Productivity Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150
Enhancing Public Sector Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152
The Information and Communication Technology Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157
Appendices
Appendix A:
Appendix B:
Appendix C:
Appendix D:
Appendix E:
Appendix F:
Appendix G:
Share of GDP and employment by Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .165
The Productivity Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166
Deriving The Source of Long-Term economic and Productivity Growth . . . . . . . . . . . . . . . . . .168
Methodology for Computing the Contribution of a Sectors’ Productivity Growth . . . . . . . . . . .171
International Comparison of Productivity 1995 – 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .172
Terminologies and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .173
The Contribution by the Manufacturing Sub- sectors
Total Output, Added Value, Number of Employees,
Labour Cost and Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .178
●
NPC BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .179
●
NPC CONSULTATIVE PANELS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .180
●
NPC MANAGEMENT TEAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .184
●
NPC REGIONAL OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185
●
INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .189
REPORT HIGHLIGHTS
Malaysia’s Productivity Performance, 2002
Productivity Performance
In 2002, Malaysia’s productivity grew by 2.5% to
RM24,013 (2001: RM23,437) attributed to higher
capacity utilisation in industries arising from an
improvement in both domestic and external demand.
This was supported by strong consumer spending,
continued recovery in investment activities, expansion in
public sector expenditure as well as favourable export
performance.
of the Organisation for Economic Cooperation and
Development (OECD) namely the United States (2.3%),
Canada (1.5%), the United Kingdom (1.4%), France
(1.2%), Germany (0.9%), Japan (0.8%) and Italy (0.4%).
Among the East Asian countries, Malaysia’s productivity
growth was higher than Singapore (1.9%), Hong Kong
(0.3%) and Thailand (-0.1%). However, South Korea and
Taiwan recorded higher productivity growth of 3.6% and
3.2% respectively.
In terms of contribution to GDP growth of 4.2%,
productivity and employment contributed 58.0% and
40.9% respectively. The economic growth was broadbased with all sectors recording productivity growth.
Among the sectors that recorded relatively higher
productivity were Manufacturing (3.3%), Construction
(2.5%), Electricity, Gas and Water (2.9%), Finance (2.8%)
and Government Services (3.4%).
In 2002, Malaysia’s productivity growth of 2.5% exceeded
that of Italy (–1.4%), Japan (0.7%), Germany (0.9%), the
United Kingdom (1.0%), France (1.1%) and Canada,
(1.4%). However the United States recorded a higher
growth of 2.8%.
Total Factor Productivity
Productivity – driven growth strategies through higher
TFP will enable Malaysia to remain competitive. For the
period 1991 – 2002, TFP grew by 1.4% resulting in GDP
growth of 6.1%. The contribution of TFP to GDP growth
was at 23.7% while capital and labour contributed 48.3%
and 28.1% respectively. The main sources of TFP growth
for the period were Education and Training, 37.5%,
Demand Intensity 35.7%, Capital Structure 15.3% and
Technical Progress, 10.0%. Among the sources of TFP
growth, Technical Progress will be the impetus for future
growth in view of increasing competitiveness and ICT
application.
International Productivity Performance
During the period of 1997 – 2002 Malaysia’s Productivity
Growth of 2.8% surpassed that of several major countries
Among the East Asian countries, Malaysia’s productivity
growth exceeded that of Taiwan (2.3%) and Hong Kong
(-5.5%). Nevertheless, Thailand, Singapore and South
Korea achieved higher growth of 4.5%, 4.2% and 3.5%
respectively.
Sectoral Productivity Performance
The manufacturing sector registered a productivity
growth of 3.3% and output growth of 5.2%.
Improvement in capacity utilisation arising from increase
in demand contributed to the favourable performance.
Among the industries that registered relatively higher
productivity growth were transport equipment, 13.8%,
plastic, 2.6%, iron and steel, 17.7% and non-metallic
mineral products, 31.5%.
The Construction Sector registered a productivity growth
of 2.5% and output growth of 3.8%. These performances
were attributed to the strong demand from both housing
and higher Government expenditure on public projects.
NPC Productivity Report 2002 ■ Page i
REPORT HIGHLIGHTS
The Agriculture Sector registered a productivity and
output growth of 1.1%. The relatively lower achievement
was due to contraction in output especially oil palm.
Being the main revenue earner within the agriculture
sector, oil palm registered a 3.4% drop in output.
The Finance Sector registered a productivity growth of
2.8% and output growth of 8.2%. The increase in
business activities and a more efficient banking system
through the implementation of ICT had contributed to the
sector’s growth.
Performance of Small and Medium Industries
The SMIs contribution to the manufacturing sector was at
28.5% of total manufacturing output, 26.5% of
manufacturing added value and 30.7% of total
manufacturing employment. In 2002, the Productivity of
SMIs increased by 2.7%. The high productivity growth
was recorded by manufactures of medical, precision and
optical instrument, furniture and fixtures, rubber and
plastic products.
Productivity and Quality Strategies to Meet Challenges
To increase productivity, greater efforts are needed to
upgrade skills, adopt better management and
organisational systems. To enhance competitiveness,
industries are required to upgrade R&D and S&T as well
as to acquire internationally recognised quality standards.
These initiatives need to be supported by a creative and
innovative workforce.
The culture of excellence and the quest for continuous
improvements need to be intensively promoted and
targeted at individuals as well as business entities.
NPC Productivity Report 2002 ■ Page ii
PRODUCTIVITY REPORT 2002
Chapter 1
Chapter 1
TREND IN PRODUCTIVITY AND ECONOMIC GROWTH
The Malaysian economy grew stronger in 2002, attributed
to strong domestic demand and favourable export
performance. Growth in domestic demand was driven by
strong consumer spending, continued recovery in
investment activity and the expansion in public sector
expenditure.
technologies more efficiently. To date about 3.5 million
employees had been trained under the Human Resource
Development Fund (HRDF) with disbursements totalling
over RM1,076 Million (Table 1.1). In 2002, 420,436
employees had been trained under HRDF schemes where
50.7% of them were trained in the area of management,
28.2% in the areas of productivity and quality, 12.5% in
the area of information technology (IT) and 8.6% in
In 2002, productivity increased to RM24,013 (2001:
RM23,437), posting a growth of 2.5% (2001: 0.3%)
(Figure 1.1) while GDP grew by 4.2%. This positive
development was achieved through higher capacity
utilisation in industries arising from an improvement in
both external and domestic demand. It is important for
the economy to ensure that this positive development is
sustained. One of the areas that needs to be emphasised
is enhancing the contributions of Total Factor Productivity
(TFP) to the economic growth. Enhancing TFP growth and
embarking on productivity and quality driven growth
strategies include efficient utilisation of productive
resources and efficient production systems would enable
the economy to be more competitive. This in turn would
facilitate the transition from a production-based economy
to a knowledge-based economy.
Total Factor Productivity is important in an era of
knowledge–based economy as it measures endogenous
technical change and others characteristics of a
knowledge-based economy. Factors such as, human
capital, innovation and investment in technology &
Information and Communication Technology (ICT) are the
cutting edge in enhancing the economy’s
competitiveness.
technical areas.
In 2002, the implementation of fiscal and expansionary
monetary policies have resulted in an overall
improvement in economic performance. Output grew by
4.2% (2001: 0.4%) and employment by 1.8 % (2001:
0.1%). The overall economic growth was contributed by
productivity at 58.0% and employment at 41.0% (Figures
1.2 & 1.3).
PRODUCTIVITY PERFORMANCE OF SELECTED
ECONOMIC SECTORS
This section highlights the performance of selected
economic
strategy will hinge on the availability of a quality
workforce. Companies need to intensify training activities
to improve the skills level and to acquire new skills which
would enable workers to operate new and emerging
namely,
the
Manufacturing,
Construction, Agriculture, Electricity, Finance, Transport
and Government Sector.
The performance of these
sectors will be analysed in terms of
productivity,
employment and output growth.
In 2002, there was general improvement in capacity
utilisation in industries arising from improvement in both
external and domestic demand for manufactured
products. In the export sector, the demand for Malaysia’s
manufactured products had increased. This resulted in
productivity,
The success of enhancing TFP or productivity driven
sectors
employment
and
output
of
the
manufacturing sector to grow by 3.3% (2001: -3.42 %),
1.8% (2001: -2.1%) and 5.2% (2001: –5.5%) respectively
(Figure 1.5 and Table 1.2). The growth of productivity and
the contribution of the selected industries to the
manufacturing sector’s output are shown in Figure 1.4.
NPC Productivity Report 2002 ■ Page 1
Figure 1.1: Productivity Growth
Source:
National Productivity Corporation, Malaysia
Computed from:
- Economic Report, Ministry of Finance, Malaysia, various issues
- Economic Planning Unit, Malaysia
e = estimate
Figure 1.2: Growth of GDP, Employment, Productivity and Capital Investment
Source:
Computed from:
e = estimate
Figure 1.3: Contribution of Productivity and Employment to Economic Growth (2002e)
Source:
Computed from:
e = estimate
Table 1.1: Manpower Training
Levy
Contribution
(RM)
Disbursement
Approved
(RM)
No. of
Employees
Trained
1993-1997
501,411,315
449,054,233
1,690,747
1998
61,000,356
88,166,080
409,814
1999
82,718,934
78,823,907
247,785
2000
177,265,872
113,181,247
301,732
2001
193,825,456
158,514,671
394,638
2002
121,825,113
187,774,252
420,436
Total
1,138,047,046
1,075,514,390
3,465,152
Source: HRDC, Ministry of Human Resources, Malaysia
The Construction Sector faced labour shortages arising
from the repatriation of foreign workers. However, this
repatriation exercise had only minimal impact on the
overall performance of the sector. The sector had
benefited from strong demand for both housing and
higher government spending on public projects related to
health, education and rural development. The sector
registered a productivity growth of 2.5% (2001: 0.4%),
employment growth of 1.3% (2001: 1.6%), and output
growth of 3.8 % (2001: 2.0%) (Figure 1.5 and Table 1.2).
The Agriculture Sector registered a productivity growth of
1.1 % (2001: 2.3%), and an output growth of 1.1 %
(2001: 2.3%), while employment grew by 0.03 % (2001:
-0.18%)(Figure 1.5 and Table 1.2).
Productivity employment and output of the Electricity, Gas
and Water Sector grew by 2.9 % (2001: 2.5%), 4.3 %
(2001: 2.30%), and 7.2 % (2001: 4.8%) respectively
(Figure 1.5 and Table 1.2).
The Finance Sector registered a productivity growth of
2.8% (2001: 4.9%) and employment growth of 5.5%
(2001: 0.5%). The output of the sector grew by 8.2%
(2001: 5.5%) (Figure 1.5 and Table 1.2). Although the
productivity performance of the sector was lower as
compared to last year, the sector especially the banking
system, strengthened further in 2002 amid lower nonperforming loans ratio and higher core capital ratio. The
combinations of higher repayments, successful debt
restructuring by banking institutions and higher specific
provisions contributed to the improvement.
The Transport Sector registered a productivity,
employment and output growth of 1.3% (2001: 2.1%),
4.0% (2001: 2.5%), and 5.3% (2001: 4.6%) respectively
(Figure 1.5 and Table 1.2).
PRODUCTIVITY OUTLOOK FOR 2003
The economic growth in year 2002 is expected to
continue into year 2003. The continuation of fiscal
stimulus measures and the expansionary monetary
policies have positive impact on economic growth. At the
micro level, industries need to further enhance
productivity and quality improvement initiatives which
include wage increases which commensurate with higher
productivity gains, implementing effective cost
management, quality and environmental management
systems. In 2003, the economy is expected to achieve a
productivity growth of 2.2%.
Sectoral Productivity, Employment and Output
In 2003, the Manufacturing Sector is expected to continue
to move towards capital intensive and high technology
operations. In tandem with these, more emphasis will be
given to product quality, design, competitive pricing and
delivery system. However, the present world economic
scenario would lower the performance of the sector. The
Manufacturing sector is expected to register productivity
growth of 2.4%, employment growth of 3.10% and output
growth of 4.5%.
The on going implementation of fiscal stimulus package
would benefit the overall economy and improve the
domestic demand. This would have positive impact on the
Construction sector. The Construction Sector is expected
to register productivity growth of 0.4%, employment
growth of 1.6% and output growth of 1.9%.
The Transport Sector is expected to register a productivity
growth of 1.9%, employment growth of 2.7% and output
growth of 4.6%. Productivity of the Trade Sector is
expected to grow by 1.0%, employment by 2.2% and
output by 3.3%. For the finance sector a productivity
growth of 1.9%, employment growth of 3.5% and growth
in output of 5.3% is expected.
The Government Sector registered a productivity growth
of 3.4% (2001: 3.5%) employment growth of 1.0% (2001
: 1.5%) and output growth of 4.3% (2001 : 5.1%) (Figure
1.5 and Table 1.2).
Figure 1.4:
Manufacturing Sub-Sectors - Productivity Growth and Contribution
to Output (2002)e
Source:
Computed from:
e = estimate
Figure 1.5: Productivity Growth of Selected Sector 1998 - 2002e
Source:
Computed from:
e = estimate
Table 1.2: Growth of Productivity and Output by Sector (%)
Malaysia
Productivity
2001
2002e
0.29
2.46
Agriculture
Mining & Quarrying
Manufacturing
Construction
Electricity, Gas & Water
Transport
Commerce/Trade
Finance
Government Services
Other services
Productivity
2001
2002e
2.29
1.11
-0.38
1.90
-3.42
3.32
0.39
2.51
2.53
2.93
2.12
1.35
1.54
1.14
4.93
2.75
3.52
3.36
0.13
1.03
Source:
Computed from:
e = estimate
GDP
2002e
4.24
2001
0.40
Output
2001
2.11
0.14
-5.48
2.03
4.89
4.62
2.66
5.45
5.07
0.65
2002e
1.14
2.05
5.15
3.84
7.25
5.37
3.76
8.25
4.34
3.24
Chapter 2
Chapter 2
Productivity growth of Malaysia for the period 1997 2002 was 2.8%. This growth surpassed that of several
selected major countries of the Organisation for Economic
Co-operation and Development (OECD) namely, the
United States (2.3%), Canada (1.5%), the United
Kingdom (1.4%), France (1.2%), Germany (0.9%), Japan
(0.8%) and Italy (0.4%).
For the year 2002, Malaysia’s productivity growth of 2.5%
(2001: 0.3%) exceeded that of Italy, -1.4% (2001: -0.2%),
Japan, 0.7% (2001: 0.2%), Germany 0.9% (2001:
0.2%), the United Kingdom, 1.0% (2001: 1.2%), France,
1.1% (2001: 0.2%), and Canada, 1.4% (2001: 0.4%).
However, Malaysia’s productivity growth was lower than
the United States which recorded 2.8% growth (2001:
0.4%).
Figure 2.1: International Productivity Comparison
Productivity Growth, Malaysia and Selected OECD
Countries (2002e)
Productivity Index, Malaysia and
Selected OECD Countries (1997 = 100)
3.0
2.8
2.5
2.5
Percentage
2.0
1.4
1.5
1.1
1.0
1.0
0.9
0.7
0.5
-1.4
0.0
-0.5
-1.0
-1.5
sia
USA Malay
Productivity Index, Malaysia and
Selected East Asian Countries (1997 = 100)
y
man Japan Italy
UK
Ger
Percentage
Productivity Growth, Malaysia and Selected
East Asian Countries (2002e)
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
4.5
Computed by National Productivity Corporation, Malaysia
4.2
3.5
2.5
2.3
-5.5
d
ilan
Tha
Source:
ada rance
F
Can
re
apo
Sing
. of
Rep
ea
Kor
a
aysi
Mal
an
Taiw
ng
g Ko
Hon
In East Asia, for the period 1997-2002, Malaysia’s
productivity growth of 2.8% was better than Singapore
(1.9%), Hong Kong (0.3%) and Thailand (-0.1%).
However, the Republic of Korea and Taiwan registered
higher productivity growth for that period, recording an
increase of 3.6% and 3.2% respectively.
Figure 2.2. In 2002, the productivity level of Hong Kong
was 3.7 times higher than Malaysia, while Taiwan was 3.1
times higher. This indicates that, while a Malaysian
worker was able to generate US$1.00 of GDP, a Hong
Kong worker produced US$3.7, whilst a Taiwanese
generated US$3.1.
For the year 2002, the productivity growth of most of the
selected East Asian countries recorded an improvement
compared to the previous year. Malaysia’s productivity
growth of 2.5% (2001 :0.3%) exceeded that of Taiwan
2.3%, (2001: -0.8%) and Hong Kong -5.5% (2001:1.1%). However, Thailand, Singapore and the Republic of
Korea achieved higher growth of 4.5% (2001: 0.3%),
4.2% (2001: 0.3% ) and 3.5% (2001 : 1.6%) respectively.
(Figure 2.1).
The gap between Malaysia, Taiwan, the Republic of Korea
and Thailand remained relatively unchanged, while the
gap between Malaysia and Hong Kong narrowed in 2002.
Relative Productivity Levels
The productivity levels of selected East Asian countries
relative to Malaysia for 2002 are shown in Table 2.1 and
Sectoral Comparison Among Countries
Productivity in the Manufacturing Sector
In 2002, the productivity growth of the Manufacturing
sector in Malaysia increased by 3.3% (2001: -3.4%), as a
result of positive output and employment growth.
However, Singapore and Taiwan recorded higher growth
of 11.0% (2001: 0.2%) and 6.9% (2001: -5.1%)
respectively. Both Singapore and Taiwan registered
Figure 2.2: Relative Productivity Levels and Growth
Source:
Computed by National Productivity Corporation, Malaysia
Table 2.1: Relative Productivity, National Level
Country
Productivity Level (In 1995
constant prices US$)
2002
Malaysia
Singapore
Hong Kong
Taiwan
Rep. of Korea
Thailand
Indonesia
Relative
Productivity Level
e
e
2002
2001
1.0
4.5
3.7
3.1
2.4
0.4
0.2
1.0
4.3
4.0
3.1
2.4
0.4
0.2
12,801
57,051
47,926
39,782
30,970
5,450
2,482
Source: Computed by National Productivity Corporation, Malaysia
Table 2.2: Productivity Growth in the Manufacturing Sector (%)
Country
Manufacturing Sector
2002
e
2001
Malaysia
3.3
-3.4
Singapore
11.0
0.2
Taiwan
6.9
-5.1
positive output growth amidst a lower growth (in
Singapore’s case, a decline) in employment in the sector,
compared to Malaysia (Table 2.2).
performing better than Singapore at -1.5% (2001: -6.0%).
For the Transport sector, productivity growth in Malaysia
was 1.4% (2000: 2.1%), lower than Singapore, at 4.9%
(2001 : -11.6%). Malaysia also experienced lower growth
than Singapore in the Trade Sector, recording growth of
1.1% (2001 : 1.5%), compared to Singapore’s 4.0%
(2001 : -9.6%) (Table 2.3).
Productivity in the Services Sector
In 2002, the productivity growth of the Finance sector for
Malaysia registered 2.7% growth (2001: 4.9%),
Table 2.3: Productivity Growth in the Services Sector (%)
Country
Finance
Sector
e
Transport
Sector
e
Trade
Sector
e
2002
2001
2002
2001
2002
Malaysia
2.7
4.9
1.4
2.1
1.1
1.5
Singapore
-1.5
-6.0
4.9
-11.6
4.0
-9.6
2001
Chapter 3
Chapter 3
Since the Seventh Malaysia Plan (1996-2000), the
economic development strategy has shifted from one
that was input-driven to one that is productivity-driven
through the enhancement of Total Factor Productivity
(TFP). This strategy is also emphasised in both the Third
Outline Perspective Plan (OPP3) (2001-2010) and the
Eighth Malaysia Plan (2001-2005). Emphasis of growth
during the periods will depend on raising TFP and to a
lesser extent on labour and capital inputs.
For the period 1992-2002, the economy registered a TFP
growth of 1.4% and a GDP growth of 6.1%, while capital
and labour registered a growth of 2.9% and 1.7%
respectively (Table 3.1). During the period, TFP
contributed 23.6% to GDP growth while capital and labour
contributed 48.3% and 28.1% respectively. Such
relatively higher contribution of capital to GDP growth
indicated that growth was mainly input driven. The high
contribution of capital was attributed to the rapid growth
of investment particularly, in large infrastructure projects
during the 1991-1997 period. For the period 1992-1996,
the economy recorded a TFP growth of 2.8% while GDP,
capital and labour grew by 9.6%, 4.1% and 2.6%
respectively. During this period, the contribution of TFP to
GDP was 29.3% as compared to 43.2% from capital and
27.5% from labour.
For the 1997-2002 period, the growth of TFP, GDP, capital
and labour were at 0.3%, 3.2%, 1.9% and 0.9%
respectively (Table 3.1). The contribution of TFP to GDP
was at 9.7% as compared to 60.8% from capital and
29.5% from labour. The sharp fall in domestic demand
following the 1997 financial crisis and the softening of
world economic growth in 2001 lead to an overall decline
in TFP growth. Government initiatives during the Eighth
Malaysia Plan include encouraging higher private
investment in research and development (R&D),
increasing tertiary education enrolments, increasing the
number of skilled and knowledge-workers, improving
technology-related capacity and skills and encouraging
the usage of information and communications technology
(ICT) is expected to improve the contribution of TFP to the
economic growth. During the Eighth Malaysia Plan
covering the period of 2001 – 2005, TFP is targeted to
contribute 37.2% of the GDP growth while the
contributions of capital and labour are targeted at 41.3%
and 21.5% respectively.
Table 3.1: Contribution of Factors of Production
Period
Rate of Growth (%)
1992-2002
1992-1996
1997-2002
Source :
GDP
TFP
Capital
Labour
6.09
9.56
3.19
1.44
2.80
0.31
2.94
4.13
1.94
1.71
2.63
0.94
Computed from :
- Economic Report, Ministry of Finance, Malaysia
- Department of Statistics, Malaysia
Contribution to GDP Growth
(%)
TFP
Capital
Labour
23.64
29.29
9.72
48.28
43.20
60.81
28.08
27.51
29.47
Figure 3.1: Contribution of CI and TFP to Higher Productivity, 1992-2002
Higher Productivity
TFP
46.9%
CI
53.1%
Source:
Computed from:
In terms of contribution to higher productivity during the
period 1992-2002, TFP contributed 46.9% while capital
intensity contributed 53.1% (Figure 3.1). To enhance
competitiveness of the country and to further strengthen
the economic resilience, the contribution of TFP to higher
productivity has to be enhanced through human resource
development, productivity and quality enhancement,
higher technology utilisation and promoting culture of
excellence.
Sources of Total Factor Productivity Growth
The main contributors to the TFP growth (TFPG) comprise
capital structure, education and training, demand
intensity, economic restructuring and technical progress.
a)
Capital Structure reflects the continuous capital
investment in advanced machinery and equipment
which will improve production efficiency. For the
period 1992-2002, capital structure contributed
15.3% to TFPG.
b)
Education and Training of the workforce involved
upgrading of skills and knowledge. Higher skilled
workers can produce better quality products and
services which ultimately will increase TFPG. For
the 1992-2002 period, education and training
contributed 37.8% to TFPG.
c)
Demand Intensity measures the extent of demand
capacity of the economy. For the period 19922002, demand intensity contributed 35.6% to
TFPG.
d)
Economic Restructuring between sectors
measures efficiency in the allocation of resources
between sectors. For the 1992-2002 period, the
contribution of economic restructuring to TFPG
was 1.3%.
Table 3.2: Components of TFPG
1992-2002
TFPG
Capital Structure
Education and Training
Economic Restructuring
Demand Intensity
1.44
15.31
37.75
1.32
35.60
Technical Progress
10.02
Source:
e)
Computed from:
Technical Progress indicates the effective and
efficient utilisation of technology, innovation,
management and organisational effectiveness. For
the 1992-2002 period, technical progress
contributed 10.0% to TFPG.
In order to improve the contribution of TFP to a K-based
economy, it is imperative to analyze the factors that
contributed to the improvements in TFP. There are many
possible factors that might affect TFPG such as
investment in R&D, impact of foreign direct investment
(FDI) and domestic demand, share of export or import to
GDP, tertiary education enrolment and expenditure, and
usage of ICT.
Box 1
TOTAL FACTOR PRODUCTIVITY AND ITS DETERMINANTS
Total Factor Productivity measures the synergy and
efficiency of the utilisation of both capital and human
resources. It is also regarded as a measure of the degree
of technological advancement associated with economic
growth. Higher TFP growth indicates efficient utilisation
and management of resources, materials and inputs
necessary for the production of goods and services. TFP
also refers to the additional output generated through
enhancements in efficiency arising from advancements in
worker education, skills and expertise, acquisition of
efficient management techniques and know-how,
improvements in an organisation, gains from
specialisation, introduction of new technology and
innovation or upgrading of existing technology and
enhancement in information and communications
technology (ICT) as well as the shift towards higher added
value processes and industries. Thus, productivity yield
better returns if such quantitative increase in capital
intensity are simultaneously complemented by growth in
TFP.
Generally, higher productivity growth is associated with
growth in capital intensity (CI) and the growth in TFP.
Capital intensity measures the physical capital expansion
(fixed assets) allocated to each employee. This measure
indicates whether an enterprise adopts a capital-intensive
or labour-intensive policy. Higher CI provides the
advantage of technology, quality, volumes and speed to
increase productivity and hence generate greater output.
There exists a close relationship between changes in
productivity, CI and TFP (Figure B1.1). Productivity
growth is the sum of the TFP growth and weighted CI
growth. For a given productivity growth, the total
percentage contribution from TFP growth and CI growth
must add to 100. This explains why low growth in TFP has
to be complemented by high growth in CI and vice versa
in order to maintain a specific level of productivity growth.
Sources of Total Factor Productivity Growth
There are five major determinants of TFP growth (Figure
B1.2). They are :
(a)
Demand Intensity which indicates the extent of
productive capacity of the economy. A slow-down
in demand intensity would result in unused
capacity, lowering the utilisation of existing
machinery and equipment. Demand intensity is
reflected in sales performance.
(b)
Education and Training of the workforce which
aims to upgrade skills, and knowledge. With
higher level of skills, workers will be more efficient
and produce better quality products and services.
Investments in human resource development
reflects the emphasis given to education and
training .
(c)
Economic Restructuring which refers to the
movement of resources from less productive to
the more productive sectors of the economy.
Experience of the developed countries indicates
that resources in the more productive sectors of
the economy were utilised at the more efficient
level than resources in the less productive sectors.
(d)
Capital Structure which relates to the proportion
of investments in productive capital inputs .
Investment in machinery and equipment which
are productive capital inputs yields immediate
output as compared to infrastructure, plant and
buildings which have longer lag time.
(e)
Technical Progress which relates to the effective
and efficient utilisation of technology, innovation,
work attitudes and management and organisational
effectiveness. With high technological capabilities,
a motivated workforce and as effective
management, higher value-added products and
services will be produced at competitive costs.
TOTAL FACTOR PRODUCTIVITY AND ITS DETERMINANTS
Figure B1.1: Relationship Between Productivity, CI and TFP
HIGHER
PRODUCTIVITY
Higher CI
Higher TFP
Quality of
Workforce
Quality of Capital
and Systems
QUALITATIVE INPUTS
Figure B1.2: Sources of Technical Progress
WORKFORCE
WORKFORCE
Positive Quality Culture
High Team Spirits
Multi-Skilling
Better Communication
Good Health
Leadership Style
Best Management Practices
Information Technology
Easy Access to Information
Performance Measurement
High Quality Machinery and
Equipment Capabilities
Technology Utilisation
Innovation
Research and Development
CAPITAL
TECHNOLOGY
Chapter 4
Chapter 4
PRODUCTIVITY PERFORMANCE OF THE
MANUFACTURING SECTOR
Trend in Productivity, Employment and Output
In 2002, the economy achieved high growth buoyed by
strong domestic demand and the overall improvement in
the export market. The year witnessed the recovery of
spending on information and communication (ICT)
products, which brought about positive development to
the local electronic and related industries facilitating these
industries to operate at high capacity. In tandem with this
positive development, the manufacturing sector recorded
an increase in productivity by 3.3% (2001: -3.4%). Output
grew by 5.1% (2001: -5.5%) while employment improved
by 1.8% (2001: -2.1%) (Figure 4.1).
Figure 4.1:
The growth trends of Productivity, Labour Cost per
Employee and Unit Labour Cost are shown in Figure 4.2.
Overall, the manufacturing sector labour cost
competitiveness declined as Labour Cost per Employee
grew by 4.5%, which was higher than the productivity
growth of 3.3%. This led to an increase in Unit Labour
Cost by 0.7%.
Total Factor Productivity
For the period 1996-2001, the average Total Factor
Productivity (TFP) growth for the manufacturing sector
was at 5.2 % (Table 4.1). The TFP growth of selected
industries is shown in Table 4.1
Growth of Productivity, Output and Employment
for the Manufacturing Sector
Source:
Computed from:
- Economic Planning Unit
e = estimate
Figure 4.2:
Growth of Productivity, Labour Cost per Employee and
Unit Labour Cost for the Manufacturing Sector
Source:
Computed from:
- Economic Planning Unit
e = estimate
Table 4.1: TFP Growth
Industries
Overall Manufacturing
Electrical and electronic
Industrial chemical
Transport Equipment
Textile
Fabricated Metal
Non-metallic mineral products
Machinery
Plastics
Furniture
Paper and paper products
Beverage
Basic Metal
Wood
Food
Rubber
Source:
1996-2001 (%)
5.2
7.3
6.7
5.9
5.7
5.2
4.4
4.4
3.4
3.3
3.0
2.6
1.9
1.4
1.3
0.8
Table 4.2: Sources of TFP Growth, 1996 – 2001
Period
1996 - 2001 (%)
Quality of Labour
Demand Intensity
Capital Structure
Technical Progress
Source:
2.1
1.7
0.8
0.6
Figure 4.3: Productivity Indicators, 2001
Source:
Computed from:
- Annual Survey of Manufacturing Industries, Department of Statistics, Malaysia
e = estimate
e
Table 4.3: Added value per Employee Growth, 2001
e
Sub-sector
Electrical and Electronic
Office, Accounting and Computing Machinery
Electrical Motors, Generator and Transformer
Electricity Distribution and Control Apparatus
Insulated Wire and Cable
Accumulators, Primary Cells and Batteries
Electric Lamps and Lighting Equipment
Other Electrical Equipment
Electronics Valves and Tubes and Other Electronic Components
Television and Radio Transmitters and Telegraphy
Television and Radio Receivers, Sound or Video Recording or Reproducing Apparatus
Textiles
Rubber Products
Apparel
Wood and Wood Products
Furniture
Basic Chemical
Other chemicals
Plastic Products
Transport Equipment
Fabricated Metal
Machinery
Food & Beverages
Medical Appliances and Instruments and Appliances for Measuring,
Checking, Testing, Navigating precision
Paper and Paper Products
Glass and Glass Products
Tobacco
Non-metallic Mineral
Iron and Steel
Non-ferrous metal
%
-12.13
-1.42
-11.79
-8.12
-2.90
-12.01
-9.36
-8.85
-12.33
-11.78
-24.30
-9.45
-8.58
-10.87
-12.06
-5.54
-7.64
-3.42
-9.14
-4.50
-5.22
4.83
-0.20
Manufacturing
-7.06
Source:
Computed from Annual Survey of Manufacturing Industries, Department of Statistics
e = estimate
-5.33
-11.05
-18.12
7.04
8.13
-2.22
-16.91
Table 4.4: Sales Value per Employee Growth, 2002
Sub-sector
Electrical Machineries, Apparatus, Appliances & Supplies
Manufacture of Radio and TV
Semiconductors and other Electronic components
Cable and Wires
Textile
Rubber Products
Apparels
Furniture and Fixtures
Industrial Chemicals
Other Chemical Products
Plastic Products
Transport Equipment
Fabricated Metal
Machinery
Food Manufacture
Professional and Scientific Equipment
Tobacco Industries
Non-metallic Mineral Products
Iron and Steel
Non-ferrous Metal
Manufacturing
1
Growth (%)
6.45
-0.32
9.17
7.56
-6.29
9.80
-6.41
11.39
6.38
-1.75
-2.96
6.14
2.51
5.45
-9.87
3.65
12.40
-0.64
15.81
-0.30
0.76
15.29
-3.08
3.69
Source:
Computed from:
Monthly Manufacturing Industries, Department of Statistics, Malaysia
1 = (January to December 2002)
TFP also captures those qualitative factors, which give
more output for every unit of resource used. It constitutes
improvements in all resources namely, labour, capital and
intermediate inputs such as materials, energy and
services. Higher TFP growth indicates efficient utilisation
of these resources.
The sub-sectors that contributed relatively high in export
were affected by slowdown in major industrial countries
especially the downturn in global electronic cycle. Subsectors which experienced a decline in productivity were
Electrical and Electronics, 12.1%, Apparel, 10.9%,
Textiles, 9.5% and Rubber Products, 8.6%.
TFP growth is attributed to the quality of labour, market
intensity, capital structure and technical progress. For the
period of 1996 – 2001, the quality of labour grew by
2.1%, which accounted for 40.3% of TFP growth.
Investment in human resource to upgrade their skills has
attributed to such TFP growth.
The performance of the manufacturing sector for the year
2002 was based on Sales Value per Employee is a proxy
for productivity.
Demand intensity reflects the productive capacity of the
economy. For the period 1996 – 2001, demand intensity
grew by 1.7% and contributed 32.7% to TFP growth.
Improvements in both domestic and external demand
have resulted in higher output and higher capacity
utilisation.
The capital structure exhibits the productive capital
investment in advanced machinery and equipment that
enhance production efficiency. For the period 1996-2001,
capital structure grew by 0.8% and this contributed to
15.4% to TFP growth.
Technical progress indicates the effectiveness and
efficiency in the utilisation of technology, innovation and
management practices. For the period 1996 – 2001,
technical progress grew by 0.6% and contributed 11.6%
of TFP growth.
In 2001, the Manufacturing sector experienced
challenging market conditions due to weakening of
exports and lower domestic demand. Consequently, the
Added Value per Employee of the sector declined by 7.1%
(Table 4.3). This was attributed to lower added-value
creation and lower capacity utilisation as firms cut down
on production. This is indicated by a decline of 1.3% in
added value content and 0.4% in process efficiency.
However, among the sub-sectors that registered
productivity growths were Tobacco Products, 7.0%,
Machinery, 4.8%, and Non-Metallic Mineral Products,
8.1%.
In 2002, the Manufacturing sector recorded significant
improvement on account of a revival in external demand
and sustainable growth in domestic consumption. This
led to an economic resilience in the manufacturing sector.
As a result, the manufacturing sector's capacity utilisation
rate increased to 83% with both export and domesticoriented industries operating at higher capacities of 83%
and 82% respectively. The sub-sectors that contributed
significantly to export and posted an increase in
productivity were, the Electrical and Electronics, 6.5%,
Rubber Products, 9.8%, Furniture and Fixtures, 6.4% and
Wood and Wood Products, 11.4% (Table 4.4).
The domestic-oriented industries continued to improve as
more sub-sectors registered an increase in productivity.
Among the sub-sectors that recorded growth were,
Transport Equipment, 2.5%, Professional and Scientific
Equipment, 12.4%, Fabricated Metal, 5.5%, Food
Processing, 3.6%, Plastic Products, 6.1%, Glass and
Glass Products, 15.8%. Productivity of Iron and Steel
from construction-related industry grew by 15.3%
Labour Cost Competitiveness
Labour cost competitiveness analysis for the year 2001
was based on Added Value per Labour Cost (AV/LC),
Labour Cost per Employee (LCE) and Unit Labour Cost
(ULC).
In 2001, with the economic slowdown, firms continued to
streamline their operations in order to reduce cost.
Despite that, the Manufacturing sector recorded a decline
in labour cost competitiveness as indicated by Added
Value per Labour Cost which declined by 8.5%, and
Labour Cost per Employee which grew by 1.6%. This
resulted in an increase in Unit Labour Cost by 7.9% (Table
Table 4.5: Labour Cost Competitiveness, 2001
Sub-sector
e
Growth (%)
Added Value/
Labour Cost
Unit Labour
per Labour Cost per Employee
Cost
Office, Accounting and Computing Machinery
Electrical Motors, Generator and Transformer
Electricity Distribution and Control Apparatus
Insulated Wire and Cable
Accumulators, Primary Cells and Batteries
Electric Lamps and Lighting Equipment
Other Electrical Equipment
Electronics Valves and Tubes and Other Electronic Components
Television and Radio Transmitters and Telegraphy
Television and Radio Receivers, Sound or Video Recording
or Reproducing Apparatus
Textiles
Rubber Products
Apparel
Furniture
Basic Chemical
Other Chemicals
Plastic Products
Transport Equipment
Fabricated Metal
Machinery
Food and Beverages
Medical Appliances and Instruments and Appliances for Measuring,
Checking, Testing, Navigating precision
Glass & Glass Products
Tobacco
Iron and Steel
Non-ferrous metal
-12.81
-8.29
-14.57
-10.17
-5.05
-14.82
-10.06
-9.19
-15.14
-3.65
0.78
7.49
3.25
2.28
2.27
3.29
0.78
0.38
3.32
-8.44
9.91
7.13
14.03
9.60
6.22
16.94
9.74
8.24
15.57
0.55
-16.25
-9.47
-8.99
-13.37
-11.76
-7.54
-16.49
-9.85
-8.44
-7.70
-4.46
1.06
-4.34
-9.61
0.02
0.45
2.89
-0.34
2.16
10.59
7.14
-0.76
5.60
-0.79
3.74
4.33
0.71
9.73
12.75
14.05
11.32
7.38
22.59
12.77
8.65
11.50
5.56
-1.16
5.48
-8.71
-10.37
-21.88
-15.31
4.21
-8.08
-17.52
3.71
-0.76
4.81
26.39
3.77
6.37
0.73
8.58
10.19
27.13
16.11
-2.88
7.26
18.69
Manufacturing
-8.49
1.57
7.89
Source: National Productivity Corporation, Malaysia
e = estimate
Table 4.6: Labour Cost Competitiveness, 2002
Sub-sector
1
Growth (%)
Sales Value per Labour Cost Unit Labour
Labour Cost per employee
Cost
Electrical Machineries, Apparatus, Appliances & Supplies
Manufacture of Radio and TV
Semiconductors and other Electronic components
Cable & Wires
Textile
Rubber Products
Apparels
Furniture and Fixtures
Industrial Chemicals
Other Chemical Products
Plastic Products
Transport Equipment
Fabricated Metal
Machinery
Food Manufacture
Professional and Scientific Equipment
Tobacco Industries
Non-metallic Mineral Products
Iron and Steel
Non-ferrous Metal
3.65
0.83
5.02
8.14
11.01
6.77
-9.08
5.82
3.32
7.15
-10.59
2.67
-2.23
-0.04
-14.94
0.67
3.93
-8.27
8.52
-10.28
-1.79
2.65
-9.85
2.70
-1.13
3.95
-0.54
5.31
2.84
2.94
5.27
2.96
5.82
8.53
3.38
4.85
5.49
5.96
2.96
8.15
8.31
6.72
11.12
2.60
12.32
7.51
-3.64
-0.95
-4.91
7.49
12.36
-6.29
9.94
-5.49
-3.26
7.60
11.78
-2.60
2.36
0.00
17.49
-0.69
-3.84
8.96
-7.80
11.51
1.82
-2.58
10.93
Manufacturing
-0.74
4.47
0.68
Source:
Computed from:
Monthly Manufacturing Industries, Department of Statistics, Malaysia
1 = (January to December 2002)
4.5). However, the Non-metallic Mineral sub-sector
registered an increase in labour cost competitiveness. The
advancement was mainly due to the growth in Added
Value per Labour Cost by 4.2% that surpassed the growth
in Labour Cost per Employee, which grew by 3.7%.
Hence, Unit Labour Cost for the sub-sector declined by
2.8% indicating improvement in labour cost
competitiveness.
However, labour cost competitiveness deteriorated in
2002 as Labour Cost per Employee increased by 4.5%
which was faster than the growth in Sales Value per
Labour Cost, which declined by 0.7%. This resulted in
Unit Labour Cost to increase by 0.7%. Some of the subsectors that recorded an increase in labour cost
competitiveness include the Electrical and Electronic,
Rubber Products, Wood and Wood Products, Plastic
Products, Glass and Glass manufacture and Iron and Steel
(Table 4.6).
Other Productivity Indicators
Other productivity indicators are also being analysed in
this section to provide an overview of productivity
performances based on each of the related indicators with
respect to the selected sub-sectors in the manufacturing
sector in 2001. The indicators are as follows:
(i)
(ii)
(iii)
(iv)
Added Value per Fixed Assets
Fixed Assets per Employee
Added Value Content
Process Efficiency
Added Value per Fixed Asset
Lower demand for manufactured goods resulted in a
decline in capacity utilisation particularly in the existing
equipment and machinery. This resulted in Added Value
per Fixed Assets or capital productivity of the
manufacturing sector to decline by 5.0%. The subsectors that registered an increase include Chemical,
1.1%, Transport Equipment, 2.1%, Fabricated Metal,
1.7%, Machinery, 4.0%, Non-metallic Mineral, 4.7% and
Footwear, 9.8% (Figure 4.3).
Capital outlays in the manufacturing sector remained
weak in 2001, as firms were cautious in committing to
new investment amidst an environment of excess
capacity. Fixed Assets per Employee registered a decline
by 2.2% reflecting a lower investment on equipment and
machinery. The sub-sectors that recorded growth were
Wood and Wood Products sub-sector, 1.4%, Machinery
0.8%, Non-metallic Mineral 3.3% and Iron and Steel 1.2%
sub-sectors (Figure 4.3).
Added Value Content
In 2001, the Manufacturing sector registered a decline by
1.3% in Added Value Content. Lower capacity utilisations
of production resources such as employees and
machinery and lower value added creation have impacted
the growth of Added Value Content. The sub-sectors that
recorded growth were Rubber Products, 2.6%, Plastic,
1.7%, Fabricated Metal, 0.8%, Transport Equipment,
1.8%, Food and Beverage, 0.9%, Non-metallic Mineral,
1.3% and Footwear, 0.7% (Figure 4.3).
Process Efficiency
In 2001, the sector recorded a decline by 0.4 % in Process
Efficiency mainly due to firms could not able utilise its
workforce and production equipment optimally. Among the
sub-sectors that registered a growth were the Chemical,
0.8%, Fabricated Metal, 0.4%, Machinery, 0.9%, Nonmetallic Mineral, 0.5% and Footwear 0.7% (Figure 4.3).
Box 2
KNOWLEDGE WORKFORCE FOR HIGHER PRODUCTIVITY
Introduction
Knowledge is an important aspect of accelerating
development and improving productivity. An economy
that is knowledge driven will generate new sources of
growth through higher value added activities thus
contributing to Total Factor Productivity growth. To
achieve this, the workforce must be well equipped with
skills and knowledge that will enhance creativity and
innovation to sustain economic development in an era of
globalisation and liberalisation.
The ability to create knowledge, share existing knowledge
and apply oranisational knowledge to new situations is
critical. Knowledge is vital for an organisation’s survival
and the recognition of this knowledge is knowledge
management which is the process of creating and
applying knowledge. Organisations therefore need to tap
these sources of knowledge and utilise them to maximise
productivity performance. To assess the extent of
knowledge workforce practices in an organisation, the
NPC carried out a study among manufacturing
companies.
training throughout their careers in order to enhance
career development. Other aspects of a knowledge worker
includes having proper formal education, gradually
progressing towards becoming an expert or a specialist,
having effective analytical and critical skills and the ability
to work independently and collaboratively.
Knowledge Management Skills
It is crucial that knowledge workers possess sufficient
knowledge and skills in order to be competent and proactive in their area of work. The study revealed that
managers were found to be confident in their ability to
generate new knowledge (3.96), independently assess
knowledge (4.00) and creatively apply knowledge (4.27)
to their job functions (Table B2.1). However supervisors
and production personnel were less competent in these
areas. Nevertheless production personnel were found to
be reasonably competent in mastering work processes
(3.51) and were able to identify work related problems
(3.27).
Characteristics of the Knowledge Worker
Knowledge work has been defined as work that is
information based, knowledge intensive and has
opportunities for knowledge enhancement. The key
characteristics are the creation of new knowledge and
extensive use of specialised knowledge. Workers involved
in such work are required to be versatile, autonomous,
highly skilled and able to harness information and
knowledge to produce useful action that benefits the
organisation.
Team Working and Communication Skills
A knowledge worker needs to effectively impart
knowledge and communicate ideas explicitly so that
knowledge is shared and applied appropriately to enhance
knowledge work and provide an organisation with
knowledge capital. Although most Management staff were
confident in expressing ideas (4.07), nevertheless
supervisory and production staff were found to be capable
of understanding job functions of their co-workers. All
three levels of management were also able to effectively
work as a team, thus creating a more conducive
environment for enhancing knowledge work (Table B2.2).
Knowledge workers should have sufficient Information
and Communications Technology (ICT) exposure and be
adequately equipped with ICT skills. They should develop
a culture of continuous learning, re-learning and re-
Initiatives and Adaptability
Another important aspect of a knowledge worker is the
ability to initiate personal improvement and adapt to
changing work environment. This ability was prominent
Table B2.1:
Knowledge Management Skills
(Mean ratings on a scale of 1-5)
Criteria of Knowledge Management
Able to master work processes
Identify problems immediately
Generate and evaluate alternatives
Solve problems independently
Independently assess knowledge
Generate new knowledge
Creatively apply knowledge
Management
Supervisors/
Technicians
Production
Personnel
3.83
3.93
3.88
3.90
4.00
3.96
4.27
3.73
3.68
3.59
3.40
3.40
3.36
3.33
3.51
3.27
3.06
2.83
2.78
2.66
2.72
Supervisors/
Technicians
Production
Personnel
Table B2.2:
Team Working and Communication
Management
Team Working and Communication
Ability to connect own tasks functions
and that of other workers
Work effectively as a team
Ability to discuss and put forward work
related ideas with other employees
Listen effectively
Express ideas clearly
Possess confidence in expressing ideas
3.94
4.04
3.56
3.82
3.12
3.52
3.76
3.90
4.00
4.07
3.54
3.51
3.53
3.75
3.09
3.10
2.99
2.96
among management level and it was also found that
management level staff were able to work more
independently (4.67) than the supervisory or production
level staff (2.63). Management and supervisory were also
able to take up challenging and varied tasks and were
more adaptable to changing needs of the organisation
(Table B2.3).
Management Initiatives
It is important that management is committed in
developing a knowledge workforce and provides the
necessary facilities and infrastructure to do so. On the
whole management’s attitude was positive in developing a
knowledge
workforce
and
knowledge
work
culture(74.1%). The companies also ensured that
opportunities for sharing (71.1%), reflecting and learning
Table B2.3:
Initiative and Flexibility
Management
Initiative and Flexibility
Realistically evaluate own strengths
and weaknesses
Possess clear career goals
Independently set and achieve goals
Willing to carry out challenging tasks
Capable of handling varied tasks
Adapt and respond to changing needs
Supervisors/
Technicians
Production
Personnel
3.30
3.49
3.31
3.40
3.51
3.39
3.26
2.97
2.63
2.68
2.81
2.77
3.67
4.01
4.67
3.94
3.97
3.90
Table B2.4:
Management Initiatives in developing a Knowledge Workforce
(Percentage of respondents)
Management policies and practices
View developing knowledge workers
as the most important company priority
Provide incentives for knowledge
acquisition
Provide incentives for risk taking
Provide supportive leadership
Provide opportunities for employees
to share knowledge
Encourage employees to reflect and
learn from experience
View learning as equal in importance
to productivity
Strongly
disagree
1
2
3
4
Strongly
agree
5
1.3
5.2
19.5
39.0
35.1
3.9
8.1
1.3
14.3
16.2
2.6
44.2
44.6
32.5
26.0
20.3
35.1
11.7
10.8
28.6
2.6
3.9
22.4
48.7
22.4
2.6
3.9
23.7
52.6
17.1
2.6
3.9
22.1
49.4
22.1
Table B2.5:
Management Commitment in enhancing Knowledge Worker Practices
(Percentage of respondents)
Knowledge Worker Practices
Provide technical training for
basic work skills
Provide basic IT training for all employees
Provide access to IT resources for all employees
Provide theoretical training to enable
employees to understand the technology and
equipment used
Sponsor all employees who wish to upgrade
their skills and knowledge
Encourage multiskilling
Encourage job rotation
Encourage employee awareness of work
processes occurring both before and after
their work station
Strongly
disagree
1
2
3
4
Strongly
agree
5
34.6
14.3
11.5
28.2
19.5
21.8
32.1
37.7
29.5
5.1
15.6
20.5
0
13.0
16.7
9.0
29.5
35.9
23.1
2.6
14.3
19.0
16.5
15.6
43.0
22.8
33.8
24.1
35.4
18.2
12.7
21.5
18.2
1.3
3.8
16.7
28.2
38.5
15.4
1.3
from experience (69.7%) were made available to all staff.
About 71.5% of respondents viewed learning as an
important aspect of improving productivity (Table B2.4).
The activities of a knowledge workforce also requires
knowledge development to deepen and widen employee
knowledge. In this respect management should create
opportunities for employee involvement and participation.
From the study it was found that 37.2% of the
respondents agreed that access to IT was provided to all
employees while 25.7% agree that theoretical training is
provided and 36.4% indicated that sponsorship to
upgrade knowledge is available to all employees.
(Table B2.5)
Management was also committed to provide employees
with the necessary skills and training. This includes job
rotation (25.3%) and multiskilling (14.0%). However only
16.7% of the respondents agree that employees are
encouraged to develop a broader understanding of work
processes both preceding and subsequent to their work
station (Table B2.5).
Technology as a tool for enhancing Knowledge
Workforce
The availability of existing technology and the ability to
utilise this technology is also an important criteria of
creating a knowledge worker. Table B2.6 specifies the
technology available and the level of competence of the
workforce by responding companies.
The survey findings indicate that respondents’ companies
were well equipped with basic IT resources such as word
processing (89.4%) and spreadsheet (90.6%) tools as
well as e-mail (95.5%), Internet (78.7%) and
telecommunication (80.3%) tools. Average levels of
competence were reported on most of the tools available
with the exception of e-mail (65.6%), local area network
(56.8%) and telecommunication tools (59.3%). These
findings indicate that responding companies are
technologically prepared for the knowledge workforce
(Table B2.6).
Table B2.6:
Type of
Technology
Technology Available and Level of Competence
(Percentage of Respondents)
Facilities Available
Currently
Plan to
Not
available
introduce
Relevant
Level of Competence
Highly
Somewhat
Not
Competent
Competent Relevant
Word processing tools
89.4
6.1
4.5
47.5
50.8
1.6
Spreadsheet tools
90.6
3.1
6.3
33.3
37.0
2.5
Presentation graphic tools
81.3
10.9
7.8
25.9
63.8
10.3
PC database tools
87.7
10.8
1.5
41.1
55.4
3.6
Project management tools
55.7
31.1
13.1
22.0
50.0
26.0
Multimedia presentation tools
46.0
30.2
23.8
13.2
56.6
30.2
Enterprise Resource Planning Tools (ERP)
40.0
33.3
26.7
19.6
49.0
31.4
Internet navigation browser
78.7
9.8
11.5
46.6
41.4
12.1
Web page production tools
50.0
25.8
24.2
24.1
50.0
25.9
E-mail tools
95.5
4.5
0
65.6
32.8
1.6
Electronic data exchange tools
50.0
29.0
21.0
30.2
39.6
30.2
Tele/Video conferencing tools
52.3
20.0
27.7
24.6
42.1
33.3
Local area network tools
81.0
7.1
11.9
56.8
37.8
5.4
Telecommunication tools
80.3
12.1
7.6
59.3
28.8
11.9
Source: National Productivity Corporation, Malaysia.
Conclusion
The survey findings indicate that management is
committed in developing a knowledge workforce in their
respective organisations. It was also found that those at
the management level can be considered as knowledge
workers compared to the supervisory, technical and
production staff.
In terms of technology, companies were well equipped
with basic IT resources to create the environment for a
knowledge workforce. Workers also possessed quite a
high level of competency in IT to carry out daily functions
and tasks.
However efforts should be made to remove the concept
that only managers are knowledge workers and others
are not. In a knowledge workforce every employee should
be considered and given equal opportunity to acquire
knowledge and become a knowledge worker. To achieve
this task there should be a concerted effort by all parties
to develop and transform the capabilities of workers by
providing the right tools and opportunities to tap workers
knowledge abilities.
Chapter 5
Chapter 5
MANUFACTURING SUB-SECTORS
This chapter analyses the productivity performance of the
following selected sub-sectors:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Food Products and Beverages
Textiles
Footwear
Apparel
Transport Equipment
Fabricated Metal Products
Machinery
Rubber Products
Chemicals and Chemical Products
Wood and Products of Wood
Furniture
Iron and Steel
Plastic Products
In 2001, the Added Value per Employee for Electrical and
Electronic sub-sector declined by 12.1% to RM38,392
(2000 : RM43,692) due to lower demand for electronic
products and components.
The analysis is based on the following productivity
indicators:
1
2
3
4
5
6
7
8
9
In 2001, the Electrical and Electronic sub-sector
registered a 12.4% decline in total output, 16.4%
decrease in added value and 4.8% deterioration in
employment. The contributions of the sub-sector to total
manufacturing output, added value and total
manufacturing employment were at 24.7% (2000:26.6%),
23.2% (2000:25.9%) and 24.2% (2000:25.4%)
respectively (Table 5.1). The decline was to the
contraction in global demand for electronic products and
components such as personal computers and
telecommunications products.
Added Value per Employee
Total Output per Employee
Added Value Content
Process Efficiency
Added Value per Labour Cost
Unit Labour Cost
Labour Cost per Employee
ELECTRICAL AND ELECTRONIC SUB-SECTOR
The Electrical and Electronic sub-sector comprises the
manufacture of electrical machinery and apparatus, the
manufacture of radio, television and communication
equipment and apparatus and also manufacture of office,
accounting and computing machinery.
The sub-sector also recorded 8.3% decline in Total Output
per Employee, 4.2% in Added Value Content and 0.4% in
Process Efficiency, which is the same as the
manufacturing average (Figures 5.1). The industry has
undertaken measures to streamline operations such as
reorganisation of production capacity, consolidation of
productive resources and retraining of workers.
The Electrical and Electronic sub-sector registered 0.1%
decline in Fixed Assets per Employee resulting in firms
being cautious of committing new investment or
expansions. Added Value per Fixed Asset recorded a
decline by 12% due to firms not being able to fully
utilising its equipment and machineries to generate more
added values.
In 2001, the sub-sector registered decreasing labour cost
competitiveness. This was indicated by 12.8% decline in
Added Value per Labour Cost, 9.9% increase in Unit
Labour Cost and 0.8% in Labour Cost per Employee.
PRODUCTIVITY PERFORMANCE OF SELECTED MANUFACTURING SUB-SECTORS
Table 5.1:
Total Output, Added Value and Employment
for Electrical and Electronic Sub-sector
Value Level
e
2000
58,969
12,835
293,776
Total Output
Added Value
Employment
1
2001
51,458
10,733
279,571
% Share to the
Manufacturing
Sector
e
2000
2001
26.64
24.65
25.86
23.23
25.44
24.17
1 Value Levels for Total Output and Added Value are in RM million
Source :
Computed from :
Annual Survey of Manufacturing Industries,
Department of Statistics, Malaysia, various issues
e = estimate
Figure 5.1:
Source :
Productivity Performance for Electrical and Electronic Sub-sector,
2001 (Growth in Percent)
Computed from :
The sub-sector’s performance was adversely affected by
the decline in exports demand. Hence it is necessary for
firms to undertake measures and initiatives to improve
productivity.
Growth
(%)
e
2001
-12.40
-16.38
-4.84
FOOD AND BEVERAGES SUB-SECTOR
The Manufacture of Food Products and Beverages subsector comprises production, processing and
preservation of meat, fish, fruit, vegetables, oils and fats,
manufacture of dairy products, manufacture of grain mill
products, starches and starch products and prepared
animal feeds, manufacture of other food products and
manufacture of beverages.
The Manufacture of Food Products and Beverages subsector experienced a decline of 0.2% in Added Value per
Employee valued at RM48,794. The sub-sector also
registered a decrease of 1.1% in Total Output per
Employee while Added Value Content grew by 0.9%,
which was higher than manufacturing average of –1.3%.
The sub-sector experienced a decline in Process
Efficiency at 0.3%. Among the industries that recorded an
increase include the manufacture of grain mill products,
starches and starch products and prepared animal feeds
(Figure 5.2).
In 2001, the sub-sector registered a decline of 0.5% in
total output but recorded 0.5% growth in added value and
0.7% in employment. The major industries that
contributed significantly to the sub-sector’s added value
generation and total output were production, processing
and preservation of meat, fish, fruits, vegetables, oils and
fats.
The sub-sector’s Fixed Assets per Employee and Added
Value per Fixed Asset both indicated a decline at 0.2% and
0.05% respectively. The sub-sector experienced a decline
in Added Value per Labour Cost at 4.3% while registering
a growth of 5.5% and 4.3% in Unit Labour Cost and
Labour Cost per Employee respectively.
The sub-sector contributed 15.4% share of total
manufacturing output (2000: 14.6%), 10.2% share of
total manufacturing added value (2000: 9.4%) and
accounted for 8.3% share of total manufacturing
employment (2000: 8.3%) (Table 5.2).
Table 5.2:
Total Output, Added Value and Employment of the
Manufacture of Food Products and Beverages Sub-sector
Value Level
Total Output
Added Value
Employment
1
e
2000
32,303
4,677
95,661
2001
32,149
4,698
96,294
% Share to the
Manufacturing
Sector
e
2000
2001 e
14.59
15.40
9.42
10.16
8.28
8.32
Source :
Computed from :
e = estimate
Growth
(%)
e
2001
-0.48
0.46
0.66
Figure 5.2:
Source :
Productivity Performance of the Manufacture of Food Products
and Beverages Sub-sector, 2001 (Growth in Percent)
Computed from :
TEXTILES SUB-SECTOR
The Textiles sub-sector comprises the spinning, weaving
and finishing of textiles, manufacture of other textiles and
manufacture of knitted and crocheted fabrics and articles.
In 2001, the Textiles sub-sector registered a 7.9% decline
in total output, 8.5% decline in added value and 1.2%
growth in employment. The Sub-sector contributed 2.3%
share of total manufacturing output (2000 : 2.3%), 2.6%
share of total manufacturing added value (2000 : 2.6%)
and accounted for 3.1% share of total manufacturing
employment (2000 : 3.1%) (Table 5.3).
PRODUCTIVITY PERFORMANCE
In 2001, the sub-sector registered a decline in Added
Value per Employee and Total Output per Employee of
9.5% and 8.8% respectively. The decline in the subsector’s productivity was due to employment growing
faster than added value generation. Process Efficiency
showed a 0.3% decline. It was attributed to the inefficient
utilisation of resources to generate added value. Added
Value Content declined by 0.7% indicating that growth in
total output did not commensurate with growth in added
value generation (Figure 5.3).
The sub-sector registered a 3.5% decline in Fixed Assets
per Employee due to lesser investment during the year.
Added Value per Fixed Asset declined by 6.1% as the
existing fixed assets are not fully utilised (Figure 5.3).
The sub-sector registered a 9.5% decline in Added Value
per Labour Cost, 9.7% increase in Unit Labour Cost and
0.02% growth in Labour Cost per Employee (Figures 5.3)
indicating that the labour cost competitiveness during the
period had declined. The present market environment
necessitates the sub-sector to continuously improve their
competitiveness by maximising the utilisation of available
resources and machineries.
Table 5.3:
of the Textiles Sub-sector
Value Level
e
2000
5,177
1,313
35,322
Total Output
Added Value
Employment
1
2001
4,769
1,201
35,683
% Share to the
Manufacturing
Sector
e
2000
2001
2.34
2.28
2.64
2.59
3.05
3.08
Source :
Computed from :
e = estimate
Figure 5.3:
Source :
Productivity Performance of the Textiles Sub-sector,
Computed from :
Growth
(%)
e
2001
-7.88
-8.52
1.02
FOOTWEAR SUB-SECTOR
The Footwear Products sub-sector comprises the
manufacture of footwear except the manufacture of
footwear of textile material without applied soles and the
manufacture of orthopaedic shoes. The sub-sector covers
a wide range of footwear products that are categorised
into rubber based products, leather based products,
sports or canvas shoes, industrial boots, Wellington
boots, slippers and sandals and soles and heels.
The growth in productivity was attributed to the higher
Added Value Content, which grew by 0.7% and Process
Efficiency at 0.7%. In addition, Added Value per Fixed
Asset increased by 9.8% in 2001 due to higher utilization
of the existing machineries. However the sub-sector
recorded 8.4% decline in Fixed Assets per Employee,
which was lower than the manufacturing average of 2.2%.
The sub-sector registered 13.4% growth in Added Value
per Labour Cost, while Unit Labour Cost and Labour Cost
per Employee declined by 11.2% and 11.3% respectively.
The favourable performance of the sub-sector indicated
that it was competitive in terms of labour cost, as the
workforce was able to generate higher added value.
The sub-sector recorded 12.1% increase in total output,
13.1% increase in added value and experienced 12.4%
growth in employment. The sub-sector contributed to
0.1% (2000:0.1%) share of total manufacturing output,
0.2% (2000:0.2%) share of total manufacturing added
value and accounted for 0.4% (2000:0.4%) of total
manufacturing employment. (Table 5.4)
To further enhance productivity, the sub-sector should
continuously invest in automation and upgrading the
skills of the workers. The sub-sector also needs to move
to higher added value activities such as design and
merchandising to be able to compete globally.
The Footwear Products sub-sector experienced an
increase in Added Value per Employee by 0.6% while Total
Output per Employee declined by 0.1%.
Table 5.4:
of the Footwear Products Sub-sector
Value Level
Total Output
Added Value
Employment
1
e
2000
265
84
4,452
2001
297
95
5,004
% Share to the
Manufacturing
Sector
e
2000
2001 e
0.12
0.14
0.17
0.21
0.39
0.43
Source :
Computed from :
e = estimate
Growth
(%)
e
2001
12.07
13.05
12.41
Figure 5.4:
Source :
Productivity Performance for Footwear Products Sub-sector,
Computed from :
WEARING APPAREL SUB-SECTOR
The Wearing Apparel sub-sector comprises the
manufacture of wearing apparel, except fur apparel,
dressing and dyeing and manufacture of articles of fur.
Industries classified under the manufacture of wearing
apparel, except fur apparel are manufacture of clothing,
custom tailoring and dressmaking and the manufacture of
miscellaneous wearing apparel.
Industries classified
under dressing and dyeing of fur includes the
manufacture of articles of fur and production of hides and
skins that have been tanned and fur dresses and the
manufacture of articles of hides e.g. skin rugs and mats.
In 2001, the Wearing Apparel sub-sector registered a
5.1% decline in total output, 6.3% declined in added value
while employment increased by 5.1% (Table 5.5). The
sub-sector contributed 2.2% of total manufacturing
output, 2.4% of total manufacturing added value and
accounted for 6.3% of total manufacturing employment.
In 2001, the Added Value per Employee for Wearing
Apparel sub-sector declined by 10.9% at RM15,374
(2000 : RM17,249) as a result of a decline in Total Output
per Employee and Added Value Content of 9.8% and
1.2% respectively (Figure 5.5). This was relatively lower
than the manufacturing average. Process Efficiency and
declined by 1.0% (Figure 5.5).
per Employee as investment made were mainly for other
expansion purposes while existing labour intensive
methods are still applicable in most companies.
Continuous investment in ICT as the industry moves
towards less labour incentive technology include CAD,
computerised pattern making system and computer aided
cutting machines in the early stages of the manufacturing
processes are vital to improve productivity. The subsector registered a 3.7% decline in Added Value per Fixed
Asset (Figure 5.5.).
In 2001, the Sub-sector registered decreasing labour cost
competitiveness. This was indicated by 13.4% decline in
Added Value per Labour Cost, 14.1% increase in Unit
Labour Cost and 2.9% in Labour Cost per Employee
Table 5.5:
of the Wearing Apparel Sub-sector
Value Level
e
2000
4,743
1,197
69,424
Total Output
Added Value
Employment
1
2001
4,500
1,122
72,993
% Share to the
Manufacturing
Sector
e
2000
2001
2.14
2.15
2.41
2.43
6.01
6.31
Source :
Computed from :
e = estimate
Figure 5.5:
Source :
Productivity Performance of the Wearing Apparel Sub-sector,
Computed from :
(Figures 5.5). The industry needs to further enhance its
productivity through cost reduction, and to produce
higher value added apparel by creating its own design.
Growth
(%)
e
2001
-5.13
-6.28
5.14
TRANSPORT EQUIPMENT SUB-SECTOR
The Transport Equipment sub-sector comprises the
manufacture of motor vehicles, trailers and semi-trailers
and the manufacture of other transport equipment.
Industries included under the manufacture of motor
vehicles, trailers and semi-trailers are the manufacturing
of motor vehicles, manufacturing of bodies (coachwork)
for motor vehicles, manufacturing of trailers and semitrailers and manufacturing of parts and accessories for
motor vehicles and its engines. Industries under the
manufacture of other transport equipment are building
and repairing of ships and boats, manufacturing of railway
and tramway locomotives and rolling stock,
manufacturing of aircraft and spacecraft and
manufacturing of transport equipment.
The Transport Equipment sub-sector registered a
decrease in Added Value per Employee by 4.5% and Total
Output per Employee by 6.1%. The decline was due to
firms not fully utilise its resources especially manpower
and equipment due to lower demand for passenger cars.
In addition, Process Efficiency declined by 0.4% and
Added Value Content grew by 1.8%.
per Employee. However the sub-sector recorded a 2.2%
growth in Added Value per Fixed Asset.
The labour cost competitiveness of the sub-sector
deteriorated as reflected by an increase in Labour Cost per
Employee by 5.6% while the Added Value per Labour Cost
declined by 7.7%. This resulted in Unit Labour Cost to
increase by 11.5%. To further enhance productivity, the
sub-sector needs to continuously invest in human capital,
R&D and innovation as these will give an impetus towards
achieving competitiveness.
The Transport Equipment sub-sector recorded a growth of
4.5% in total output, 6.2% growth in added value and
10.4% in employment. The sub-sector contributed to
3.8% share of total manufacturing output (2000: 3.4%),
4.8% share of total manufacturing added value (2000:
4.2%) and 4.0 % share of total manufacturing
employment (2000: 3.6%) (Table 5.6).
Table 5.6:
of the Transport Equipment Sub-sector
Value Level
Total Output
Added Value
Employment
1
e
2000
7,615
2,095
42,132
2001
7,960
2,224
46,514
% Share to the
Manufacturing
Sector
e
2000
2001 e
3.44
3.81
4.22
4.81
3.64
4.02
Source :
Computed from :
e = estimate
Growth
(%)
e
2001
4.53
6.15
10.40
Figure 5.6:
Source :
Productivity Performance of the Transport Equipment Sub-sector,
Computed from :
FABRICATED METAL PRODUCTS SUB-SECTOR
The Fabricated Metal Products (except Machinery &
Equipment) sub-sector includes the manufacture of
structural metal products, tanks, reservoirs and steam
generators and the manufacture of other fabricated metal
products as well as metal working service activities.
Total output of the sub-sector grew by 2.6% accounting
for 4.9% share of total manufacturing output
(2000:4.5%). Added value grew by 3.4% and contributed
to 5.2%(2000:4.7%) share of total manufacturing added
value. Total employment grew by 9.1%, which accounted
for 5.3%(2000: 4.9%) share of total manufacturing
employment. (Table 5.7)
In 2001, the sub-sector recorded a decline in Added Value
per Employee and Total Output per Employee by 5.2% and
6.0% respectively. However, the sub-sector recorded
0.8% growth in Added Value Content, which was higher
than the manufacturing average. Process Efficiency grew
by 0.4%, indicating better utilisation of resources in the
sub-sector. Fixed Assets per Employee contracted by
6.8% while Added Value per Fixed Asset in the sub-sector
recorded 1.7% growth, which was higher than the
manufacturing average.
The sub-sector experienced a decline in labour cost
competitiveness as indicated by a 4.5% contraction in
Added Value per Labour Cost resulting in an increase in
Unit Labour Cost by 5.6%. However, the Labour Cost per
Employee of the sub-sector decreased by 0.8%.
Productivity of the Fabricated Metal Products sub-sector
can be further enhanced through better application of high
technology machineries and production techniques,
Information Communication Technology (ICT) and
nurturing a skilled workforce. The sub-sector needs to
explore new markets in higher added value industries
especially in infrastructure and building construction to
sustain its competitiveness.
Table 5.7:
of the Fabricated Metal Products Sub-sector
Value Level
e
2000
9,949
2,337
56,274
Total Output
Added Value
Employment
1
2001
10,209
2,418
61,414
% Share to the
Manufacturing
Sector
e
2000
2001
4.49
4.89
4.71
5.23
4.87
5.31
Source :
Computed from :
e = estimate
Figure 5.7:
Source :
Productivity Performance of the Fabricated Metal Products
Sub-sector, 2001 (Growth in Percent)
Computed from :
Growth
(%)
e
2001
2.61
3.46
9.13
MACHINERY SUB-SECTOR
The Machinery sub-sector constitutes the manufacture of
general-purpose machinery, manufacture of special
purpose machinery and manufacture of domestic
appliances.
The sub-sector recorded a 0.8% growth in Fixed Assets
per Employee at RM29,389 (2000 : RM29,149), which
was higher than the manufacturing average. This resulted
in Added Value per Fixed Asset to grow by 4.0% with
better utilisation of its machineries and equipment.
In 2001, the Manufacture of Machinery and Equipment
recorded a 5.0% growth in total output, 4.8% in added
value with a decline of 0.04% in employment. The subsector’s share towards total manufacturing output was
5.0% (2000:4.5%), added value 5.8% (2000:5.1%) and
total manufacturing employment 4.0% (2000:4.0%)
(Table 5.8).
In 2001, the Machinery and Equipment sub-sector was
able to maintain its labour cost competitiveness. This was
indicated by 1.1% growth in Added Value per Labour
Cost, 1.2% decline in Unit Labour Cost and 3.7% increase
in Labour Cost per Employee.
The present competitive global environment requires the
industries to strengthen their technological capabilities in
their efforts to improve the efficiency of their
manufacturing processes. Industries also need to make
qualitative changes in terms of improvement in the work
culture and nurturing a new breed of learned workers.
In 2001, the Added Value per Employee for the
manufacture of machinery and equipment grew by 4.8%
at RM57,520 (2000 : RM54,868). Performance of this
sub-sector improved significantly due to efficient
utilization of resources as reflected by growth of 1.0% and
5.0% in Process Efficiency and Total Output per Employee
respectively. However Added Value Content decreased by
0.2% (Figure 5.8).
Table 5.8:
of the Machinery and Equipment Sub-sector
Value Level
Total Output
Added Value
Employment
1
e
2000
9,849
2,538
46,262
2001
10,338
2,660
46,244
% Share to the
Manufacturing
Sector
e
2000
2001
4.45
4.95
5.11
5.75
4.01
3.99
Source :
Computed from :
e = estimate
Growth
(%)
e
2001
4.96
4.79
-0.04
Figure 5.8:
Source :
Productivity Performance of the Machinery sub-sector,
Computed from :
RUBBER PRODUCTS SUB-SECTOR
The Manufacture of Rubber Products sub-sector
comprises the manufacture of rubber tyre and tubes,
retreading and rebuilding of rubber tyres, manufacture of
other rubber products, which covers rubber remilling and
latex processing, rubber smokehouses, manufacture of
rubber gloves and manufacture of other rubber products.
In 2001, the sub-sector recorded a decline of 8.2% and
5.7% in total output and added value respectively while
registering a growth of 3.1% in employment (Table 5.9).
The decline was particularly due to stiff competition in the
global market from both Thailand and Indonesia.
Manufacture of rubber gloves generated 48% of the subsectors total added value and accounted for 45% of total
employment for the sub-sector. However the sub-sector
benefited from the high demand in rubber gloves
especially from the United States of America.
The sub-sector contributed 4.3% share of total
manufacturing output (2000: 4.4%) and 5.5% share of
total manufacturing added value (2000: 5.4%) while
accounting for 6.1% share of the total manufacturing
employment (2000: 5.9%).
In 2001, the sub-sector registered a decline of 8.6% and
10.9% in Added Value per Employee and Total Output per
Employee respectively. The sub-sector also recorded a
decline of 0.3% in Process Efficiency. However, the subsector recorded 2.6% growth in Added Value Content,
which was higher than the manufacturing average.
(Figure 5.9)
The sub-sector recorded a decline of 3.8% and 5.0% in
both Fixed Assets per Employee and Added Value per
Fixed Asset respectively indicating under utilisation of
existing machineries and equipment.
competitiveness. This was reflected by a decrease in
Added Value per Labour Cost by 9.0%, while Labour Cost
per Employee increased by 0.5%. This also resulted in
Unit Labour Cost to increase by 12.8%.
Table 5.9:
of the Manufacture of Rubber Products Sub-sector
Value Level
e
2000
9,808
2,699
68,050
Total Output
Added Value
Employment
1
2001
9,009
2,544
70,163
% Share to the
Manufacturing
Sector
e
2000
2001
4.43
4.31
5.44
5.50
5.89
6.07
Source :
Computed from :
e = estimate
Figure 5.9:
Source :
Productivity Performance of the Manufacture of Rubber Products
Computed from :
Changes in product and market requirements necessitate
firms to identify and implement measures to enhance
productivity on a continuous basis. There should be
continuous investment in new technology and capital
equipment to improve the firm’s competitiveness.
Growth
(%)
e
2001
-8.15
-5.74
3.11
CHEMICALS AND CHEMICAL PRODUCTS SUB-SECTOR
The Manufacture of Chemicals and Chemical Products
sub-sector comprises of manufacture of basic chemicals,
manufacture of other chemical products and manufacture
of man-made fibres.
The sub-sector recorded 4.5% decline in Fixed Assets per
Employee while its Added Value per Fixed Asset grew by
1.1% (Figure 5.10).
In 2001, the sub-sector registered decreasing labour cost
competitiveness. This were indicated by 9.8% decline in
Added value per Labour Cost, an increase of 12.7% in Unit
Labour Cost and an increase of Labour Cost per Employee
by 7.1% (Figure 5.10).
In 2001, the sub-sector registered a decline of 0.5% in
total output, 1.2% growth in added value and 4.8%
growth in employment. The contributions of the subsector to total manufacturing output, added value and
total manufacturing employment were 9.2% (2000:
8.6%), 8.9% (2000: 8.2%) and 3.6% (2000: 3.5%)
respectively (Table 5.10). The major contributor to the
sub-sector is the manufacture of basic chemicals.
As the Chemical industry is a very capital and energy
intensive industry, soaring energy costs and the increase
in the cost of production are of great concern to the subsector. Hence the industries should undertake measures
related to cost reduction, upgrading of skills, training and
development of workers especially for electricians,
welders and boilermen with a view of sustaining its
competitiveness.
In 2001, the Added Value per Employee for the sub-sector
recorded a decline of 3.4% to RM99,029 (2000 :
RM102,548). The sub-sector recorded a 5.1% decline in
Total Output per Employee, while experiencing 1.7%
growth in Added Value Content, resulting in Process
Efficiency to grow by 0.8% (Figure 5.10).
Table 5.10:
of the Chemicals and Chemical Products Sub-sector
Value Level
Total Output
Added Value
Employment
1
e
2000
19,223
4,085
39,836
2001
19,123
4,133
41,737
% Share to the
Manufacturing
Sector
e
2000
2001
8.69
9.16
8.22
8.94
3.45
3.61
Source :
Computed from :
e = estimate
Growth
(%)
e
2001
-0.52
1.18
4.77
Figure 5.10: Productivity Performance of the Chemicals and Chemical Products
Source :
Computed from :
WOOD AND PRODUCTS OF WOOD SUB-SECTOR
The Manufacture of Wood and Products of Wood
comprises the sawmilling and planing of wood,
manufacture of products of wood, cork, straw and plaiting
materials, which consist of manufacture of veneer sheets
and plywood, manufacture of laminboard, particle board
and other panels and board; manufacture of builders’
carpentry and joinery, manufacture of wooden and cane
containers and manufacture of other products of wood.
In 2001, the sub-sector recorded a decline of 14.3% in
total output, 15.8% in added value and 4.2% in
employment. The decline in total output was attributed by
the low external demand for wood products. Among the
industries in the sub-sector, the sawmilling and planing of
wood contributed the highest generation of total output
and added value level of RM1.8 billion and RM0.4 billion
respectively.
The Sub-sector contributed to 2.2% share of total
manufacturing output (2000: 2.4%), 2.2% share of total
manufacturing added value (2000: 2.5%) and accounted
for 4.2% share of total manufacturing employment (2000:
4.4%). (Table 5.11).
In 2001, the sub-sector recorded a decline of 12.1% in
Added Value per Employee, with a value level of
RM21,061. The sub-sector also registered a decrease of
10.5%, 1.8% and 1.3% in its Total Output per Employee,
Added Value Content and Process Efficiency respectively
(Figure 5.11).
In 2001, the sub-sector registered 1.4% growth in Fixed
Assets per Employee, which is higher than manufacturing
average, but experienced a decline of 13.2% in Added
Value per Fixed Asset.
competitiveness as indicated by 11.8% contraction in
Added Value per Labour Cost and a corresponding
increase in Unit Labour Cost by 11.3%. However, the
Labour Cost per Employee decreased by 0.3%.
Table 5.11:
of the Manufacture of Wood and Products of Wood Sub-sector
Value Level
Total Output
Added Value
Employment
1
e
2000
5,243
1,215
50,764
2001
4,495
1,024
48,626
% Share to the
Manufacturing
Sector
e
2000
2001
2.37
2.15
2.45
2.22
4.39
4.20
Growth
(%)
e
2001
-14.27
-15.77
-4.21
Source :
Computed from :
e = estimate
Figure 5.11: Productivity Performance of the Manufacture of Wood and
of Wood Sub-sector, 2001 (Growth in Percent)
Source :
Computed from :
The industry must strive to focus on higher added value
activities in order to be competitive. The industrial
linkages between the upstream industries such as sawn
timber, plywood and other panel products and the
downstream industries that utilises these materials as
well as components need to be further developed both
horizontally and vertically along the supply chain.
FURNITURE SUB-SECTOR
The Manufacture of Furniture sub-sector comprises the
manufacture of wooden and cane furniture, manufacture
of metal furniture, manufacture of other furniture, except
of stone, concrete or ceramic.
Total Output per Employee and 0.7% in Added Value
Content. The sub-sector also registered 0.4% decrease in
Process Efficiency, which was the same as manufacturing
average (Figure 5.12).
The sub-sector recorded a decrease of 5.2% and 0.3% in
Fixed Assets per Employee and Added Value per Fixed
Asset respectively. Such unfavourable indicated that the
fixed assets were not fully utilised.
In 2001, the sub-sector recorded a decline of 1.5% and
2.2% both in total output and added value respectively
while registering a 3.6% growth in employment (Table
5.12). The decline in total output was due to the
deterioration of external demand for wood products in the
global market. The manufacture of wooden and cane
furniture contributed the highest added value generation
to the sub-sector with a value of RM1.1 billion and
employed highest number of workers totaling to 47,551
people.
The sub-sector registered a 7.5% decline in Added Value
per Labour Cost, 7.4% increase in Unit Labour Cost and
2.2% growth in Labour Cost per Employee indicating that
the labour cost competitiveness during the period had
deteriorated.
To further improve added value, the industry has to
address several issues including technology upgrading
for more efficient production and minimizing labour
content through automation.
Product diversification
through design and product development, high product
performance standards and quality management as well
as upgrading the skills of workers are also some of the
issues which need to examined by the industry.
The sub-sector contributed 2.8% of the total
manufacturing output (2000: 2.7%), 3.2% of total
manufacturing added value (2000: 3.1%) and accounted
for 5.4% of the manufacturing employment (2000: 5.2%).
In 2001, the manufacture of furniture sub-sector recorded
a decline of 5.5% in Added Value per Employee, 4.9% in
Table 5.12:
of the Manufacture of Furniture Sub-sector
Value Level
Total Output
Added Value
Employment
1
e
2000
5,878
1,525
59,935
2001
5,792
1,492
62,083
% Share to the
Manufacturing
Sector
e
2000
2001
2.65
2.77
3.07
3.23
5.19
5.37
Source :
Computed from :
e = estimate
Growth
(%)
e
2001
-1.45
-2.16
3.58
Figure 5.12: Productivity Performance of the Manufacture of Furniture Sub-sector,
Source :
Computed from :
BASIC IRON AND STEEL SUB-SECTOR
The Manufacture of Basic Iron and Steel sub-sector
comprises the manufacture of primary iron and steel
consisting of all the processes from smelting in blast
furnaces to the semi-finished stage in rolling mill that
include the production of ingots, billets, slabs or bars.
In 2001, Iron and Steel sub-sector registered a 2.4 %
decline in total output, 3.7% decrease in added value and
1.6 % deterioration in employment. The contributions of
the sub-sector to total manufacturing output, added value
and total manufacturing employment were 2.9% (2000:
2.8%), 2.0% (2000: 1.9%) and 1.3% (2000: 1.3%)
respectively (Table 5.13).
decline in Total Output per Employee and Added Value
Content by 0.9% and 1.4% respectively and the Process
Efficiency which also declined by 0.4%. Added Value
Content declined by 1.4% due to higher cost of Bought In
Material and Services.
The sub-sector posted 1.2% increase in Fixed Assets per
Employee but recorded a decline of 3.4% in Added Value
per Fixed Asset, which could be attributed to the inability
of the firms to utilise their plant and equipment optimally.
Labour cost competitiveness declined as indicated by a
decline in Added Value per Labour Cost by 8.1% while
Labour Cost per Employee grew by 6.4%. This resulted in
a 7.3% increase in Unit Labour Cost.
In 2001, the Added Value per Employee for sub-sector
declined by 2.2% from RM 63,967 to RM 62,543 (Figure
5.13) which was higher than the manufacturing average
which recorded 7.1% decline. This were attributed to the
Table 5.13:
Total Output, Added Value and Employment for
Manufacture of Basic Iron and Steel Sub-sector
Value Level
Total Output
Added Value
Employment
1
e
2000
6,212
949
14,841
2001
6,062
914
14,611
% Share to the
Manufacturing
Sector
e
2000
2001 e
2.81
2.90
1.91
1.98
1.29
1.26
Source :
Computed from :
e = estimate
Figure 5.13: Productivity Performance for Manufacture of Basic Iron and
Steel Sub-sector, 2001 (Growth in Percent)
Source :
Computed from :
Growth
(%)
e
2001
-2.41
-3.74
-1.55
NON-METALLIC MINERAL PRODUCTS SUB-SECTOR
The Manufacture of Non-Metallic Mineral Products subsector comprises the manufacture of non-structural, nonrefractory ceramic wares, manufacture of refractory
ceramic products, manufacture of structural nonrefractory clay and ceramic products and manufacture of
cement, lime and plaster.
5.14) as compared to a decline of 7.1% in the
manufacturing average. This growth was attributed to the
increase in Total output per Employee by 6.8% and Added
Value Content by 1.3%. Process Efficiency grew by 0.5%.
Performance of this sub-sector has improved due to
efficient utilisation of resources as reflected by growth of
its Process Efficiency and Value Added Content.
In 2001, this sub-sector registered 11.1% growth in total
output, 12.5% growth in added value and 4.0% increase
in employment. The sub-sector contributed 3.7% (2000:
3.1%) share of total manufacturing output, 4.4% (2000:
3.7%) of total manufacturing added value and accounted
for 3.5% (2000: 3.4%) of the total manufacturing
employment (Table 5.14).
Increase in investment as shown by a 3.3% growth in
Fixed Assets per Employee and a 4.7% growth in Added
Value per Fixed Asset also contributed positively towards
the productivity of the Sub-sector.
Labour cost competitiveness has improved, as growth of
3.8% in Labour Cost per Employee was lower than the
growth of Added Value per Labour Cost, which grew by
4.2%. Subsequently this reduced Unit Labour Cost by
2.9%.
The sub-sector registered 8.1% growth in Added Value
per Employee at RM50,476 (2000 : RM46,679) (Figure
Table 5.14:
for Manufacture of Non-Metallic Mineral Products Sub-sector
Value Level
Total Output
Added Value
Employment
1
e
2000
6,858
1,812
38,813
2001
7,620
2,038
40,383
% Share to the
Manufacturing
Sector
e
2000
2001
3.10
3.65
3.65
4.41
3.36
3.49
Source :
Computed from :
e = estimate
Growth
(%)
e
2001
11.12
12.51
4.04
Figure 5.14: Productivity Performance for Non-Metallic Mineral Products Sub-sector,
Source :
Computed from :
PLASTIC PRODUCTS SUB-SECTOR
Plastic Products sub-sector comprises the manufacture
of plastic blow moulded products, the manufacture of
plastic extruded products, the manufacture of plastic bags
and films, the manufacture of plastic product rigid fibre
reinforced, the manufacture of plastic foam products, the
manufacture of plastic injection moulded components.
In 2001, Manufacture of Plastic Products sub-sector
registered a 3.9% (2000:4.8%) decline in total output,
4.4% (2000: 6.1%) in added value but 5.2% (2000:
7.8%) increase in total manufacturing employment (Table
5.15).
In 2001, the Added Value per Employee of Plastic
Products sub-sector declined by 9.1% from RM34,644 to
RM31,479 (Figure 5.15). The sub-sector's Total Output
per Employee also declined by 8.7%, 0.5% in Added Value
Content and 0.3% in Process Efficiency while Fixed Asset
per Employee and Added Value per Employee also
declined by 6.2% and 3.1% respectively
Labour cost competitiveness in this sub-sector also
deteriorated as Added Value per Labour Cost declined by
8.4% and Labour Cost per Employee declined by 0.8%.
Hence, Unit Labour Cost grew by 8.7%,
Table 5.15:
for Plastic Products Sub-sector
Value Level
Total Output
Added Value
Employment
1
e
2000
10,378
2,969
85,699
2001
9,971
2,838
90,142
% Share to the
Manufacturing
Sector
e
2000
2001
4.69
4.78
6.14
6.14
7.79
7.79
Growth
(%)
Source :
Computed from :
e = estimate
Figure 5.15: Productivity Performance Manufacture of Plastic Products Sub-sector,
Source :
Computed from :
e
2001
-3.92
-4.42
5.18
MANUFACTURING SUB-SECTORS IN 2002.
This section analyses the productivity performance of
selected manufacturing sub-sector. The analysis based on
Sales Value per Employee refers to as productivity, Labour
Cost per Employee and Unit labour Cost.
of the Electrical and Electronic sub-sector increased by
6.5%, compared to 3.7% of manufacturing average. The
Labour Cost per Employee grew by 2.7%. Within the
Electrical and Electronic industry, manufacture of
semiconductors and other electronic components and
manufacture of cables and wires registered growth of
9.2% and 7.6% respectively.
The Electrical and Electronic sub-sector comprises the
manufacture of radio and television, sound reproducing
and recording equipment, manufacture of semiconductor
and other electronic and communication equipment and
manufacture of cable and wires. In 2002 the productivity
The sub-sector labour cost competitiveness remained
competitive as productivity grew faster than the labour
cost as reflected by a decline in Unit Labour Cost by 3.6%.
The productivity improvement was attributed to an
increase in capacity utilisation especially by the
semiconductor industry.
Figure 5.16: Productivity Indicators of the Electrical and Electronics
Source :
Computed from :
FOOD SUB-SECTOR
In 2002, the food sub-sector registered a productivity
growth of 3.7 per cent due to an increase in the
production of canned and frozen seafood, rice milling and
palm oil refineries. Labour cost competitiveness increased
as shown by the growth of Labour Cost per Employee at
2.9%, which was lower than productivity. This led to a
decline in Unit Labour Cost by 0.7%.
TEXTILE SUB-SECTOR
The textile sub-sector registered a decline in productivity
by 6.3%. An increased in Labour Cost per Employee by
5.3% and a decrease in productivity led to a decline in
labour cost competitiveness as indicated by an increase
in Unit Labour Cost by 12.4%.
Figure 5.17: Productivity Indicators of the Food Processing Sub-sector, 2002
(Growth in Percent)
Source :
Computed from :
Figure 5.18: Productivity Indicators of the Textiles Sub-sector, 2002
(Growth in Percent)
Source :
Computed from :
FOOTWEAR SUB-SECTOR
In 2002, the productivity of sub-sector grew by 16.5%,
higher than manufacturing average. The labour cost
competitiveness of the sub-sector remained completive
as the growth of Labour Cost per Employee by 2.4%, was
slower than the growth of Productivity. This attributed to
the decline of Unit Labour Cost by 12.1%.
APPAREL SUB-SECTOR
The apparel sub-sector experienced a decline in
productivity by 6.4% due to lower capacity utilisation. As
Labour Cost per Employee increased by 2.9%, the Unit
Labour Cost has increased by 9.9% indicating a decline in
labour cost competitiveness.
TRANSPORT EQUIPMENT SUB-SECTOR
In 2002, productivity of the sub-sector increased by 2.5%
due to increased demand in passenger car segment. The
introductions of new model, affordable pricing and low
interest rate have contributed to the growth.
Labour Cost per Employee increased by 4.9%, which is
faster than productivity. This led to an increase of Unit
Labour Cost by 2.4%, higher than manufacturing average.
FABRICATED METAL SUB-SECTOR
Productivity of the sub-sector grew by 5.5%, which was
above the manufacturing average. This was due to the
increase in production of tin can, wire, iron and steel
drum. Labour Cost per Employee increased by 5.5% and
Unit Labour Cost by 0.01%. Thus enable the sub-sector to
sustain its labour cost competitiveness.
Figure 5.19: Productivity Indicators of the Footwear Products Sub-sector, 2002
(Growth in Percent)
Source :
Computed from :
Figure 5.20: Productivity Indicators of the Apparel Sub-sector, 2002
(Growth in Percent)
Source :
Computed from :
Figure 5.21: Productivity Indicators of the Transport Equipment Sub-sector, 2002
(Growth in Percent)
Source :
Computed from :
Figure 5.22: Productivity Indicators of the Fabricated Metal Sub-sector, 2002
(Growth in Percent)
Source :
Computed from :
MACHINERY SUB-SECTOR
Productivity of the sub-sector experienced a decline by
9.9%. An increased of 5.9% in Labour Cost per Employee
compared to a decline in productivity. This led to the
decrease in labour cost competitiveness as reflected by an
increase of Unit Labour Cost by 17.5%.
INDUSTRIAL CHEMICAL SUB-SECTOR
Productivity of the sub-sector declined by 1.8%, which
was lower than manufacturing average. Labour cost
competitiveness of the sub-sector has declined due to an
increase of 5.8% in Labour Cost per Employee that was
faster than productivity. This is reflected by 7.6% growth
in Unit Labour Cost.
RUBBER PRODUCTS SUB-SECTOR
In 2002, the rubber and rubber products sub-sector
registered a productivity growth of 9.8% due to increased
demand for rubber gloves. The labour cost
competitiveness of the sub-sector also improved as
shown by the growth of productivity, which was faster
than the growth of 2.8% in Labour Cost per Employee.
WOOD AND WOOD PRODUCTS SUB-SECTOR
Wood and wood products sub-sector recorded a
productivity growth of 11.4% as demand for downstream
products increased such as fixtures and joinery for doors
and floors.
The sub-sector able to overcome the challenges of
shortage of supply of local latex and rising operational
cost by improving product quality and productivity.
Labour Cost per Employee increased by 5.3% cent higher
than manufacturing average but as productivity grew
higher than Labour Cost per Employee. The Unit Labour
Cost was reduced to 5.5% thus the sub-sector was able to
sustain its labour cost competitiveness.
Figure 5.23: Productivity Indicators of the Machinery Sub-sector, 2002
(Growth in Percent)
Source :
Computed from :
Figure 5.24: Productivity Indicators of the Rubber Products Sub-sector, 2002
(Growth in Percent)
Source :
Computed from :
Figure 5.25: Productivity Indicators of the Industrial Chemical Products
Source :
Computed from :
Figure 5.26: Productivity Indicators of the Wood and Wood
Products Sub-sector, 2002 (Growth in Percent)
Source :
Computed from :
FURNITURE AND FIXTURES SUB-SECTOR
Productivity of the furniture and fixtures sub-sector grew
by 6.4% due to an improved capacity utilisation to more
than 70%. Labour Cost per Employee grew by 2.9% and
the decline of 3.3% in Unit Labour Cost reflecting the
ability of the sub-sector to sustain labour cost
competitiveness.
IRON AND STEEL SUB-SECTOR
Productivity of the iron and steel sub-sector registered a
growth of 12.6%, higher than manufacturing average,
mainly attributed to the continuation of public
infrastructure projects. Labour Cost per Employee grew
by 12.3% which was almost the same rate with the
productivity. Thus the sub-sector able to sustain its labour
cost competitiveness as indicated by 2.6% increase in
Unit Labour Cost.
NON-METALIC MINERAL PRODUCTS SUB-SECTOR
Productivity of the sub-sector grew by 0.8% due to
increased demand from the construction industry for
building materials such as ceramic tiles, roofing tiles and
earthen bricks.
The growth of Labour Cost per Employee by 2.6%, lower
than manufacturing average but faster than productivity
attributed to an increase in Unit Labour Cost by 1.8%.
Therefore reduced the labour cost competitiveness of
sub-sector.
PLASTIC PRODUCTS SUB-SECTOR
The plastic product sub-sector recorded a growth of
6.1%. This was attributed to the expansion of other
industries especially the Electrical and Electronic and
Transport equipment industries.
The growth of 3.4% in Labour Cost per Employee, which
was lower than the growth of productivity has improved
the labour cost competitiveness. This led to a decline by
2.6% in Unit Labour Cost.
Figure 5.27: Productivity Indicators of the Furniture Products Sub-sector, 2002
(Growth in Percent)
Source :
Computed from :
Figure 5.28
Source :
Productivity Indicators of the Iron and Steel Sub-sector, 2002
(Growth in Percent)
Computed from :
Figure 5.29
Source :
Productivity Indicators of the Non-Metallic Mineral
Products Sub-sector, 2002 (Growth in Percent)
Computed from :
Figure 5.30: Productivity Indicators of the Plastic Products Sub-sector, 2002
(Growth in Percent)
Source :
Computed from :
Box 3
INNOVATIVE CAPABILITY:
A NEW CHALLENGE FOR HIGHER PRODUCTIVITY
Introduction
Innovative capability is the capability to generate and
manage technological change. The capability which
involves the process of acquiring technology-changing
skills, knowledge and experience is different from those
needed to operate existing systems. The innovation
involves the implementation of new ideas which lead to
higher performance, create new opportunities and
increase future capacity and the end result is to have
more competitive advantages, technological leadership as
well as increased knowledge base. By adopting,
developing and enhancing innovative capability it
contributes to the sources of technical progress, which
includes the workforce, system and capital equipment.
Process & Production Organisation and Product-centered
against six levels of capability which are Basic Operation
Level 1, Basic Operation Level 2, Basic Innovative
Capability Level 3, Intermediate Innovative Capability
Level 4, Advanced Innovative Capability Level 5 and
Research Based Innovative Capability Level 6.
The framework (Table B3.1) which was developed by Bell
and Pavit’s distinguishes between routine operating
capability and innovative technological capability. Routine
operating capability means the capability to produce
goods at given levels of efficiency and given input
requirements or technology-using skill.
Innovative
technological capability means the capability to create,
change or improve products, processes and production
organisation or equipment.
They have mastered basic operations in process and
capital equipment, able to achieve high-volume
production, conduct routine testing and achieved rapid
ramp up, routine maintenance through TPM,
implementing Management QMS, TQM, and QCC and
production and process organisation supported by
computer information system MRP and adopting JIT.
Assessing Technological Capability and Knowledge
Flow
In Table B3.1 the different types of technological
capabilities are shown by columns and the level of
capabilities are shown by rows. This framework was
developed based on actual observations in the Malaysian
electronic industry calibrated against regional and global
electronic industry. This framework gives historical
timeline of each individual firm and records technological
milestone, events, activities and capabilities.
There are four parameters under each type of capability
which consist of Project Management, Equipment,
Based on observations of four electronic firms, one local
and three subsidiaries of Multi National Companies (MNC)
a steady progression have attained capabilities between
Levels 3 to 5 for different types of activities. But none has
yet developed research-based innovative capability in
Level 6 involving the production of increasingly complex
and higher-value products.
Conclusion
Over the years, Malaysian electronic industry has been
concerned with improving production and equipment
capabilities which they have achieved an advance level of
innovative capability. However, none of them have
achieved research based product-centred technological
capability. The development of innovative technological
capabilities is an evolutionary and cummulative learning
process. Technology learning is evidently an important
phase for entry into R&D-based innovation capability
where diffusion of knowledge via the MNC has assisted in
building and enhancing innovative capabilities. Hence,
learning mechanisms via parent-subsidiary, suppliercustomer and local-global linkages can be relied upon to
move into leading-edge innovative organisation.
INNOVATIVE CAPABILITY: A NEW CHALLENGE FOR HIGHER PRODUCTIVITY
Table B3.1: Framework to Assess Technological Capability
Type of
Capability
Level of
Capability
Project
Management
Equipment
Process &
Production
Organisation
Productcentred
ROUTINE OPERATING CAPABILITY
Basic Operation
Level 1
Engaging prime
consultant.
Initial project outline.
Basic civil work.
Simple plant erection.
Purchase equipment.
Recruitment.
Basic maintenance but
equipment suppliers
stationed at plant.
SKD: parts assembly,
only final assembly.
Assemble kits:
dissemble &
reassemble kits.
PPC: Organising basic
process flow.
Visual testing only
Routine QC to
maintain basic
standard: in-coming,
final production
inspection, out-going
inspection.
Routine QC to
maintain basic
standard: in-coming,
final production
inspection, out-going
inspection.
Basic Operation
Level 2
Installation,
maintenance,
servicing.
Simple customising
existing system.
Basic plant erection.
Routine maintenance
of tools & equipment.
TPM.
Replication of
unchanging items of
equipment.
Process flow, line
balancing.
CKD.
Efficiency
improvement from
experience.
Routine testing.
Replication of fixed
specification.
Routine QC
Minor clean up of
design to suit
production or market.
Basic Innovative
Capability
Level 3
System integration.
Project management
services to customers.
Providing customised
software solutions
Repair & troubleshoot equip problems.
Copying & simple
adaption of existing
design.
Set-up Equipment
Design Centre.
Set-up of Process,
Production/Industrial
Engineering Dept.
Improved layout.
ISO9002, SPC, QCC,
TQM,JIT
Set-up
Prod.Eng.,Prod.Design
Dept.,Prod.Dsg. for
Manufacture,
Cosmetic and
mechanical design.
Inter-mediate
Innovative Capability
Level 4
Software development.
Project mgt.
Int. investment
Dev. Automated
equipment.
Equip.Design Centre.
High precision tooling.
Automation processes.
Flexible & multi-skilled
production.
Process reengineering.
Dev.new process
specification.
Design Centre
upgraded to separate
firm.
Own prod.design.
ISO9001, software
dev.,system
engineering.
INNOVATIVE CAPABILITY: A NEW CHALLENGE FOR HIGHER PRODUCTIVITY
Table B3.1: Framework to Assess Technological Capability (cont’d)
Type of
Capability
Level of
Capability
Project
Management
Equipment
Process &
Production
Organisation
Productcentred
ROUTINE OPERATING CAPABILITY
Advanced Innovative
Capability
Level 5
Project mgt.on a
global scale.
Recognised training &
service centre to TNC,
customers/
suppliers.
Research-Based
Innovative Capability
Level 6
Note:
CKD
JIT
MRP
PPC
QC
QCC
QMS
SKD
TPM
TQM
:
:
:
:
:
:
:
:
:
:
R&D for
specifications/ designs
of new high precision
tools, complex
automated equipment.
Patents.
Set-up recognised
training inst.
Radical innovation in
organisation.
Own-developed CIM
with customers,
vendors or group.
In dept Failure
Analysis.
Developing/man FA,
TestCAD software
tools. Patent.
Rapid prototyping.
Package design.
Materials & surface
analysis.
Upgraded to regional/
worldwide Design
Centre.
Design services for
TNC, customers.
Fast time-to-design
cutting-edge & hi-pre
equipment to produce.
Is among
regional/global leader
of CNC complex
equipment, high
precision tooling,
stamping, die &
mould, prototype
model.
Process & software
dev. To produce & test
high yield,
miniaturised & higher
performance HDD
products & chips.
Time- to- volume
production.
Research into advance
material & new
specification to
produce future or
cutting-edge products.
A leading regional or
international R&D,
prod.dev. ASICs or
software design
centre.
R&D into new
products generations.
R&D into more
uniform crystal
growth, improved
magnetic orientation,
advanced materials.
Complete Knock Down
Just In time
Material Resource Planning
Production Planning and Control
Quality Control
Quality Control Circle
Quality Management System
Semi-knocked Down
Total Preventive Maintenance
Total Quality Management
Box 4
UTILISATION OF IT/AMT IN THE ELECTRICAL AND
ELECTRONIC SUB-SECTOR
INTRODUCTION
In the present manufacturing environment, information
and communications technology (ICT) has been
recognised as the enabler to enhance enterprise efficiency
and competitiveness. Advanced manufacturing
technology (AMT) is defined as “an enabling technology
for increased productivity through higher speed and
better information about the manufacturing processes,
more flexible manufacturing lines, faster development of
innovation and shorter time-to-market resulting in lower
operational costs”.
In 2001, electrical and electronic sub-sector recorded the
most extensive usage in Information Technology (IT)/AMT
1
among other sub-sectors . The electrical and electronic
sub-sector is the largest contributor to Malaysia’s exports
earnings, investment, industrial output, value-added and
employment.
In view of the importance of the industry to the Malaysia
manufacturing sector, a study on the Utilisation of IT/AMT
in the Electrical and Electronic Sub-sector was initiated in
2002. The respondents were categorised by company size
where 36.4% were from small and medium sized
2
3
companies and 63.6% were from large sized companies
.
INTENSITY OF IT/AMT
In this study, IT/AMT applications are divided into 3 main
categories, namely, product engineering, IT in production
and production technology.
Product engineering category consists of four
applications, i.e Computer-Aided Design (CAD),
Computer-Aided Engineering (CAE), Computer-Aided
Manufacturing (CAM) and Finite Element Analysis (FEA).
These applications are used mainly in the early stage of
production to aid the design, planning and control
processes.
Intensity of IT/AMT refers to the degree of work supported
by IT. High intensity means more than 70% of the
application is being used in the manufacturing processes
while medium intensity refers to between 40% - 70% of
application being used. Low intensity refers to less than
40% of application being used.
Figure B4.1 shows the intensity of IT/AMT usage among
respondents for Product Engineering category. Of the four
applications in this category, large companies used all
applications listed compared to small and medium sized
companies that only used CAD, CAE and CAM. Of the
respondents, 70% of CAM users and 45% of CAD users
recorded high intensity of usage. High intensity of usage
in CAM and CAD was reported mainly by large sized
companies.
IT in Production category of IT/AMT application
encompasses nine applications, i.e Computer Integrated
Manufacturing (CIM), Material Resource Planning
(MRPII), Bar Code System (BSC), Electronic Data
Interchange (EDI), Activity Based Cost Accounting (ACA),
Enterprise Resource Planning (ERP), Factory Data
1
National Productivity Corporation, Information Technology Application in the Manufacturing Sector, 2001
2
Company with 150 or less employees
3
Company with more than 150 employees
UTILISATION OF IT/AMT IN THE ELECTRICAL AND ELECTRONIC SUB-SECTOR
Figure B4.1: Intensity of IT/AMT Usage in Product Engineering
Figure B4.2: Intensity of IT/AMT Usage in IT in Production
Figure B4.3: Intensity of IT/AMT in Production Technology
Collection (FDC), Customer Relation Management (CRM)
and Artificial Intelligence (AI).
Intensity of IT/AMT in the IT in the Production category is
shown in Figure B4.2. Large companies used all the
applications in this category while small and medium
sized companies did not use ACA in their operations. High
intensity of usage was recorded by 80% of CIM users,
66.7% of MRPII users, 60% of BSC users, 57.1% of EDI
users, 50% of ACA users, 41.7% of ERP users, 40% of
FDC users and 33.3% of CRM users. High intensity of
usage in CIM, MRPII, BSC, EDI, ACA, ERP, FDC and CRM
was reported mainly by large companies compared to
small and medium sized companies.
Rapid change in technology and usage of production
technology applications like Computer Numerical Control
(CNC), Laser, Programmable Logic Controller (PLC),
Computer Aided Quality Control (CAQC), Statistical
Process Control (SPC), Process Control Systems (PCS),
Flexible Manufacturing System (FMS), Intelligent sensors
and vision systems (IS/VS), Computer Aided Production
Planning (CAPP), Automated Guided Vehicles (AGVs) and
Programmable Transfer Machine (PTM) enable
competitive advantages to be achieved among
manufacturers.
Figure B4.3 shows the intensity of IT/AMT in production
technology. As expected, large companies used all the
applications in this category while small and medium
sized companies only used PCS, CNC, FMS, PLC, SPC and
CAPP. In addition, 50% of CNC, Laser and PLC users
recorded high intensity of usage respectively. High
intensity of usage was also recorded by 40% of CAQC
users, 37.5% of SPC users, 33.3% of PCS and FMS users
and 20% of IS/VS users. High intensity of usage of these
applications was reported mainly by large companies.
CONCLUSION
In today’s world of business, investing in ICT particularly
in AMT application is inevitable for manufacturers
especially for the small and medium industries. It is
intergral for them to study the latest technology available
in order to improve productivity, competitiveness and
efficiency.
automate the manufacturing processes that will assist
them in producing better quality product with lower cost
and a shorter production period.
The findings from this study shows that embarkation on
IT/AMT application in the electrical and electronic subsector is still low especially for SMIs. Generally, large
sized companies used IT/AMT application intensively in
their operations as compared to the small and medium
companies. SMIs should invest more on IT/AMT to fully
To quest for competitiveness, government assistance
such as grants and incentives are available for SMIs.
Proactive government initiatives such as E-Manufacturing
Grant and Engineering Design Grant are hoped to be key
factors that would drive higher spending on ICT in future.
Box 5
PRODUCTIVITY PERFORMANCE OF THE CONSTRUCTION SECTOR
Introduction
The construction sector is an important contributor to
Malaysia’s economic growth. The construction sector
includes activities ranging from constructing buildings,
roads, railroads, electricity or other transmission lines or
towers, pipelines, oil refiners to other specified civil
engineering projects. Experiences from developed
countries have shown that for subnational development to
take place, the construction sector must grow faster than
the overall national economy. Thus, the construction
sector acts as a barometer of the economic climate and
economic performance. In 2002, the contribution of the
sector to the economy was at RM7,434 million compared
to RM3,832 million in 1990.
The growth of the construction sector has grew in tandem
with the growth of Gross Domestic Product (GDP).
During the period of 1990 – 1997, the sector grew by
13.4%. This was attributed to the active property market
and accelerated development of infrastructure projects.
However, it plummeted in 1998 to register a negative
growth of 23%. Government measures under both the
fiscal stimulus and housing development programmes,
have been successful in addressing this declining growth.
From 1999 – 2000, the sector registered a growth of
3.1%. (Figure B5.1)
As of March 2002, there were 43,541 units of unsold
houses, 2,453 units of unsold industrial plants, 7,999
units of unsold retail property, 1.4 million sq. m. shopping
complex and 2.4 million sq. m. purpose-built office. The
overhang of unsold property has impinged the industry
from achieving a higher growth. (MIER)
The implementation of civil works such as schools and
colleges, Government quarters and infrastructure projects
under the stimulus packages was attributed to the growth
of the sector. The productivity of the sector grew by 2.5%
in 2002 as compared with 0.4% registered in 2001.
The productivity growth of the sector for years 1998 and
1999 declined as compared with a positive growth in the
wage rate. However the sector was able to register
positive productivity growth for year 2000 (2.3%), 2001
(0.3%) and 2002 (2.5%). (Figure B5.2)
Issues and Challenges
Generally, the construction sector is still very complacent
in using labour-intensive, inferior products and low
technology methods of construction. However, the recent
repatriation of foreign workers, which resulted in a
shortage of workers, especially foreign labour and the
continuous usage of old and obsolete technologies, have
contributed to the low level of productivity achieved by the
sector.
The construction sector needs to focus on several criteria
to enhance productivity and quality to make the sector
more competitive. Besides research and development,
the training and upgrading of skills of the workforce is
also important as it helps to enhance productivity. In the
era of globalization and liberation, advancement in
technology is also important for the sector.
It is widely recognised that the activities involved in the
construction sector are complex in nature. It involves
many parties from designing, planning, coordinating and
implementing. This complexity can be minimized through
the adoption of Industrialized Building System (IBS).
IBS can be defined as “products, systems and techniques
used in making construction less labour-oriented, faster
as well as better quality controlled”. It generally involves
prefabricated products – factory manufactured elements
that are transported to the construction sites and
Figure B5.1: The Performance of The Construction Industry (1980 - 2002)
assembled. While there are various definitions of IBS,
based upon the structural aspects of the systems, IBS can
be divided into five major groups namely, pre-cast
concrete framing, panel and box system, steel form-work
system, steel framing systems, timber framing systems
and block-work systems.
The experiences observed in some developed countries
such as U.K, Germany, Japan and U.S have shown that
IBS has long-term benefits in terms of energy saving,
better indoor air quality and less labour costs.
Figure B5.2: Productivity and Wage Rate of the Construction Sector
1998-2002
Chapter 6
Chapter 6
The Services sector is a major contributor to Malaysia’s
GDP growth. It contributed 57.0% to GDP growth in
2002 as compared to 55.2% in 2001 (Figure 6.1). The
sector employed 4.7 million employees in 2002 and
contributed 49.8% of total employment (2001: 49.4%).
The Services sector continues to be a major employer
with a share of 49.8% of the total employment in 2002
(Figure 6.3). Within the sector, Commerce and Trade subsector contributed the highest with 17.9%, Transport
sub-sectors 5.3% and Finance 5.2%.
The Services sector comprises:
In 2002, the Services Sector registered an employment
growth of 3.3% (2001:1.4%) (Figure 6.4). At sub-sector
level, the Transport sub-sector grew at a rate of 4.0%,
Finance 5.5%, Utility 4.3%, Commerce and Trade 2.6%
and Government Services 1.0%.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Transport
(transport,
storage
and
communications);
Finance (finance, insurance, real estate and
business services);
Commerce/Trade (wholesale and retail trade, hotel
and restaurants);
Utility (electricity, gases and water services);
Government Services (general public services,
defense, and others); and
Other services (community, social and personal
services, product of private non-profit services to
household and domestic services of household).
The high GDP growth was contributed by Commerce and
Trade at 15.0%, Finance at 14.1%, Transport at 8.8%,
Government Services at 7.2% and Utility at 4.3%. In
2002, the Services sector registered an output growth of
5.3% (2001:5.7%) (Figure 6.2). At sub-sector level, the
Finance sub-sector recorded the highest growth at 8.3%,
followed by Utility 7.3%, Transport 5.4%, Government
Services 4.3%, and Commerce and Trade 3.8%.
During the 1998-2002 period, the output of the Services
sector increased by 4.3% (Figure 6.2). The Utility subsector registered a growth of 6.3%, Finance 5.5%
Transport 5.0%, Commerce and Trade 3.4%, and
Government Services 4.3%.
The employment growth in the Services sector during the
period of 1998-2002 registered a growth of 1.8% annually
(Figure 6.4). During the same period, the Utility subsector experienced a growth of 3.2.%, while the Finance
and Other Services sub-sectors grew at a rate of 2.3% and
1.6% respectively.
Productivity Trends
In 2002, the Services Sector registered a productivity
growth of 2.1% (2001:2.4%) (Figure 6.6). Government
Services registered a growth of 3.4%, Utility 2.9% Finance
2.8%, and Transport 1.3%.
During the period 1998-2002, the Services sector’s
productivity grew at the average rate of 3.6% (Figure
6.6). At sub-sector level, Government Services grew by
4.1%, Utility 2.6%, Transport 2.3%, Finance 2.3%, and
Commerce and Trade 1.2%.
ISSUES AND CHALLENGES
The Services sector is highly competitive as a result of
the rapid growth in technology, particularly in the
Information and Communications Technology (ICT) and
globalisation. In order for the sector to maintain their
competitive edge, it is imperative that there is continuous
innovation in terms of services improvement.
Figure 6.1: Output Share of Services Sector
Source:
Computed from:
e = estimate
Figure 6.2: Output Growth of Services Sector
Source:
Computed from:
e = estimate
Figure 6.3: Employment Share of Services Sector
Source:
Computed from:
e = estimate
Figure 6.4: Employment Growth of Services Sector
Source:
Computed from:
e = estimate
Figure 6.5: Productivity Level of Services Sector
Source:
Computed from:
e = estimate
Figure 6.6: Productivity Growth of Services Sector
Source:
Computed from:
e = estimate
To further meet the changing needs of customers, the
Services sector should focus on three main areas namely
nurturing the quality of workforce, enhancing the use of
technology and improving service quality.
In the knowledge-based economy, success in this fastchanging era will depend on the ability of both
organisations and individuals to exploit knowledge,
creativity and skills.
Quality of Workforce
Organisation excellence requires the Services sector to
be efficient and effective. Hence, organisations must
encourage their employees to be more knowledgeable,
customer focused, capable of teamworking, flexible and
have the ability to work independently.
The optimum use of appropriate technology will enable
the sector to shift to higher growth, improve customer
services, increase market share and leverage existing
resources to generate new revenue and gain a competitive
edge. For the change to be beneficial, the use of
technology should be business driven and complement
the business needs.
The knowledge and skills of the workforce are essential
for business survival particularly in the Services sector.
Hence, organisations have to establish beneficial learning
culture comprising multi skilling, customer services and
technology skills. From the employees perspective, multi
skilling helps to sustain the value and high employability
of oneself, better understanding of integrated
organisation activities and ultimately, customer services
are delivered in a more timely and cost-effective manner.
Enhancing the Use of Technology
The rapid growth of information and communication
technology as well as the telecommunications has
resulted in availability and wider range of services in this
industry. As businesses are increasingly globalised,
organisations must employ new methods, new skills
and knowledge through e-business.
Quality Environment towards Quality Service
Improvement
To be a leading organisation, it is important to implement
quality improvement initiatives that include development
strategies, marketing changes and human resource
development. The competitive environment requires a
reliable process to be in place to enable the organisation
to focus on developing and delivering zero defects
services.
Quality improvement can be further enhance through
benchmarking to identify some of the best practices
observed in the industry and inculcate such practices.
Recognising the importance of quality improvement as
the key to customer satisfaction, organisations should
initiate productivity and quality development programmes
such as ISO implementation, six sigma and balanced
scorecard.
BANKING INDUSTRY
In tandem with the economic recovery, the performance
of the banking industry had improved. Added value
increased from RM22.4 billion in 2001 to RM22.8 billion
in 2002, registering an increase of 1.79%.
With the increase in total operating revenue from RM46.8
billion in 2001 to RM46.9 billion in 2002 and the drop in
number of employees from 90,273 in 2000 to 87,747 in
2001, banks are now beginning to reap the benefits from
the consolidation process. However, local banks and
financial institutions need to be competitive and broaden
their own customer base to ensure its long-term
sustainability. As competition intensifies, the margins will
be further squeezed and as such, banks would need to be
more innovative in pricing and packaging their services.
Added Value Per Employee
In 2002, the Added Value per Employee in the banking
industry increased by 4.8% (2001 : 10.9%) (Figure. 6.7).
This was due to the economic recovery, financial
restructuring as well as the wider application of
Information and communication technology ( ICT ).
Within the group, the commercial banks recorded the
highest growth of 7.1% (2001 : 12.5%) while the finance
companies achieved a growth of 5.2% (2001 : 6.2%). The
merchant banks however, registered a decline of 22.5%
(2001 : 3.5%).
In 2002, Labour Cost per Employee of the banking
industry increased by 3.8% (2001 : 12.5%) (Figure 6.8)
and the Added Value per Labour Cost increased by 1.0%
(2001: - 1.4%) (Figure 6.9) while Unit Labour Cost
increased by 0.9% (2001 : 2.2%) (Figure 6.10). Generally,
Labour Cost Competitiveness for the banking industry had
improved as the growth in Labour Cost per Employee
(3.8%) was lower than the growth in Added Value per
Employee (4.8%). Among the banking group, merchant
banks recorded the highest growth of Labour Cost Per
Employee of 12.6% (2001 : 16.6%) while commercial
banks and finance companies registered a growth of 3.3%
(2001 : 13.6%) and 2.4% (2001 : 7.8%) respectively.
For the Added Value Per Labour Cost, merchant banks
recorded a decline of 31.2% (2001 : 11.2%) while finance
companies and commercial banks recorded a growth of
2.8% (2001 : - 1.5%) and 3.7% (2002 : - 0.9%)
respectively. In terms of Unit Labour Cost, merchant
banks recorded the highest growth of 30.1% (2001 :
10.9%) (Figure 6.10) while the finance companies
registered a growth of 1.1% (2001 : 3.0%). However the
commercial banks registered a decline of 1.4% (2001 :
1.8%) as a result of consolidation.
Capital Productivity
In 2002, the banking industry recorded a decline of 3.7%
in Added Value per Fixed Asset as compared to a growth
of 0.5% achieved in 2001 (Figure 6.11). The decline in
Added Value per Fixed Asset was due to the high
investment in Fixed Asset particularly ICT as the industry
is very competitive. Within the group, the merchant banks
recorded the highest decline of 29.3% (2001 : - 8.3%) in
Added Value per Fixed Asset while the finance companies
and commercial banks registered a decline of 2.5% (2001
: 2.9%) and 1.6% (2001 : 0%) respectively (Figure 6.11).
Fixed Assets Per Employee
In 2002, the Banking Industry registered a growth of 9.0%
(2001 : 10.6%) in Fixed Assets per Employee (Figure
6.12). This was due to high expansion in ICT to enhance
business transactions. Among the group, the merchant
banks achieved the highest growth of 9.5% (2001 :
12.8%) while commercial banks and finance companies
recorded an increase of 9.0% (2001 : 12.7%) and 7.8%
(2001 : 3.1%) respectively.
Sustaining Productivity
In the face of rising customer expectations and demands,
banks need to be sensitive to customer needs and to
strive for greater efficiency. The traditional boundaries of
financial markets had broadened considerably with the
financial sector become increasingly diversified due to the
emergence of new modes of financing and new players.
As such, the banking system would face a greater degree
of disintermediation.
Banks need to redefine their strategic business focus, reexamine existing business models and find their own
niches. Banking is a long-term business requiring
strategic focus and clear organisational goals. Sound
business strategies require highly skilled manpower and
management team and the quality of manpower would be
the key element of performance and competition within
the banking fraternity. Continuous training and
Figure 6.7:
Source:
development of bank employees will contribute towards
higher productivity and quality of services in the banking
industry.
Information and communication technology can
contribute towards higher productivity. The application of
ICT will further increase efficiency, speed and accuracy of
transactions within the banking system.
Banking Industry, 1998- 2002
Computed from:
- Bank Negara Malaysia Data
Figure 6.8:
Source:
Computed from:
Figure 6.9:
Source:
Labour Cost Per Employee
Added Value Per Labour Cost
Computed from:
Figure 6.10:
Source:
Computed from:
Figure 6.11:
Source:
Unit Labour Cost
Added Value Per Fixed Asset
Computed from:
Figure 6.12:
Source:
Computed from:
PORT INDUSTRY
Under the Eighth Malaysia Plan, port development will
continue with emphasis on improving port infrastructure
and facilities. The improvement includes investments on
post-panamax cranes, erecting additional berths and
deepening existing berths. The port industry has also
taken initiatives to boost Malaysian ports as regional
hubs. The initiatives include increasing port capacity,
improvement in supporting ancillary services,
cooperation with other international ports, offering main
line operators user-friendly services, competitive port
tariffs, rebates, preference vessels and dedicated berth
schemes. Furthermore, measures have also been taken to
improve the efficiency and productivity of ports namely,
multi-skilling training programmes, modernisation,
increased automation and computerization to upgrade
management processes and procedures.
PRODUCTIVITY INDICATORS
Two sets of productivity indicators are used to review the
performance of ports. The indicators are financial and
physical productivity indicators which are based on
financial and operation data respectively.
FINANCIAL PRODUCTIVITY INDICATORS
Financial productivity indicators are generated from the
financial statements. The indicators are used for
planning, measuring, analysing, controlling and
improving performance.
In 2002, the Added Value per Employee of Malaysian
ports increased to RM132,177 (2001: RM109,999),
posting a growth of 20.2% (Figure 6.13). Utilisation of
high technology equipments and efficient services
coupled with introduction of IT packages to optimise the
utilisation of space at container yard and other
computerized service systems are responsible for such
growth.
Labour Cost Competitiveness can be measured by Added
Value per Labour Cost, Labour Cost per Employee and
Unit Labour Cost. In 2002, Added Value per Labour Cost
and Labour Cost per Employee experienced a growth of
12.0% (2001: 1.8%) (Figure 6.14) and 7.3% (2001: 9.3%)
(Figure 6.15) respectively. Meanwhile, Unit labour Cost
registered a decrease of 10.0% (2001: 7.7%) (Figure
6.16). The improvement in Labour Cost Competitiveness
was due to higher increase in Added Value growth as
compared to the increase in the growth of Labour Cost.
Hence, improvement in Labour Cost Competitiveness
shows how labour resources are effectively managed by
the ports.
In 2002, ports experience a higher growth in Added Value
as compared to the growth in Fixed Assets causing a
Figure 6.13:
growth in Capital Productivity by 10.1% (2001: -2.7%)
(Figure 6.17). Such improvement is due to better
utilisation of the fixed assets.
Capital Intensity
Port operations are capital intensive. In 2002, Capital
Intensity grew by 9.2% (2001: 14.3%) (Figure 6.18). The
growth was attributed to greater usage of sophisticated
and high technology equipment as well as Information
and Communication Technology (ICT) applications.
Process Efficiency
In 2002, Process Efficiency of the ports was 1.27 (2001:
1.20), indicating a growth of 5.8% (Figure 6.19). Such
improvement showed that ports were able to utilise their
resources efficiently and effectively. However, further
efforts are required in order to maintain and improve the
efficiency in port operations such as implementing quality
programmes at all levels, continuous training to upgrade
skills, multi-skillling and benchmarking with best
practices.
Of Port Industry
e = estimate
PHYSICAL PRODUCTIVITY INDICATORS
The physical productivity indicators are computed using
daily operations data. The indicators are used to gauge
and measure the ports’ overall business performance.
Cargo Throughput Handled
Cargo throughput handled measures the total tonnage of
cargo handled at ports per year. The total tonnage
throughput handled increased from 203.88 million tonnes
in 2001 to 213.30 million tonnes in 2002, indicating a
growth of 4.6% (Figure 6.20). This increase was due to a
significant growth in local cargo as well as improvement
in regional trade transactions.
Container Throughput Handled
Container throughput handled measures total Twenty-foot
Equivalent Unit (TEU) of containers being handled per
year. The improvement in regional trade transactions and
more goods being transported through containers have
resulted in a growth of 20% in the volume of container
handled in 2002 (2001: 7.5 million, 2002: 9.0 million)
(Figure 6.21).
Total Number of Ship Call
In 2002, total number of ship call registered a growth of
1.6% (2001: 57,985 ship call, 2002: 58,892 ship call)
(Figure 6.22). The increase was due to actions taken by
ports to promote business transactions and networking
with other international ports, maintaining effective
services (such as customer service centre and port free
zone) as well as extending their berth capacity. The
outcome of such initiatives has resulted in more and
bigger vessels berthing in our local ports.
Average Ship Turnaround Time
The average ship turnaround time measures the duration
of the vessel’s stay in port and calculated from the time of
arrival to the time of departure. In 2002, the average ship
turnaround time for break bulk berth has increase
marginally by 0.7% (2001: 42.56 hours, 2002: 42.85
hours) (Figure 6.23). The longer turnaround time taken
was attributed to the increase in the volume of cargo
handled.
On the other hand, the average ship turnaround time for
container berth has decrease by 5.7% (2001: 17.8 hours,
2002: 16.8 hours) (Figure 6.23). The decrease was
attributed to effective application of ICT, better equipment
as well as improvement in port operation services.
Figure 6.14:
Added Value Per Labour Cost
Of Port Industry
e = estimate
Figure 6.15:
Labour Cost Per Employee
Of Port Industry
e = estimate
Figure 6.16:
Unit Labour Cost
Of Port Industry
e = estimate
Figure 6.17:
Added Value Per Fixed Asset
Of Port Industry
e = estimate
Figure 6.18:
Of Port Industry
e = estimate
Figure 6.19:
Process Efficiency
Of Port Industry
e = estimate
Figure 6.20:
Total Cargo Throughput Handled
Of Port Industry
Source: Ministry of Transport Malaysia
e = estimate
Figure 6.21:
Total Container Throughput Handled
Of Port Industry
e = estimate
Figure 6.22:
Total Number Of Shipcall
Of Port Industry
e = estimate
Figure 6.23:
Average Ship Turnaround Time
Of Port Industry
e = estimate
Box 6
PRODUCTIVITY AND QUALITY IMPROVEMENT
THROUGH MULTI-SKILLING
Introduction
Many organisations in the service industry globally have
introduced multi-skilling. Multi-skilling is defined as “the
process in which employees are trained and educated to
perform a wider range of tasks compared to what was
done before”. It involves identifying a range of tasks and
activities required to render a service or produce a
product and subsequently training the employees so that
they can perform their tasks and activities. The process
eventually results in employees being multi-skilled and
flexible in their job assignments.
The Importance of Multi-Skilling
In the fast changing work environment one needs to be
aware of the changes that arise in work practices. In the
services sector, knowledge and skills of people are
paramount. Every business needs to organise itself in
such a way as to be able to adapt to changes swifly in
order to sustain its competitive advantage.
Multi-skilled workforce is one option which can help to
achieve high service level with low inventories. It is
possible to achieve high service levels at lower cost
provided the cost related to multi-skilling is less than the
saving due to reduced inventories.
Reasons for introducing multi-skilling in the work place
are:
●
fast changing times
●
business must be capable of adopting to change
●
business has globalised and cost elements are
very important to the effectiveness, efficiency and
profitability of a company
●
organisational structures are flatter, therefore,
centralisation and de-centralisation need to be
considered in the context of dealing with changing
work practices.
●
●
●
●
people need to be trained to work in uncertain and
changing environment and be prepared to think
and act accordingly to the changes.
skills need to be transferable and they can be both
hard skills and soft skills.
empowerment has been increasingly accepted.
teams are now a part of many businesses.
It is important to identify the reasons why a company
might have to introduce such practices. The important
challenges such as costs, responsiveness, lead times,
customer expectations, sustaining competitive advantage
and building the equity of brands need to be addressed.
With a flexible, trained and well-motivated workforce,
there is a better chance of achieving these challenges and
thriving in the markets. Failure to do so, sales may fall,
costs may rise and the business may be vulnerable to any
possible threats.
Benefits of Multi-Skilling.
Benefits gained from implementing multi-skilling are as
follows:
a.
Increased Efficiency
Multi-skilling enables the number of job functions
to be grouped into one position. For example, the
tasks of receptionist, service centre and
telephonist which were previously done by
individuals assigned to the specific jobs are now
grouped into one job position. The three functions
are now being shared which resulted in higher
productivity and efficiency. With the removal of
functional specialization, fewer substitutes are
required to cover absence, holiday and staff
turnover. Increasing the pool of individual skills
gives an organisation greater flexibility in its
allocation of labour to tasks, thus improving
overall efficiency.
PRODUCTIVITY AND QUALITY IMPROVEMENT THROUGH MULTI-SKILLING
b.
c.
Improved Work Environment
The impact of multi-skiling is not only to job
functions but also on work environment attributes
such as identification and image of the
organisation, training and development or career
advancement, customer focus, work organisation
and
productivity,
communication,
and
supervision. Based on comparison between the
results of the staff opinion survey at one of the
leading hotels (conducted before and after the
implementation of multi-skilling), the respective
percentage level of satisfaction on work
environment attributes is higher after the
implementation of multi-skilling (Table B6.1).
Improved Competitiveness
Improving organisational competitiveness can
lead to more superior performance from the
current position. Every organisation has its own
strategies to survive in the global market and has
different focus to explore. Some organisations
focus on the ability to persuade customers to
choose their offerings over alternatives while
others focus on the ability to enhance process
capabilities.
Multi-skilling can be considered as one of the
business strategies to sustain and compete with
others in an unpredictable market. For example,
the competitiveness in terms of cost savings could
be achieved through active involvement of
employees in multi-skilling. Although multiskilling may result in increased wage rates as
depicted by rising labour cost per employee, the
overall trend for the growth in sales per employee
also rises due to flexibility of work.
d.
Improved Morale
Besides the financial benefits gained by the
organisation, multi-skilling indirectly will improve
employees’ morale due to financial and nonfinancial incentives. Multi-skilling allows
employers to move employees from one task to
another within the same department but different
job functions. One point in favour of this form of
flexibility is that it reduces boredom by not
exposing personnel to just one routine. This kind
of flexibility is most popular where people work in
teams and it is also used in some problem solving
situations. Management can concentrate on
maintaining quality and switching staff to
overcome a bottleneck. The flexibility would bring
about cost reduction and increased productivity.
Table B6.1: Impact of Multi-Skilling on Work Environment
Level of Satisfaction (%)
Before
After
Work Environment Attribute
Identification and Image of Organisation
Training and Development/Career Advancement
Customer Focus
Work Organisation and Productivity
Communication
Supervision
71
65
69
41
50
49
79
75
73
44
54
56
PRODUCTIVITY AND QUALITY IMPROVEMENT THROUGH MULTI-SKILLING
Challenges in Implementing Multi-Skilling
Multi-skilling will contribute to enhancing employees’
knowledge and skills. A shift in paradigm on the part of
employees is necessary for the successful
implementation of multi-skilling. To enable the employees
to appreciate the value of implementing multi-skilling,
they need to be constantly reminded of the benefits of
multi-skilling.
Another issue is multi-skilled employees might not enjoy
their new roles. They feel too many things need to be
done at one time and such burden should be shared or
compensated with others. Otherwise, multi-skilling effort
might lead to negative impact.
Some companies and unions are still apprehensive on the
implementation of multi-skilling. No doubt multi-skilling
might create advantages and disadvantages, but everyone
wants the best working environment. To alleviate the
resistance, multi-skilling should be implemented in
combined job positions. Such new positions should
result in better benefits than before. Thus the opportunity
for promotion of employees who are multi-skilled will be
enhanced whenever these benefits are incorporated into
the Collective Agreement (CA).
Conclusion
Multi-skilling encourages the acquisition of new
knowledge and skills. The employees would be more
prepared to face the challenges ahead by acquiring higher
level of knowledge and skills as well as being better
informed.
Multi-skilling is vital for continued development,
prosperity and productivity of the service industry in
Malaysia. With increasing competition in terms of
number of operators and constraints such as rising labour
costs on one hand and sophistication and higher
demands of customers on the other, the industries may
well experience real difficulties in future if measures to
address them are not taken. Human resource is the most
important and crucial factor for any organisation.
Engaging in developing them to be knowledgeable and
skilled is the most important investment. Multi-skilling
provides a long-term solution to many human resource
problems especially those that are directly related to
costs.
Box 7
EFFICIENCY OF LOGISTICS SYSTEM
Introduction
The role and scope of logistics have changed significantly
in recent years. Traditionally, logistics assumed a
supportive role to functional areas such as production and
marketing, and its scope limited to transportation and
warehousing. In today’s competitive global environment,
however, logistics has become more prominent in
enabling increased productivity and profit to business
organizations and is recognized as a critical factor of
competitive advantage. Over the years, Malaysia has built
its logistics infrastructures to provide more efficient
movement of consignments. These facilities are also
necessary to enable logistics industry to complement the
development of other economic sectors in the country.
Generally, there are many logistics service providers that
are involved in importing and exporting goods to foreign
markets. The logistics service providers include
exporter/importer (depot), forwarding agent, shipping
agent, haulier, port operator, customs and shipping line.
The links in the logistics chain is shown in Figure B7.1.
National Productivity Corporation (NPC) has conducted a
study on 120 manufacturers cum logistics users in 2002.
The study focused specifically to examine the efficiency of
logistics system and its logistics service providers from
the perspective of logistics users. The logistics users that
respond to the study include manufacturing companies
from various industries.
Current Usage of Logistics Services
Goods can be packaged and categorized into several types
of cargoes namely, break bulk/general cargo, liquid bulk,
dry bulk and container haulage. Container haulage is the
most common type of cargo used by manufacturer
(83.1%), break bulk/general cargo (48.2%), dry bulk
(13.3%) and liquid bulk (9.6%) (Figure B7: 2)
The efficiency of logistics system in Malaysia is measured
by several indicators namely, speed of movement of
consignments, response time and time taken to deliver
and dispatch consignments. The flow of logistics chain
will start with the movement of consignments from the
manufacturer to the port by using the haulage services
shown in Figure B7:1. The study shows that 68.1% of the
manufacturers felt that the speed of movement of
consignments is adequate (Figure B7:3) and 81.9% in
terms of fulfilling their expectations (Figure B7: 4).
Basically, the manufacturers will notify the road hauliers
before transferring their consignments to the port. It is
measured by a response time indicator whereby 72.7% of
manufacturers were aware that they need to provide 1 or
2 days notification and 74.5% of the manufacturers
admitted that the duration is reasonable (Figure B7:5).
This pattern of response time and expectations suggest
that road hauliers are relatively quick to respond to
customers’ requests for services and the response time
are within customers’ expectation.
A complete process of the logistics chain takes place after
receiving consignments at the premise and dispatching
consignments to its destination. About two-third (70.6%)
of manufacturers (Figure B7: 6) admit that their
consignments arrived at their premises as scheduled and
within their expectations (Figure B7: 7). Similar pattern of
results were obtained on time taken to dispatch
consignments (Figure B7: 6 and Figure B7: 7).
The delay in consignment movements were caused by
communication breakdown among relevant parties
(65.0%), delays in processing by customs department
(60.8%), delays in processing documents by shipping
agents (55.0%), lack of sense of urgency among
Figure B7.1: Logistics Chain in Malaysia
Shipping
Agent
Forwarding
Agent
DEPOT
Exporter
PORT
OPERATOR
HAULIER
CUSTOMS
SHIPPING
LINE
CUSTOMS
PORT
OPERATOR
HAULIER
DEPOT
Importer
Shipping
Agent
Forwarding
Agent
Sources: National Productivity Corporation, Malaysia.
Figure B7.2: Percentage of Types of Cargo Usage
Figure B7.3: Speed of Movement of Consignments
Figure B7.4: Rating of the Speed of Movement of Consignments
Figure B7.5: Rating by Days Needed for Picking Consignments
Figure B7.6: Delivering and Dispatching Consignments on Time
Figure B7.7: Rating on Delivering and Dispatching Consignments on Time
Figure B7.8: Performance of Logistics Service Providers
forwarding agents (55.0%), and delay on port release of
containers by port operators (54.2%) (Table B7: 1).
The effects of delay in consignment movement resulted
disruption in production schedule (67.5%), extra
operational costs (67.2%), demurrage charges (65.8%),
late delivery of consignments (64.2%), and delay on
clearance of letter of credits (63.3%) (Table B7: 2).
In response to such delays, manufacturers may opt for
various transport mode namely, price of service (31.3%),
reliability of service (26.6%), experience of logistics
service providers (10.9%), security of goods in transit
(7.8%), and professionalism of logistics service providers
(6.3%) (Table B7: 3).
Performance of Logistics Service Providers
In ensuring the efficiency of logistics system in Malaysia,
there is a need to measure the performance of logistics
Table B7.1:
service providers by several indicators namely, response
time, flexibility, innovativeness, level of communication,
delivery of service, market knowledge and pricing. Quick
response time is necessary to satisfy the needs of
customers. The study shows that forwarding agents have
comparatively better performance in response time,
flexibility, better communication and delivery of service,
good market knowledge and good competitive pricing
than other logistics service providers. On the other hand,
shipping lines are very innovative in providing services.
Weakest Link in the Logistics System
Looking from the perspective of a logistics chain
management, there are a number of different logistics
service providers involved to export or import a
consignment from foreign counterparts. Each logistics
service provider serves as a connecting chain to ensure a
smooth flow of a consignment from a point of origin to its
next point of destination. For the purpose of this study,
Top Five Causes of Delay
in Consignment Movement
Causes
Agree
(%)
Disagree
(%)
65.0
60.8
55.0
55.0
54.2
24.2
23.3
29.2
32.5
25.8
Causes
Agree
(%)
Disagree
(%)
Disrupt production schedule
Need to pay extra operational cost
Container demurrage charges
Late delivery of consignment
Delay on L/C clearance
67.5
67.2
65.8
64.2
63.3
15.0
16.8
18.3
20.0
17.5
Communication breakdown among relevant parties
Delays in processing by Customs Department
Delay in processing document by Shipping Agent
Forwarding Agent have the habit of need to be reminded
Delay of port release on container by Port Operator
Table B7.2:
Not
Relevant
(%)
10.8
15.8
15.8
12.5
20.0
Top Five Effects of Delay in
Consignment Movement
Not
Relevant
(%)
17.5
16.0
15.8
15.8
19.2
any logistics service provider that causes a delay in the
movement of consignment is considered as a weakest link
in the logistics system. Road hauliers and customs
department were the weakest links in the logistics system.
Manufacturers feel that road hauliers tend to discriminate
their customers by giving priority to their main customers
and did not communicate and coordinate effectively with
customers on changes of schedules.
Similarly, manufacturers rated customs department as
relatively rigid and slow in approving customs documents
for importing or exporting a consignment.
Conclusion
The study reveals that container haulage is the most
popular type of cargo used by manufacturers to deliver
their consignments. In terms of movement of goods,
majority of manufacturers admit that the speed of
Table B7.3:
movement of goods is adequate and meets their
expectations. In terms of number of days of advance
notification for picking a consignment, the study shows
that two-third of manufacturers claimed that they need to
notify road hauliers one or two days. This duration of
advance notification is perceived by manufacturers as
appropriate. The main causes of delay in consignment
movement include communication breakdown among
relevant parties, delays in processing by customs and/or
shipping agents, slow action taken by forwarding agents
and delay of port release of containers release by port
operators. The main effects of delay in consignment
movement include increase operational costs, missed the
scheduled vessel, delay in clearance of letter of credit, and
a drop in confidence to the logistics service providers.
Among the logistics service providers, road hauliers and
customs department are the weakest for import and
export activities.
Main Barriers in Choosing a Transport Mode
Factor
(%)
Price
Reliability of service
Experience
Security of goods in transit
Professional approach
31.3
26.6
10.9
7.8
6.3
Box 8
BENCHMARKING FOR PRIVATE HOSPITALS
Healthcare is provided mainly by the Government through
its network of clinics and general hospitals. The services
provided are at minimal cost but to some customers, it
was not up to their expectations.
the hospitals beyond the time medically required,
inflating the demand for hospital beds and
increasing hospital costs.
For bed occupancy rate, it ranges from 36% to
74% with an average of 59%. However, there was
a drop in the average bed occupancy rate by 4%
which was at 63% in 2001.
With the rise in income and standard of living, consumers
nowadays are more willing to pay a premium for these
services. As they are paying a significant amount of
money compared to what they had been paying at public
hospitals previously, they would expect better quality of
services.
For every occupied bed, there were between 1.1 to
3.8 trained nurses. On average there was 1.8
trained nurse per occupied bed. Meanwhile, the
number of consultations provided by each FTE
doctor ranges from 253 to 4,288 consultations.
On average each FTE doctor provided 2,302
consultations in 2002. The number of surgeries
per FTE surgeons is not available as the data for
FTE surgeons could not be obtained.
The main objective of this project is to establish
benchmarks for hospital activities. These benchmarks
would enable private hospitals to compare their own
performance and, initiate the course of action for
continuous improvement.
A total of nineteen private hospitals participated in this
project. 56% of these hospitals are from Kuala Lumpur
and Selangor. The others are from Pulau Pinang, Perak,
Johor, Sabah and Negeri Sembilan. According to staff
employed, 83% of the hospitals had 500 staff or less.
Eighteen key performance indicators (KPIs) were
identified. These KPIs are grouped into five categories
namely clinical outcome, technical efficiency, financial
indicators, patient satisfaction and staff utilisation. The
categories and its KPIs are shown in table B 9.1
Findings
1.
Technical Efficiency.
Most of the hospitals recorded an average length
of stay of three days and below. Compared to the
previous five years (1997-2001) figures, the
average length of stay for 2002 was the lowest at
3 days. In 2001 the average length of stay was 3.5
days. This is an improvement as longer stay may
reflect a waste of resources if patients are kept in
2.
Staff utilisation
In 2002, there were 4 to 11 FTE of all staff for each
occupied bed which on average there were 5 FTE
of all staff for each occupied bed. In comparison,
for year 2001, the average figure was lower at 4
FTE of all staff per occupied bed. The average
labour cost per occupied bed was RM 182,555.
One hospital had an average labour cost per each
occupied bed of almost RM 500,000 while the rest
had an average of less than RM 281,000 of labour
cost for each occupied bed. The minimum was at
about RM 77,400. There was also a wide
difference from the lowest total laboratory cost
per occupied bed (RM 3,590) to the highest (RM
53,819). The average total laboratory cost per
occupied bed was RM 17,092.
The doctor’s hours per inpatient day ranges
between 1 to 8 hours with an average of three
hours where else in year 2001, the average
Clinical Outcome
Staff Utilisation
Technical Efficiency
Table B9.1: Key Performance Indicators (KPI)
a.
Average length of stay (ALOS)
b.
Bed Occupancy Rate (BOR)
c.
Number of trained nurses per occupied bed
d.
Surgeries per full time equivalent (FTE) surgeon
e.
Number of consultations per FTE doctor
a.
Full time equivalent (FTE) of all staff per occupied bed
b.
Doctor’s hours per inpatient day
c.
Nursing hours per inpatient day
d.
Total hospital laboratory cost per occupied bed
e.
Operating theatre utilisation rate (OT)
f.
Labour cost per occupied bed
a.
% of surgical patients who passed away within 14 days of surgery.
b.
% of elective Lower Surgical Caesarean Section (LSCS) with length of stay (LOS) of more
than 5 days.
c.
% of eligible acute myocardial infarction (AMI) patients receiving thrombolytic therapy within
Financial
Indicators
Patient
Satisfaction
one hour of presentation at emergency department.
a.
Outpatient department (OPD) waiting time
b.
Waiting time for discharge (from time of decision to discharge to completion of all
procedures prior to discharge)
c.
Waiting time for admission (from OPD or emergency room)
a.
Stock turnover ratio
b.
Net profit margin
doctor’s hours per inpatient day was two hours.
As for nursing’s hours per inpatient day, it was
between 6 - 21 hours with an average of 10 hours
while in 2001 it was between 6 –14 hours with an
average of 11 hours.
an average of 30 minutes. Based on the feedback,
only one hospital had an actual OPD’s waiting time
less than its own targeted time.
For waiting time to admission, the targets set by
the hospitals ranged between 5 to 90 minutes with
an average of 23 minutes. In practice, the waiting
time for admission was between 10 to 112
minutes with an average of 35 minutes. 13
hospitals have less than the actual average
admission waiting time of 35 minutes.
The operating theatre utilisation rate is based on
the assumption that for each year, the maximum
capacity of operating theatre is 8 hours a day and
5 days per week for 50 weeks. The remaining two
weeks is allocated for maintenance. In 2002 the
rate was between 9 - 125% with an average of
51%. Compared to the previous year in which the
average utilisation was at 75%, the data shows
that there was a significant drop in the average
operating theatre utilisation rate.
3.
Clinical Outcome
Based on the feedback, five hospitals reported that
there were no cases of surgical patients who had
died within 14 days of surgery while 10 hospitals
reported the figure to be less than 0.5%. Only one
hospital reported a figure of more than 0.5% that
was at 0.96%. As for % of elective LSCS with LOS
of more than 5 days, six hospitals reported that
there were no such cases while ten other hospitals
reported that less than 20% stayed for more than
5 days. The majority of the patients stayed for 3
days or less.
Five hospitals managed to provide therapy within
an hour of presentation at emergency department.
Seven hospitals did not give any figures while the
rest reported 17% to 83% of their patients
received the therapy within an hour of
presentation. The average of all hospitals was at
73%.
4.
Patient Satisfaction
All hospitals except one distributed patient
satisfaction survey. Twelve hospitals make it a
standard practice of monitoring the outpatients
department clinic’s (OPD) waiting time.
For OPD’s waiting time, the target set by the
hospitals ranges between 5 to 30 minutes with an
average of 17 minutes. In actual fact the waiting
time for OPD was between 10 to 60 minutes with
The actual average waiting time of discharge were
between 30 minutes to three hours and the
average was at about 77 minutes. The target set
by hospitals ranged between 15 minutes to two
hours with an average of 51 minutes. Four of the
hospitals reported an actual average waiting time
to discharge at 2 hours or more while13 hospitals
reported the actual average waiting time for
discharge was below 77 minutes. As in the waiting
time for admission, none of the hospitals
managed to better their own target for waiting
time to discharge.
5.
Financial Indicators
Stock turnover ratio indicates how fast the
hospital in utilising its stock. A high ratio may
indicate positive factors such as good stock
demand and management while a low ratio may
indicate that either stock is naturally slow moving
or obsolete.
In 2002, the range of the stock turnover ratio was
between 0 –18 times. Five hospitals reported a
stock turover ratio of more than 10 times. The
overall average was 7 times. As for the net profit
margin, highest reported for 2002 was 39% with
an overall average of 7% while three hospitals
suffered losses.
Conclusions
Based on the findings of this survey, in general, there is a
wide gap between the best and the worst performances.
This means there is still plenty of room for improvement.
Each hospital should identify areas in which it is relatively
weak and try to improve its performance. At the same
time, hospitals which lead in any particular area should
strive for continuous improvement.
Chapter 7
Chapter 7
The Agriculture sector recorded productivity growth of
1.1% in 2002 (2001: 2.3%). In terms of economic
performance, the Agriculture sector contributed 8.4%
amounting to RM18,478 million share of the Gross
Domestic Product (GDP) as compared to 8.7% amounting
to RM18,269 million in 2001. The Agriculture sector
employed 17.1% of the labour force (2001: 17.4%). In
terms of export earnings, the Agriculture sector recorded
an export earnings of RM19.4 billion and RM20.3 billion
in 2002 and 2001 respectively with the bulk of the export
earnings derived from palm oil followed by saw logs,
sawn timber and rubber.
At the macro level, the strategic roles of the Agriculture
sector is to boost domestic food production in order to
cut down on food imports as well as to ensure a
consistent supply of raw materials for the downstream
industries. At the micro level, the focus is to ensure that
such policy directions are achieved through the adoption
of Best Practices techniques such as improvement in
biotechnology, plant genetics, animal husbandry which
will further enhance the productivity of the Agriculture
sector.
negative growth in land productivity of 2.5% in 2001 was
due primainly to the low commodities prices experienced
throughout the year. Crude palm oil (CPO), being the
main revenue earner within the Agriculture sector
dropped to as low as RM896 per tonne in 2001. Hence
land productivity in 2001 as measured in terms of value
level was lower than 2000 when the CPO was RM993 per
tonne even though there was a 8.9% increased in CPO
production in 2001. Likewise, the other major
commodities like rubber and saw logs also experienced
both lower production and lower commodities prices in
2001. However, land productivity is estimated to record a
growth of 1.8% in 2002 due mainly to improvement in the
commodity prices especially the price of CPO which is
expected to average RM1,035 per metric tonne.
Structurally, the Agriculture sector is dominated by a
dualistic system namely, the estate or plantation
companies and the smallholders' or farmers' sector. The
plantation companies are primarily involved in the
cultivation of export oriented crops such as oil palm and
rubber. On the other hand, the farmers are mainly
involved is the cultivation of food crops. Although both
parties suffered from the effects of poor commodities
prices in 2001, but productivity in terms of quantity of
output, yield and labour usage were sustained due to the
adoption of good agronomic practices at the farm level.
Figure 7.2, shows that labour productivity for the
Agriculture sector recorded a growth of 2.3% in 2001.
The main reason for such positive growth in labour
productivity is due to the continuous improvement in the
land-labour ratio as the Agriculture sector is experiencing
continuous decline in labour employment. Furthermore
with the strict policy imposed pertaining to the
recruitment of foreign workers, the existing-labour force
has to harvest a wider area and together with more idle
land being revitalised for agriculture purposes, it resulted
in an improvement in labour productivity. However, labour
productivity is estimated to record a lower growth of 1.1
% in 2002. The main reason was due to the cyclical tree
stress experienced by the perennial crops sector and as a
result of this, a major ongoing replanting programme was
being implemented since 2001 nationwide. Hence it is
anticipated that such replanting exercise will lead to lower
labour productivity caused by a reduction in lower landlabour ratio in 2002.
Productivity Trend of the Agriculture Sector
Figure 7.1 shows the growth in land productivity of the
Agriculture sector during the 1998-2002 period. The
Capital productivity showed an improvement as it is
estimated to record a growth of 1.1% as against a
negative growth of 0.3% in 2001 (figure 7.3). Such
Figure 7.1: Growth in Agricultural Land Productivity 1998-2002 (%)
Source:
Computed from:
Ministry of Agriculture, Malaysia
e = estimate
Figure 7.2: Growth in Agricultural Labour Productivity 1998-2002 (%)
Source:
Computed from:
e = estimate
Figure 7.3: Growth in Agricultural Capital Productivity 1998-2002 (%)
Source:
Computed from:
e = estimate
favourable growth in capital is due to the continuous farm
mechanisation programme being undertaken by the
plantation companies to mechanise their field operations.
to be set up, adoption of both integrated and intensive
farming operations to optimise the usage of resources
and at the same time, achieve higher farm income.
In view of the tight labour market and the high labour cost
as compared with neighbouring countries, the Agriculture
sector would not be able to sustain its competitiveness in
the long run. Hence institutional support in the form of
human resource development needs to be extended to the
farmers to enable them to acquire the latest technology
pertaining to plant genetics, biotechnology and farm
mechanisation. Furthermore with globalisation moving at
a fast pace, it is imperative that the farmers acquire the
necessary IT and business communication skills. To
achieve this, a national website known as "agrolink" has
already been established to enable farmers to interact and
have access to all information pertaining to agriculture at
both national and international level.
Such productivity improvement activities can be further
extended to inculcate some of the Best Practices to be
adopted for the purpose of benchmarking. Key
productivity indicators such as yield, labour requirements
and input costs have already been established for the
purpose of benchmarking on the various types of fruits
and vegetables. Hence such productivity indicators will
serve as useful benchmarks for comparison at both
national and international level.
Besides training, the institutional support can also be
extended through improvement in the farming system
itself such as encouraging more Group Farming activities
From a capital perspective, it is imperative that the
farmers adopt an intensive mechanisation programme to
modernise their farm operations to gradually reduce the
labour requirements. Various financial incentives and
loans such as the Fund for Food (3F) has been established
to provide financial aid to the farmers to enhance the
productivity of their farm operations. The plantation
companies should also accelerate their farm automation
programmes using the latest available technologies such
as mechanised harvesting, fertigation as an alternative to
labour requirements.
From a research and development (R&D) perspective, the
development of the Agriculture sector is supported by
many established research institutions such as Malaysian
Agricultural Research and Development Institute
(MARDI), Malaysia Palm Oil Board (MPOB), Malaysian
Rubber Board (MRB) which are well established in their
respective field. Hence both the research institutions and
the plantation companies can establish a smart
partnership to commercialise all the research findings to
further enhance the productivity and competitiveness of
the Agriculture sector.
The infrastructural support services can be further
strengthened by providing adequate and modern physical
infrastructure such as improvement in drainage and
irrigation system to enhance the quality of working life of
the rural communities. Besides the physical development,
infrastructural support services in terms of software
development such as the Global Positioning System
(GPS) and the Geographical Information System (GIS)
need to be constantly reviewed to ensure that the
agricultural database is comprehensive and provides the
latest information pertaining to Agriculture.
With all the institutional support provided by the relevant
agencies together with the adoption of some of the Best
Practices to be implemented at the farm level, the final
aspect of productivity enhancement in the Agriculture
sector is to promote a culture of productivity excellence as
part of the quality of working life of the rural communities.
This can be achieved through the continuous inculcation
of agricultural productivity improvement programmes to
develop the farming communities into a knowledge-based
workforce who looks forward to accept the challenges
ahead in this era of globalisation.
Issues in the Agriculture Sector
One of the main issues faced by the Agriculture sector is
the low commodities prices for example, the average
crude palm oil price for 2001 was only RM893 per tonne
while the production cost per tonne is about RM800 as
compared to RM993 per tonne in 2000. With such thin
profit margin and oil palm cultivation, being the impetus
to the Agriculture sector in terms of revenue generation
and employment creation, the productivity of the
Agriculture sector will be affected in the long run.
Likewise, the farmers were also receiving low prices for
their agricultural produce due to stiff competition from
neighbouring countries.
Hence to strengthen the price mechanism, a
comprehensive market intelligence network needs to be
set up in order to ensure that all the commodities prices
can be effectively monitored. Such efficient market
system will enable the farmers to match the local supply
of the agricultural produce with the market demand
through market intelligent to prevent any glut or shortage
in the market.
To compete against the importation of cheaper
agricultural produce from neighbouring countries, it is
imperative that the farmers re-orientated their farm
operations to become a business-like enterprise. This
means that instead of just being agricultural commodities
producers, the farmers need to operate their farming
activities on a commercial basis to process the
agricultural produce at the farm itself in order to give
more added value along the supply chain of the
agricultural produce in terms of packaging, accreditation
and standardisation of the products and possessing own
brand names such as using "Malaysia Best" logo which are
exported to overseas.
To further enhance productivity in the spirit of competition
from neighbouring countries, it is imperative that farmers
change their mindset to move from a bulk commodity
product industry to "Boutique Agriculture," producing only
highly specialised crops which command a higher added
value and not the low value agricultural produce which
could be easily imported.
Besides the exogenous factor such as weather, a good
harvest is dependent upon the quality of both seeds
inputs and fertilisers. Currently, most of the farmers are
using the conventional method of seeds cultivation which
is no longer competitive. To enable the farmers to obtain
a higher yield, there is a need to further develop the
biotechnology of plant genetics by the relevant research
agencies so that the application of such technologies
would enable the farmers to have a better quality yield.
Similarly, some form of regulatory control needs to be
enforced to ensure that both the price and application of
fertilisers and chemicals are within acceptable level to
ensure that the farmers received a satisfactory economic
returns from their farms and at the same time,
environmental protection is observed at every level of
farm operations.
Outlook for 2003
The outlook for 2003 is expected to see more stringent
measures being undertaken to enhance both the
competitiveness and productivity of the Agriculture
sector. In terms of competitiveness, likely steps to be
taken to enhance its competitiveness include reducing the
export duty of the major agricultural exports such as palm
oil to make it more competitive in the international market.
In terms of land utilisation, more idle land will be
revitalised to further boost the domestic food production.
In terms of productivity enhancement, further research on
improving the yield, plant genetics, biotechnology,
disease control will be intensified to ensure a better
quality agricultural output.
Chapter 8
Chapter 8
PRODUCTIVITY PERFORMANCE OF THE SMALL AND MEDIUM
INDUSTRIES IN MANUFACTURING SECTOR
The small and medium industries (SMIs)1 assume a vital
role in national economic development by contributing
significantly in terms of employment, and added value
generation. They form the base for greater domestic
participation in industrial growth by creating linkages and
supplying parts, components and services to the heavy
industries and other entities. The SMIs comprise more
than 80% of the total manufacturing establishments. Out
of these, 17.5% are in food processing, 15.4% in basic
metals and fabricated metal products, 14.2% in textile,
apparel and leather products, 13.3% in wood-based
products, 11.8% in chemical, rubber and plastic products,
10% in furniture, 7.1% in machinery and 2% in motor
vehicles and transport equipment. The rest of the SMIs
are involved in other manufacturing activities.
In 2002, SMIs’, contribution to the manufacturing sector,
was at 28.5% of total manufacturing output (2001:
29.2%), 26.5% of manufacturing added value (2001:
26.9%) and 30.7% of total manufacturing employment
(2001: 30.5%).
In 2002, SMIs registered 2.5% (2001: -2.0%) increase in
total output and 2.1% (2001: -2.7%) increase in added
value. While employment declined by 0.7% (2001: 2.6%)
(Table 8.1). The SMIs recorded RM62.4 billion in total
output (2001: RM60.9 billion), generated RM12.7 billion
in added value (2001: RM12.4 billion) and accounted for
361,399 in employment (2001: 363,777). More than 50%
of employment, total output and added value were from
SMIs involved in the manufacture of food, chemical,
rubber, plastic and fabricated metal products.
1
The growth in SMIs was supported by the various
government development programmes such as the
industrial linkages, market and technology development,
financial assistance, skills upgrading, factory audit
scheme and infrastructural development. During this
period, the SMIs posted 2.7% increase in productivity
(2001: -5.2%), recorded RM35,042 in Added Value Per
Employee (2001: RM34,112) (Figure 8.1). Among the
SMIs industry groups, the highest productivity growth
was recorded by the manufacturers of medical,precision
and optical instruments, furniture and fixtures, rubber and
plastic products.
The increase in SMIs productivity was attributed to the
2.5% increase in output generation (2001: -4.5%). The
improvement in domestic and external demand enhanced
capacity utilization, yielding RM172,746 in Total Output
Per Employee (2001: RM167,354). Increasing output
generation was observed in the SMIs manufacturing of
medical, precision and optical instrument, wood
products, basic metal, rubber and plastic products. In
tandem with growing domestic demands, the
manufacturers of motor vehicles also achieved high level
and growth in Total Output per Employee.
The SMIs experienced 0.5% decline in Added Value
Content (2001: -0.7%), recording a content level of
20.3%, similar that in 2001. The sector recorded 2.7%
increase in Process Efficiency (2001: -0.3%), at 1.26
(2001: 1.22).
Small and Medium Industries (SMI’s) is defined as enterprise with annual sales turnover not exceeding RM25 million or full time employees not exceeding
150 employees.
PRODUCTIVITY PERFORMANCE OF THE SMALL AND MEDIUM INDUSTRIES IN MANUFACTURING SECTOR
Table 8.1:
of Small and Medium Industries (SMIs)
Value Level
1
1
Percentage Share
of Manufacturing Sector
(%)
2001
2002e
2001
2002e
Total Output
60,880
62,420
29.16
Added Value
12,409
12,662
Employment
363,777
361,339
Growth in 2002
e
SMIs
Manufacturing
28.50
2.53
4.92
26.90
26.50
2.04
3.62
30.50
30.71
-0.67
1.73
Value Levels for Total Output and Added Value are in RM million
Figure 8.1: Productivity Performance of Small and Medium Industries (SMIs)
PRODUCTIVITY PERFORMANCE OF THE SMALL AND MEDIUM INDUSTRIES IN MANUFACTURING SECTOR
Capital intensity grew by 1.6% (2001: -5.2%), while Fixed
Assets per Employee increased to RM34,503 (2001:
RM33,956). Similarly, the SMIs experienced an increase
of 1.1% in capital productivity (2001: -1.4%), at 1.02 in
Added Value per Fixed Asset (2001: 1.00). This shows
that the SMIs were able to improve their fixed asset
utilisation.
With the improvement in external demand and high
capacity utilization, the SMIs was able to improve their
labour cost competitiveness when they recorded 2.5%
increase in Added Value per Labour Cost (2001: -7.2%),
at 1.999 (2001: 1.951). This has led to a decline of Unit
Labour Cost by 2.9% (2001: 7.0%) to register a value
level of 0.1015 (2001: 0.1045).
In tandem with the improvement in labour productivity,
the SMIs continued to experience 0.2% growth in wage
rate, recording a value level of RM17,527 in Labour Cost
per Employee (2001: RM17,485).
To face the challenges and opportunities bought about by
globalisation, SMIs has to enhance their capacity building
and competitiveness. This means preparing the SMIs for
globalization and to narrow the capability gaps with those
in the developed countries. The SMIs need to enhance
their added value generation, increase their productivity
and secure an edge on global competitiveness. The
ultimate objective of any SMIs would be to achieve their
profitability through quality, timely delivery and price
competitiveness of their products or services. In building
capacity and narrowing the capability gap, the SMIs need
to effectively manage and optimally utilize their resources
namely finance, land and properties, skilled workforce,
technology, machinery and equipment, raw materials and
markets.
Chapter 9
Chapter 9
STRATEGIES TO ENHANCE COMPETITIVENESS THROUGH
PRODUCTIVITY AND QUALITY
Enhancing Competitiveness
Globally, with the onset of the Information age and a more
integrated global economy as well as greater liberalization
of the markets, a country’s competitive advantage is less
dependent on factors such as labour, land and natural
resources, but increasingly on its potential to produce,
acquire, utilise and disseminate knowledge. The
development of the knowledge-based economy, will
contribute towards broadening the economic base with
the shift of the production possibility frontier. While FDIs
will continue to be encouraged in selected areas, domestic
investment will become the main driver for growth.
creativity. In the long run businesses must maintain
competitiveness through the continual improvement and
innovation in their delivery system. They must continually
develop new and higher value added products and
services. Only then can this be translated into the
significance of productivity growth. Thus, Industries will
need to enhance their productivity, efficiency and
innovative capability to meet global competition.
Productivity-Driven Growth
Domestically, the contribution of TFP will have to increase
with enhanced efficiency and innovativeness in the
management of capital and labour. TFP refers to the
additional output that would result from improvements in
the methods of production, with the inputs of labour and
capital remaining unchanged.
They include the
improvement of technology and know-how, innovation,
superior management techniques, gains from
specialization, increased efficiency as well as workers
education, skills and experience. As a long term strategy
for sustained economic growth, it will be imperative that
the country shifts from an input-driven growth to a
productivity-driven growth. Greater emphasis will need to
be placed on building Malaysia’s human intellectual
capital, productivity and capacity for knowledge
absorption and utilization.
Productivity & Quality Strategies to meet Challenges
Productivity Improvement is central to Malaysia’s
economic growth and competitiveness. To increase
productivity, greater efforts will be made to upgrade skills,
adopt better management systems and organisational
techniques, upgrade R&D and S&T as well as produce
high quality and customized goods as well as acquire
internationally recognized quality standards. This must be
accompanied by strong work culture and positive
attitudes. The culture of excellence and the quest for
continuous improvements need to be promoted intensely
and targeted at individuals as well as business entities.
Wage increases will have to be supported by
improvements in productivity and work performance so
that Malaysians can enjoy a higher standard of living
without serious inflation. Companies must continue to
benchmark against world-class practices and adopt
international best practices to achieve organisational
excellence. Initiatives must be taken to reduce the cost of
doing business so as to enhance productivity and
competitiveness.
The vital concern for businesses will be their ability and
capacity to compete in an increasingly globalised market.
Industries will have to urgently build capability to contend
with foreign competitors in the domestic market and
enhance their export competitiveness. Malaysian
businesses will need to become more receptive to new
knowledge and to increase their entrepreneural skills and
To ensure that competitiveness is enhanced, there should
be total commitment of all Malaysians, a change in the
mindset and a sense of urgency in the face of increasing
competition in the years ahead. To build a resilient and
competitive economy, the Government will continue to be
responsive and business-friendly and adopt appropriate
market-orientated policies and incentives. The business
STRATEGIES TO ENHANCE COMPETITIVENESS THROUGH PRODUCTIVITY AND QUALITY
community should be willing to take risk and invest in
R&D to be able to adapt quickly to changes. They must
adopt new technology and management practices in the
context of the knowledge-based economy. The workforce
should be disciplined, productive and be committed to
lifelong learning and willing to learn and improve
continuously.
NPC’s Action Plan for Enhancing Competitiveness
through Productivity and Quality
In line with the government’s strategies to build a
domestic economy that is robust and resilient and also
globally competitive, the National Productivity
Corporation (NPC) is entrusted with the responsibility of
leading the nation towards achieving higher national
economic growth through productivity enhancement
initiatives. This will be achieved through :
■
■
■
Continuous upgrading local expertise in the field
of productivity and quality ;
Promoting greater awareness and practices of
productivity and quality systems of management
and work culture;
Developing databases on productivity indicators
and benchmarks as inputs for policy formulation
and planning to enhance productivity and quality.
The initiatives are supported by promotional activities and
information dissemination on the latest developments in
productivity and quality management practices. The
National Productivity Corporation continuously focus on
the contribution of productivity and quality in sustaining
competitiveness and economic growth through a wide
range of programmes (Table 9.1).
Table 9.1 : NPC’s Plan for Enhancing Productivity Growth
Productivity and
Quality
(P&Q – Research)
To conduct research on current P&Q issues to ensure the availability of current data and
information for industries. Among the main research areas include:
●
●
●
●
●
●
●
●
●
Productivity and
Quality Data Bank
To provide database on productivity indicators at the sectoral, national and international
levels. The database will provide input for policy formulation and planning to achieve higher
productivity and quality. The sources are :
●
●
●
●
Productivity and
Quality Training and
Systems
Development
Productivity and Quality Enhancement
Productivity and Quality Management
Competitiveness
International Comparison
Wages and Productivity
Human Resource Management
Automation
Information Communication Technology
Best Practices
Benchmarking Online Networking Database (BOND)
Interactive e-Benchmark
Data Resource Centre
Publication of Annual Productivity Report and Quarterly Productivity Statistics.
To enhance organizational competitiveness through the upgrading of systems and
applications as well as upgrade skills and knowledge of employees to enhance P&Q. The
following areas are offered :
●
ISO 9000 Quality Systems and Environmental Management Systems (EMS 14000);
●
Productivity and Quality Enhancement Programmes such as Enterprise Resource
Planning (ERP), Just in Time (JIT), Total Productivity Maintenance (TPM), Total
Quality Management (TQM) and Organisational Excellence;
●
Human Resource programmes which includes Training Needs Analysis, Management
Development, Change Management, Problem Solving, Productivity-Linked Wage
Systems (PLWS) and Information Technololgy;
●
Entrepreneurship programmes for upgrading of entrepreneurs as well as
programmes on team building, corporate culture, leadership and small group
activities.
Table 9.1 : NPC’s Plan for Enhancing Productivity Growth
Productivity and
Quality Promotion
●
Performance Measurement which encompass Company Manual for Productivity
Assessment (COMPASS), Balanced Scorecard and Productivity Measurement
System;
●
Advanced Management programmes on related P&Q areas in collaboration with
selected institutions of higher learning and management development.
●
Awards and recognitions such as the Prime Minister’s Quality Award (PMQA), Quality
Management Excellence Awards (QMEA) and Productivity Awards;
●
Conventions, Seminars, Conferences, Study Missions and Exhibitions on P&Q.
●
Publication of P&Q resource materials such as company manual for productivity
assessment, productivity journals, productivity primer, benchmarking handbooks,
Handbook on Productivity Linked Wage System, Handbook on ICT, TQM Case Book,
and P&Q magazines.
●
Productivity & Quality Promotion Programme to nurture a creative and innovative
mindset.
Box 9
PRODUCTIVITY-LINKED WAGE SYSTEM
IN COLLECTIVE AGREEMENTS
Introduction
As Malaysia strives to achieve developed status by the
year 2020 it has to gear itself to meet both domestic and
global challenges. To successfully achieve this it has to
improve its competitive edge. Among the ways are to
ensure that wage increases are commensurated with
higher productivity increases. This can be done by
implementing the Productivity-Linked Wage System
(PLWS) where a closer link is established between wages
and productivity to enhance productivity and
competitiveness at the firm level.
Various government plans have supported the PLWS,
these include the Seventh Malaysia Plan (1996-2000), the
Eight Malaysia Plan (2001-2005) and the Third Outline
Perspective Plan (2001-2010). All these plans
emphasised the wider adoption and application of
productivity-related wage mechanisms as well as the need
to intensify implementation of the system. Human
Resource Development is important to ensure
effectiveness of the PLWS. Training programmes to
upgrade skills and knowledge of workers will improve
workers capabilities and enhance their productivity.
Companies should also encourage multiskilling and
provide the necessary resources to enhance the use of
Information and Communication Technology (ICT) for
greater efficiency.
Collective Agreements 2002
Collective Agreements that have been signed, deposited
and taken cognisance of by the Industrial Court are an
indication of companies that have implemented the
Productivity-Linked Wage System. The National
Productivity Corporation carried out its annual survey on
the status of Collective Agreements that were deposited
with the Industrial Court in 2002.
For the year 2002 a total of 236 Collective Agreements
were signed. These comprised Agreements from the
Manufacturing Sector (129), Services Sector (98) and the
Agriculture Sector (9). Between 2000- 2002, 53.3% of
total Agreements were productivity linked (Table: B9.1).
Components of Productivity Linkages
A total of 10 elements have been identified in Collective
Agreements to have elements of productivity linkages
(Table: B9.2). The components of these elements and
their significance to productivity improvement are
discussed as follows:
i.
Non-Contractual Bonus
Unlike the contractual bonus system where
management fixes the quantum of bonus, the
non-contractual bonus system is more flexible and
is determined at management’s discretion or
through negotiations with the employees unions.
The quantum of bonus to be paid is not fixed and
can vary from less than one month to more
depending on the organisation’s profit level or
employee’s performance or both. As a result,
most Collective Agreements do not have a
specificed scale for bonus payment and the
amount paid may vary among employees. For the
sub-period 2000 – 2002, 20.9% of total
Agreements contained the non-contractual bonus
clause.
ii.
Contractual Cum Non-Contractual Bonus
This system incorporates a contractual bonus
element and a variable component which is above
the contractual bonus payment to be paid at
management’s discretion. The employee will
therefore receive a fixed quantum of bonus plus an
PRODUCTIVITY-LINKED WAGE SYSTEM IN COLLECTIVE AGREEMENTS
additional bonus payment that is either predetermined based on certain criteria or to be
decided upon by management based on profit
level of the company and or individual
performance. For example the company may
specify an annual bonus of 2 months salary and a
variable bonus of 1 month if profit after tax
exceeds RM2.5 million. Between 2000-2002,
7.5% of Collective Agreements contained the
contractual cum non-contractual bonus element.
iii.
v.
Bonus Based on Profit Level
Companies that use this system normally stipulate
the amount of bonus to be paid depending on
profit level of the company. As a result bonuses
will be paid only if profits exceed the predetermined or threshold level. Profits could be
based on profit before tax, profit after tax or
defined by using various indicators such as return
on assets, return on equity or return on average
working capital. An example of bonus based on
profit level is as follows:
Pre-tax profit
RM1million < RM3 million
RM3 million - RM6 million
Bonus
- 1.5 months
bonus
- 2.0 months
bonus
For each additional RM1million profit declared the
company will pay an extra 0.25 months bonus. If
profit is less than RM1 million in any one year then
the amount of bonus to be paid will be based on
the company’s discretion. For the period 20002002, 7.6% of Collective Agreements contained
the bonus based on profit element.
iv.
Some examples of piece- rate include the
individual straight piece rate system where an
employee is entitled to the piece rate multiplied by
the amount of output for the shift. In cases of
production after normal working hours the worker
will be paid more per piece produced for example,
1
1 /2 times the normal piece rate.
Piece-Rate System
This is essentially a system whereby payment is
based on the number of articles produced. Any
output over and above the basic target will be
entitled to an incentive payment. Piece–rate
systems are commonly found in the agriculture
sector and textile and garment industries. From
2000-2002, the average number of Collective
Agreements with piece rate systems was 5%.
Group or Individual Target
Group or individual target is derived from an
individual’s or group’s performance. This is
usually based on the quantity, quality or utilisation
of time in the production process. For example,
companies will pay an incentive bonus based on
the group’s or individual’s productivity if their
performance exceeds the criteria set out by the
company based on quantity, quality and in some
cases effectiveness of time utilisation. Group or
individual target is generally being encouraged.
For the period 2000-2002, 0.2% of Collective
Agreements incorporated the Group Target
element while 5.1% had the individual target
element.
The reward system for group or individual
performance encourages workers to be more
productive and committed to their jobs, ultimately
improving the company’s performance.
vi.
Salary Increment on Merit
Salary increment based on merit formed a
substantial portion of Collective Agreements with
productivity linkages over the years (20002002:24.9%). This form of reward is based on
good performance of workers, which is attributed
to devotion of duty, general aptitude and ability. A
worker’s productivity will improve and benefit the
company as the system encourages workers to
strive to improve their performance.
vii.
Attendance Incentive
An attendance incentive payment that rewards an
employee for good attendance, no absenteeism
and no unpaid leave will ensure that there is
continuous productivity improvement . From
1999-2000, 19% of the agreements had the
●
attendance incentive element. This type of
incentive is usually implemented
in the
manufacturing and agriculture sector.
viii.
ix.
Service Charge
A service charge is a percentage of the total sales
that is charged to a customer. About 90% percent
of this amount is then distributed to the
operational staff based on a point system that is
determined through negotiations with the union.
This system is common among Hotels and
Restaurants services. Between 2000-2002, 6.1%
of Collective Agreements contained the element of
Service Charge.
Skills Allowance
Some companies provide skills allowance for
employees who acquire extra skills or knowledge
for use in their daily tasks. This will encourage a
pool of multiskilled workers that will be able to
overcome labour shortage and reduce labour
costs. Skills allowance are given to these workers
as a recognition for their capabilities. There are
basically two types of skills allowance; allowance
for performing additional skills and acquisition of
skills and knowledge. The examples are as follows:
a)
Multiskilling
●
Sales representatives who are
involved in a one-man operation
which
requires
them
to
load/unload company products in
the course of their day to day
selling activities.
●
b)
Staff nurses who possess
recognised post basic certificates
and are required to serve in the
relevant units.
Acquisition of additional knowledge and
skills
●
An employee is required in the
course of duty to use languages
other than English, Bahasa
Malaysia and Chinese.
●
Workers such as mechanists,
electric chargeman, boiler house
chargeman
who
possess
competency skills certificate in
their areas of work.
Conclusion
There is an increasing trend of linking wages to
productivity. Companies realise that to be competitive
wage increases should commensurate with productivity
increases. Using this system companies are able to tap
the abilities of their employees to the fullest through a
system that ensures higher rewards for productive
employees.
The government will continue to encourage the
implementation of PLWS and increase its effort in
intensifying the implementation of PLWS. This will be
done through seminars workshops, publications as well
as providing advisory services to companies in promoting
PLWS to its employees.
Staff that are not drivers but are
required to perform tasks of
drivers and possess a valid driving
licence.
Table B9.1:
Distribution of Collective Agreements with Productivity-Linked
Components By Sectors
Total No. of Collective
Agreements
No. of Collective Agreements
Productivity-Linked
Components
Total Percentage of Collective
Agreements with
Productivity-Linked Components
2000
2001
2002
20002002
2000
2001
2002
20002002
2000
2001
2002
20002002
Manufacturing
189
227
129
182
104
121
64
96
55.3
53.3
49.6
52.7
Services
117
139
98
118
53
77
47
59
45.3
55.4
48.0
49.6
Agriculture
18
7
9
11
18
7
9
11
100.0
100.0
100.0
100.0
Total
324
373
236
311
175
205
120
167
54.0
55.0
50.8
53.3
Table B9.2: Elements of Productivity Linkages
Percentage
Main Elements
2000
2001
2002
1997-1999
2000-2002
Non-Contractual Bonus
11.8
25.0
25.8
20.2
20.9
Bonus
10.1
5.3
7.2
25.2
7.5
Bonus Based on Profit Level
9.2
5.5
8.1
1.3
7.6
Contractual cum Non-Contractual
Piece-Rate
8.0
4.0
3.0
6.1
5.0
Group Target
0.4
0.3
-
-
0.2
Individual Target
8.8
3.5
3.0
2.5
5.1
Annual Wages/Salary Increment
based on Merit
28.6
28.8
17.4
28.8
24.9
Attendance Incentive Payment
19.3
18.5
18.2
12.3
18.7
Service Charge
3.8
5.3
9.3
3.8
6.1
Skills Allowance
-
3.8
2.1
-
2.0
*
From the year 2001 Skills Allowance has been identified as one of the main
elements of Productivity Linkages.
Box 10
PRODUCTIVITY-LINKED WAGE SYSTEM FOR LONG TERM
COMPETITIVENESS
Introduction
The Malaysian economy needs to remain resilient and
enhance its efficiency to be able to compete globally. The
economy will be more competitive if companies
rationalise costs through higher productivity. Companies
should therefore strategise to link wage and productivity
so that it will be more cost competitive. Through higher
productivity companies will have a bigger cake to share. It
is therefore timely that companies improve their
performance by implementing the Productivity-Linked
Wage System. This system will ensure that growth in
labour cost is commensurated with higher productivity
growth thereby reducing the cost of producing one unit of
output.
The Productivity-Linked Wage System (PLWS)
The PLWS is a wage system which establishes a closer
link between wages and productivity/performance in order
to enhance competitiveness and promote employment
stability. It also enables employers to develop a wider and
systematic approach towards improving productivity and
wages through active involvement and cooperation of
employees. The PLWS takes into account workers basic
needs and recommends that those who excelled in
productivity are rewarded for their productive efforts.
The framework of this system comprises of two main
components, the fixed component and the variable
component. The fixed component consists of the basic
wage. This provides income stability and is an indicator of
the market value of the job as well as reflecting the cost of
living. The variable component provides the variability
determined by productivity and performance of the
economy, company and or individuals.
Three basic models have been developed to enable firms
to emulate. The three models are the Profitability Model,
the Productivity Model or a combination of both the
Profitability and Productivity model. Details of the models
are as follows:
Profitability Model
The variable bonus payment in this model is dependent on
company’s profitability. The quantum to be paid will be
determined by a profit-sharing formula that is agreed
upon by management and union and is to be reviewed
periodically. Wage incentives are paid if profits exceed a
pre-determined or threshold level.
Example
The company shall pay an annual bonus of one months
basic salary. In addition the company shall pay a
discretionary bonus based on the company’s and
individual’s performance. In this case the company bases
its performance on profit level and sales turnover. If the
profit is within the range that has been set by
management then employees are entitled to additional
bonuses based on their work performance.
Productivity Model
A variable productivity payment will be paid based on
productivity improvement. Wage incentive for the year
should commensurate with productivity increases. Both
management and employees should negotiate on the
method of productivity measurement and quantum of
incentive payment.
Example 1
In this model the company uses productivity as a means
to measure the contribution by employees. Productivity is
measured based on the number saleable products over
the number of actual time taken to produce that output
excluding unpaid and annual leave, leave for medical
purposes and unforeseen circumstances such as power
and water cuts. Payment of incentives are then
apportioned according to the productivity ratio achieved
and these incentives are paid on a monthly basis.
PRODUCTIVITY-LINKED WAGE SYSTEM FOR LONG TERM COMPETITIVENESS
Example 2
This company awards both executive and non-executive
level. Salary increase for non-executives is based on three
criteria, namely performance, company capacity to pay,
and the market rate for the job. For the executive level,
salary is based on performance targets for the month.
Employees are given annual increments based on their
performance. Therefore employees that perform well are
given a higher increment compared to those who perform
poorly.
high aggregate points will be paid a higher quantum of
bonus.
Example 3
Monthly incentives are based on a productivity index
which is total production less rejects over the number of
machine man-hours to produce that output. If the
productivity index falls within the pre-determined range,
monetary incentives will then be paid. In addition to the
above monthly incentive payment an additional monthly
incentive is also paid based on the previous years
production volume. Apart from receiving monthly
incentives employees are also paid yearly bonuses which
will be paid when production volume reaches the breakeven point.
Example
This company awards employees for skills acquired. An
employee can acquire a maximum of 3 skills for payment
is made up to a maximum of 3 skills acquired. However
the acquisition of these skills and their relevancy have to
be certified by the department head or supervisor. To
qualify for the skilled allowance workers have to perform
at least 12 hours of activities per month of each skill
acquired.
Combined Model
Companies can also adopt a two dimensional approach of
linking profitability and productivity. In this model bonus
payment is dependent on both the company’s profit and
productivity. The quantum to be paid should be agreed
upon by management and union.
Example
In this model the company combines both productivity
and profitability to determine the quantum of bonus to be
paid to employees. In setting its business plan the
company will forecast sales targets for the year based on
previous years performance. Points are then apportioned
based on the achievement level and this will determine the
productivity level of the employee. In terms of company
performance, profitability of the company is used as a
component. Points are again allotted according to the
profit level achieved. The aggregate points derived from
both the sales and profitability figures are then matched
against the number of years of service of the employees.
An employee with greater number of years of service and
Multiskilling Incentive Schemes
Companies are introducing multiskilling as a means to
improve productivity. By acquiring more skills workers
become more efficient. They will also be able to perform
various tasks and temporarily reduce labour shortage in
the departments concerned. Incentives are paid to those
that acquire extra skills.
Challenges In Implementing PLWS
●
Commitment and cooperation from top
management and employees is necessary to see
the system through.
●
A transition period is required to enable
employees to adjust and adapt to the new system.
●
The company should come up with a suitable
measurement system that is acceptable to both
employers and employees.
●
The system should be reviewed periodically and
improvements made where necessary.
●
Workers must be briefed on the benefits of the
system.
Benefits of the system
●
The system will ensure that employees obtain a
fair share of the gains from performance
improvement.
●
Provides motivation for good performance.
●
Provides a more flexible wage structure that is able
to withstand economic uncertainties.
●
Enhances competitiveness in the global economy.
●
Ensures job stability and reduces the likelihood of
retrenchment in bad times.
Box 11
IMPROVING PERFORMANCE THROUGH
QUALITY CONTROL CIRCLES
Introduction
Small Group Activities are more popularly known in
Malaysia as Quality Control Circles (QCC) or Quality
Improvement Teams (QIT). A QCC is defined “as a small
group of employees from the same work area who meet
regularly to identify, solve and implement solutions to
work-related problems within their own organisation”.
Today, QC activities are common quality initiatives in
many organisations.
NPC, being the premier Productivity and Quality (P&Q)
institution has continued to make substantial efforts to
promote greater awareness and understanding of QC
activities. Events such as the QCC convention at regional,
national and international level provide a platform for
Circles to present their QC activities. The convention also
provides an understanding on how to promote and
encourage the QC movement within the organisation and
an opportunity to explore ideas and views with facilitators
and trainers of the participating Circles.
As at December 2002, a total of 6,851 circles were
registered with the NPC TQC Secretariat (Figure B11.1). In
terms of membership, as at December 2002, a total of
51,937 QCC members have registered with the NPC TQC
Secretariat (Figure B11.2). The increase in membership
indicates workers’ commitment in solving and
implementing improvement activities in their
organisations.
NPC organised the National Quality Circles Convention
2002 that attracted a total of 98 circles from various
industrial sectors to share their experiences and
achievement in QC activities. The total savings in 2002
achieved by the 98 circles totalled RM69 million
(Table B11.1)
NPC also took the opportunity to conduct a quick survey
on how these Circles have benefited from their QCC
activities.
Findings
The survey attracted a total of 49% responses. (Figure
B11.3). Majority of companies that responded to the
study are from the Manufacturing sector (42.0%)
followed by the Services sector (31.0%). Out of the
Circles that responded, more than three-quarter of them
were formed after 1999. The remaining one-quarter were
established Circles that are active in handling various QC
projects over the years.
The nature of QC projects varies. Many of the projects are
related to improving productivity and specifically related
to improving work area, work process, service delivery
and product development. From the survey, almost 90%
of the respondents choose projects for further
improvement of both work area or work process that will
simplify job and enhance efficiency. About 72% of these
projects are also aimed at product development. One
Circle aptly pointed out that QCC provides members with
“a licence to invent denying existing design concept to
come up with new ideas”.
From the findings, many of the respondents indicated that
the QCC activities have tremendous impact on their
functions in business operations especially in the areas of
cost saving, enhanced teamwork and improved work
process and morale of employees.
Table B11.2 shows that 95.1% of participants agree that
QCC activities can help reduce the cost of their operation.
The benefits in cost saving from the surveyed QCC
projects ranged from as little as RM500 to as much as
RM8 million. The Circles have median savings of about
RM200 thousand in each improvement.
IMPROVING PERFORMANCE THROUGH QUALITY CONTROL CIRCLES
Figure B11.1: No. of QCC Members Registered with TQC NPC
Secretariat (Cumulative)
Figure B11.2: No. of QCC Registered with TQC NPC Secretariat
Secretariat (Cumulative)
Table B11.1:
Cost Saving Through QCC Activities (1996-2002)
Year
No. of QCC Participated
Cost Saving
(RM)
1996
58
32,857,389
1997
85
56,819,500
1998
105
96,887,800
1999
114
28,826,219
2000
106
86,865,524
2001
108
93,000,000
2002
98
69,000,000
Figure B11.3: Type Of Sector
Many of the intangible by-products of QCC are evident
though not measurable. All of them (100.0%) cited that
from the implementation of QCC at their workplace has
enabled them to inculcate teamwork and improved
morale. Working together in teams also cultivates cooperation and develops positive attitudes towards a
quality work culture. For example, “operators show
greater interest in their jobs, and a higher morale”. Other
benefits ranked highly by most of the respondents include
improved communication (98.5%) and improved
customer service (90.7%).
enhancing quality awareness in individuals, which in turn
helps to develop the quality culture within the
organisation. The consciousness on the importance of
quality among all levels of workers will ensure product
and service quality and such emphasis on excellence at
the workplace will further strengthen competitiveness.
In addition, many acknowledge that QCC continue to be a
vital tool for enhancing the working environment in
aspects such as building morale, team spirit, teamwork,
and communication. This is especially eminent when
there is total involvement from both the lower and top
The development and success of QCC projects or
activities require sustaining efforts. All respondents
(100.0%) cited that good communication and full
commitment from all team members are vital in ensuring
the co-ordination as well as the sustainability of their QCC
projects (Table B11.3). This means that all members
should be actively committed in the Circle’s activities.
management levels. The close relationship between
workers and management and among the workers
themselves create a common focus towards achieving the
company’s objectives.
From an individual standpoint, many share the view that
through participation in QCC activities, they have
developed better self-confidence and leadership qualities.
In addition, a total of 95.1% indicated that full support
from management is very important to boost the success
of QCC activities. This means that management must
value people as the most valuable asset of the
organisation and recognises that employees’ participation
in the problem solving process will lead to improvement
of quality and productivity. As such, management must
create an environment for co-operation, where both
employers and employees must work together towards
achieving the common goals of the organisation. Other
factors that support QCC activities include an effective
training programme, reward/recognition system and
budget availability.
There are always opportunities to exchange ideas and
views, besides acquiring additional skills such as problem
solving, public speaking and presentation techniques.
These subsequently lead to self-development and selfmotivation.
Conclusion
As Malaysia enters the knowledge economy era that
emphasises competition based on customer services,
quality, flexibility and speed, the success of any
organisation is the knowledge factor. QCC is one of the
tools that must be developed and applied within the
Malaysian workforce to harness their knowledge into
Respondents, indicated that QCC at the workplace is one
of the quality improvement initiatives to increase
productivity and quality. Many respondents pointed out
that the implementation of QCC has contributed to
value adding activities.
Through QC activities, teams
must be encouraged to acquire and put new knowledge
into productive use to improve the efficiency of work and
to enhance the quality of product or services.
Table B11.2: Benefits Of QCC
BENEFITS
Cost saving
Reduce wastage
Enhanced teamwork
Reduce cycle time
Improve customer service
Improved communication
Improve work process
Improve morale
LOW
%
HIGH
1
2
3
4
5
0
10.0
0
1.5
1.6
0
0
0
1.6
2.5
0
0
1.6
0
0
0
3.3
12.5
0
7.6
6.3
1.5
1.5
0
21.3
17.5
33.3
48.5
34.4
42.6
32.4
35.3
73.8
57.5
66.7
42.4
56.3
55.9
66.2
64.7
MEAN
4.67
4.10
4.67
4.30
4.42
4.54
4.65
4.65
Table B11.3: Success Factors Of QCC
SUCCESS
FACTORS
Training
Management support
Team commitment
Reward/ Recognition
Budget availability
LEAST
IMPORTANT
%
VERY
IMPORTANT
1
2
3
4
5
0
0
0
0
0
0
0
0
0
4.8
6.5
4.8
0
17.7
11.3
35.5
30.6
24.2
40.3
51.6
58.1
64.5
75.8
41.9
32.3
MEAN
4.52
4.60
4.76
4.24
4.11
Box 12
NATIONAL PRODUCTIVITY CORPORATION:
QUALITY MANAGEMENT EXCELLENT AWARD
INTRODUCTION
The need for organisations to achieve organisational
excellence especially in business management and
performance continues to grow in importance with
increasing globalisation of trade and competition.
●
Create industry awareness of quality and
excellence
●
Encourage the production of quality products and
services
Over the years, various models have been developed to
measure organisational excellence. Measurement is a
crucial practice as the measures allow the organisation to
plan its move towards the desire stage. In the United
States, there is the Malcolm Baldrige National Quality
Award (MBNQA) model for organisational excellence. In
Europe, there is the European Quality Award model and in
Japan, the Deming Prize model. Other countries have their
own national quality award model, all of which follows the
same concept and principles of organisational excellence
as the MBNQA model. In Malaysia, we have the national
Quality Management Excellence Award (QMEA) organised
by the Ministry of International Trade and Industry (MITI)
and the Prime Minister Quality Award (PMQA), organised
by the Malaysia Administrative and Modernisation
Planning Unit (MAMPU).
●
Encourage sharing of information on successful
performance strategies and benefits of winners
Both awards are synonymous with business excellence.
As PMQA and QMEA look at all the elements of an
organisation’s operations, they give a complete and
balanced view of performance, recognizing the strengths
as well as the areas for improvement. The balanced
approach will allow organisations to be more focused and
address real issues, which enable them to improve
profitability. The awards model can also be used by
organisations to benchmark their performance against
others and to further improve their performance.
OBJECTIVES
The objectives of the QMEA are:
●
Recognition of organisational excellence
QMEA FRAMEWORK
This model of creating an excellent organisation serves as
a guide and roadmap for organisation to improve their
overall performance. It is also a tool to garner efforts and
resources within the organisation in providing more value
to their customers and stakeholders. This model centres
on seven crucial elements to achieve excellence (Figure
B12.1).
Top Management Leadership
Management has been the single most important factor
that drives organisational excellence. This drive is
reflected through management commitment in providing
time, energy and setting out clear goals and directions for
quality initiatives. This concept needs the employees to be
pro-active, initiate leadership at their own levels and act as
a solution provider to customers, giving attention to
details as required by their customers, manage internal
business processes effectively, utilise efficient data and
information management, and maintaining a close
working relationship with suppliers.
Managing Data and Information
Usage of data and information is paramount to any
business undertakings. Effective decisions are made
based on facts and figures. Organisations must be able to
utilise data and information about their customers,
products, processes and human resources in order to
fulfill customers’ needs. Effective information
NATIONAL PRODUCTIVITY CORPORATION: QUALITY MANAGEMENT EXCELLENT AWARD
Figure B12.1: QMEA Framework
ENABLERS
RESULTS
Use of Quality Data and Information
Human Resource Management
Top
Management
Leadership
and
Management
of Quality
Customer Focus
Quality and
Operational/
Business Results
Quality Assurance of External
Suppliers
Process Management
management can be a competitive strategy for
organisations competing in the global market.
Managing Human Resource
Satisfied employees strive to ensure their external
customers are happy with the products produced or
services delivered. This practice must be planned and
properly executed. At the same time, organisation must
adopt suitable HR strategies and policies to develop their
human resources, understands their employees’ needs,
requirements and most importantly attend to their
grouses. Excellent companies drive positive HR initiatives
particularly on training and development, as training is an
important tool to nurture the culture of excellence.
Customer Focus
Organisations exist because of customers. Thus, all
business processes must take into consideration
customers’ needs and requirements. Organisations
cannot develop business processes solely based on the
nature of their business set-up and the constraints that
they are facing. However, many organizations failed to
understand this and as a result, their business processes
cannot support the customers’ needs. This company will
eventually perish when a new competitor comes into the
market and offers what the customer wants.
Equally important in managing business is getting to
understand your customers. After delivering products
and services, feedback must be sought to understand
what happens to the products, customers and the delivery
process. Excellent organisations view this initiative
seriously especially to understand their customers needs
and take steps to address those needs. Proper training
for employees can assist them by providing efficient and
courteous service. The companies must be able to listen
to customers’ complaints and provide alternative
solutions.
External Suppliers
Many of today’s business operations are done on a
networking basis. This mean that companies ‘have to
work’ with other companies that manufacture parts and
components. In most cases, the decision to out-source is
because of cost effectiveness. This working scenario calls
for better working relationship between the organisations
and suppliers. The companies that out-source must
ensure that the parts and components manufactured by
the suppliers are within the allowable specifications and
requirements. To deliver this the suppliers must develop
and adopt management system and practices that will
deliver products according to the standards required by
their customers.
continuously strive to improve their business processes
to satisfy their customers.
Excellent organisations put in extra effort to manage their
processes efficiently and continuously seek opportunities
for process improvement. The production part must be
given priority for continuous improvement, as it is the
stage where the product is actually manufactured. In the
service sector, the interface with customers is the
moment where services are provided.
Process Management
Products are delivered through various processes in
organisation. These processes range from R&D,
understanding customers’ requirements, production,
packaging, delivery and after sales services. The
processes that are important to customers must be
identified and improved to enhance the company’s
performance.
Business Results
This simply means managing your business efficiently
and effectively and it will be reflected in your business
results. Business results however must be viewed
according to objective attainment.
In the Balanced
Scorecard approach, the business results must be
balanced to cover four perspective namely, – customer
The delivery of quality products depends very much on
the business processes before the products reach the end
users. These processes must be efficient
and
continuously upgraded. What could be delivered today
using the current business processes could no longer be
efficient 12 months later. Thus, organizations must
perspective, internal business process perspective,
learning and growth perspective and financial perspective.
This approach requires organisations to be able to
generate results in areas important to their customers,
internal business process, human resources and finally
their financial position.
AWARD CATEGORY
No.
Category
Description
1
Category I (Small)
Local company with annual sales turnover not exceeding RM 10 million.
2
Category I (Medium)
Local company with annual sales turnover exceeding RM 10 million to RM
25 million.
3
Category II
Local company with annual sales turnover exceeding RM 25 million to RM
200 million.
4
Category III
Local company with annual sales turnover exceeding RM 200 million.
5
Category IV
Open
PAST WINNERS
No.
2002
Category
Winners
Category I (Small)
Masasinar Holdings Sdn Bhd
Category I (Medium)
ABX Express Sdn. Bhd. (Special Award)
Category II
Automotive Industries Sdn Bhd
Category III
No winner
Category IV
Pan Century Oleochemicals Sdn. Bhd.
Box 13
PRODUCTIVITY AWARD
Introduction
Productivity is a key for long-term economic growth. The
productivity of the economy would determine the living
standards of the nation. Gross Domestic Product and
productivity trends tend to move in the same direction
over time. Improving relative productivity growth is a
strategic way to improve the competitiveness of the
economy.
Realising the importance of enhancing productivity and
competitiveness at organisational level, NPC initiated the
NPC Productivity Award since 1999. This award is
conferred in recognition of excellent management of
productivity by companies. The objectives of the award
are to instill the importance of productivity measurement
at the enterprise level and to use the productivity
indicators in managing company's performance.
Companies participating in the award are divided into
several categories as shown in figure B13.1
The Productivity Award uses both quantitative and
qualitative criteria to assess an organisation's
performance. The quantitative assessment is based on six
productivity indicators namely, Labour Productivity,
Capital Productivity, Capital Intensity, Process Efficiency,
Labour Cost per Employee and Unit Labour Cost. On the
other hand, the qualitative assessment is based on the
productivity improvement initiatives implemented by the
participating companies pertaining to inventory and
materials management, utilisation of machinery and
equipment, product/service development, technical
efficiency and productivity management.
For inventory and material management, productivity
initiatives include the introduction of systematic material
management and acquisition, material resource planning
(MRP)
software,
supplier/vendor
partnership
development program, efficient waste management
programme, time and motion study and Just-In-Time
system.
Productivity initiatives in terms of utilisation of machinery
and equipment include up-grading of machines and
process improvement especially for critical process,
innovative activities to improve production process,
implementation of Total Preventive Maintenance (TPM),
continuous improvement of production cycle time and
incorporating health and safety best practices.
For Product / Service Development, productivity initiatives
include research and development (R&D) on products and
services, Market Preference Survey on products and
services and implementation of incentive schemes to
encourage employees' participation on product and
services development.
As for technical efficiency, productivity initiatives consist
of continuous training and re-training of employees to
upgrade skills, manpower planning and development
programmes for productivity improvements, embarking
on business reengineering programme, innovation
through technology and enhancing technology utilisation
through adoption of cost-effective systems.
Productivity management initiative programmes include
Small Group Activities (SGA), Suggestion Scheme, Total
Quality Management (TQM). Productivity Measurement,
Benchmarking, Quality Control Circle (QCC), 5’S
practices, Kaizen, ISO 9000, ISO 14000, QS 9000,
6 Sigma and Balance Score Card.
NATIONAL PRODUCTIVITY CORPORATION PRODUCTIVITY AWARD
Advantages of participating in the Productivity Award
Participating in the award would enable the company to
diagnose and identify areas needed for further
improvement. Through such internal diagnosis, the
company is able to determine their position in terms of
productivity and competitiveness. Subsequently the
company could strategise to establish better customer
and supplier management relationship. This is especially
pertinent for the company in this era of increased and
challenging global market competition. Winning the
award also enhance staff motivation to further improve
their productivity and quality of service.
Figure B13.1: Award Category
Category I
(a)
Small and Medium Industries
Local company with annual sales turnover not exceeding RM10 million
(b)
Small and Medium Industries
Local company with annual sales turnover exceeding RM10 million to RM25
million
Category II
Local company with annual sales turnover exceeding RM25 million to RM200
million
Category III
Local company with annual sales turnover exceeding RM200 million
Category IV
Open
Box 14
ENHANCING PUBLIC SECTOR PRODUCTIVITY
Introduction
Efficient utilisation of resources is important to both
public and private sector organisations. The cost of
inefficient utilisation of resources would be borne by the
public as a whole. Research projects addressing the issue
of inefficiency and the solution to improve such adequacy
of the public sector has been able to improve the services
provided by the public sector. Most of these studies use
performance measurement as a tool to measure public
sector efficiency. Performance measurement enables
organisations to use the resources efficiently. It is an
essential tool for both public and private sector
organisations.
Performance indicators enable
management to gain insight into a number of relevant
aspects of production or policy processes in order to
develop effective control on these processes and deliver
the efficient services to the public.
The basis of performance measurement for each
production or policy process contains four basic
elements; input, process, output and impact (Figure
B14.1). The measures of inputs, process, output and
effects can be distinguished and measured by means of
indicators. Take an example of retraining of graduates.
The output is number of graduates who completed the
training course and the resources used to produce the
output efficiency. Efficiency is the total number of
graduates trained in relation to the resources used.
Productivity is a ratio of all output to all resources used.
Effectiveness measures the output of a Government
program when completed as compared with the
objectives. In this example, effectiveness is measured by
the number of graduates who actually secured a job
(within a specified period) as a result of their enrolment in
the retraining program.
Case Study of Public Sector Productivity.
(First phase)
NPC has initiated several pilot studies with selected
agencies to develop more comprehensive measures of
performance such as productivity indexes and
effectiveness measures.
Productivity Measures
This study involves 367,923 employees in the Federal
service (excluding Armed Forces and Police) using 1995
as the base year.
The productivity indicator is a partial productivity measure
based on the output-input concept, that is, the ratio of
public sector output indexed to employee index. The
measurement focuses on programmed final output
(goods and services produced and delivered by an
agency) and labour efficiency in producing the output. It
is also known as labour productivity index.
Output measurement
A framework has been developed in the public
organization from which output are defined and
quantified. Several important criteria were used. The
selections of output were based on the following;
●
The output (product /service) are final from the
perspective of the program. It reflects the effort
rather than the outcome or impact.
●
The output is measurable, using physical
quantitative measures.
●
The output is a recurring category of services or
product.
Figure B14.1: Input - Output Relationship
INPUT
PROCESS
OUTPUT
Efficiency/
Productivity
OUTCOME/
IMPACT
Effectiveness
●
Outputs are comparable from one period to
another.
●
The output data reflect the resources utilized.
Weighting
Most organisation produces 5 or 6 output. As such, the
multiple output must be combined into single measure
using appropriate weights. Weighting is very important
as it distinguishes between output requiring more labour
time versus those activities requiring less labour time
The weight is developed based on the unit labour time
expended to produce an output in the base year. This
weight is computed by dividing the employee year or
number of employees by the output in the base year.
Measuring Input
The input is based on number of employees / labour force
involved for the year.
Productivity Results
Productivity index is computed by dividing output index
with the input index. Figure B14.2 summarizes the change
in labour productivity of selected Government agencies
from the study. The information obtained from the
productivity measurement enables management to
analyse the output , employee and productivity changes
for each reported activities. This information assists
management in identifying the causal factor for the
change in productivity. Productivity enables management
to determine work load and staff requirements.
The next phase of this study is the gradual introduction of
other performance measures, effectiveness or impact of
government delivering services
General Framework on Performance Measures
Performance
measurement
indicators
enable
management to review service delivery, inefficiencies,
Figure B14.2: Labour Productivity for Selected Government Agencies, 1995-2000
Figure B14.3: General Framework on Performance Measurement
Relevancy
Scope & Coverage
Accessibility
Waiting time
Effectiveness
PERFORMANCE
Productivity
Efficiency
Appropriateness
Quality
Meeting Customer
needs
Input per Output Unit
Cost per output
responsiveness and effectiveness. Using police services
as an example, productivity measures indicate police
personnel efficiency in delivering services, attending to
major car accidents, issuing traffic infringement notices
and response to calls for assistance.
Effectiveness measure for police services will be in the
form of reduction in the crime rate as it reflects police
performance. Elements in effectiveness are measured by
means of indicators.
A framework as illustrated in Figure B14.3 can be used by
organisation in identifying indicators that reflect
organizational performance that encompass the
elements of effectiveness and efficiency. Elements used to
measure effectiveness are relevancy , accessibility,
appropriateness and quality. The indicators to measure
relevancy consist of scope and coverage or
comprehensiveness of the services. Elements used to
measure efficiency is input per unit output and the
indicator used to measure efficiency is cost per unit
output .
Using such framework, an inter-departmental pilot project
on performance measurement was carried-out in 2002.
The main purpose of this project was to study the impact
of training and research services offered by the agency.
To analyze the impact of agency training services, an
impact evaluation framework, highlighting on several
dimensions such as relevancy, quality, staffing, facilities,
accessibility, and indirect benefits (Figure B14.4). Both
quantitative and qualitative data are use to analyze the
above indicators over a period of time. The indicators for
relevancy include:
A.
Relevancy
(i)
Type and number of training programmes
conducted; and
(ii)
Type and number of participants trained.
B.
Quality
(i)
Participants’ evaluation criteria;
(ii)
Pre and post test of training effectiveness;
and
(iii)
Meeting customer group.
C.
Staffing
(i)
Type and number of trainers;
(ii)
Trainer background;
(iii)
Type and number of facilitators; and
(iv)
Facilitator background.
D.
Facilities
(i)
Type and number of training room;
(ii)
Type and number of audio-visual-aids
(AVAs);
(iii)
Library resources;
(iv)
Type and number of accommodation and
recreation facilities; and
(v)
Food facilities.
E.
Accessibility
(i)
Training programmes fees charged;
(ii)
Overseas training expenses incurred; and
(iii)
Training programmes conducted (planned
versus actual).
F.
Indirect benefits
(i)
Enhance national image.
Figure B14.4: Framework on Impact Evaluation of Training and Research Services
Box 15
THE INFORMATION AND COMMUNICATION
TECHNOLOGY SECTOR
INTRODUCTION
The role of Information and Communication Technology
(ICT) as an enabling technology for accelerating
development and enhancing competitive strength has
been well recognised. ICT leads to the creation of new
products, services and distribution channels within
traditional industries, as well as innovative business
models and whole new industries. ICT enables improved
business process efficiency and hence increases
productivity. The competitive edge brought about by ICT
has thus lead to the growth of ICT industry.
●
●
●
●
●
●
●
ICT is defined based on the following principles:
●
(a)
(b)
For manufacturing industries, the products of
industry must be intended to fulfill the function of
information processing and communication
including transmission and display. Must use
electronic processing to detect, measure and/or
record physical phenomena or to control a
physical process.
For services industries, the products must be
intended to enable the function of information
processing and communication by electronic
means.
The above principles was adopted in accordance to the
Malaysia Standard Industrial Classification 2000 (MSIC
2000) which conforms closely to the industrial classes of
the International Standard Industrial Classification (ISIC)
as follows: Manufacturing
●
Office and accounting machinery
●
Computers and computer peripherals
●
Telecommunication cable and wires
●
Electric power cables and wires
Other insulated wires and cables
Semi-conductor devices
Electronic valves and tubes and printed circuit
boards
Other electronic components
Television and radio transmitters and apparatus
for line telephony and line telegraphy.
Television and radio receivers, sound or video
recording or reproducing apparatus and
associated goods
Instruments and appliances for measuring,
checking, testing, navigating and other purposes,
except industrial process equipment
Industrial process control equipment
Services
●
Distributive trades (wholesale and retail of
machinery, equipment and supplies)
●
Renting of office machinery and equipment
(including computers)
●
Telecommunications
(telephone
services,
broadcasting, internet service provider and paging
services)
●
Computer and related activities services (hardware
consultancy software consultancy and supply,
data processing services, data base activities,
maintenance and repair and other computer
related services)
PERFORMANCE OF THE ICT SECTOR
The ICT sector consists of the ICT Manufacturing and ICT
Services industries. The ICT services industries
encompassed both Computer services industries and
Telecommunications services industries.
In 2000, there were 671 establishments operating in the
ICT manufacturing industries compared to 321
establishments in the ICT services industries. For the ICT
THE INFORMATION AND COMMUNICATION TECHNOLOGY SECTOR
Table B15.1:
Performance Indicators for ICT Manufacturing
and Services Industries. (2000)
Manufacturing
Performance
Indicators
Number of Establishments
Services
Computer Services
Telecommunications
Services
671
283
38
Total Output
(RM million)
177,681.35
3,193.51
16,786.79
Added Value*
(RM million)
34,159.88
1,235.85
10,434.03
Labour Cost
(RM million)
8,097.50
577.76
1,313.60
Number of
Employees
436,981
12,240
43,557
Source:
Economic Census 2001 – Information and Communication Technology,
Department of Statistics, Malaysia, 2001
manufacturing industries, the value of total output were
RM177.7 billion while added value generated by these
establishments amounted to RM34.2 billion (Table
B15.1). There were 436,981 employees engaged in 2000
with the total labour cost of RM8.1 billion.
For the ICT services industries, the contribution of the ICT
telecommunications services industries registered higher
contribution to total output, added value, labour cost and
employment than the ICT computer service industries.
This is in line with the demand for telecommunications
services that remained favourable as the number of
cellular phone subscribers and internet services increased
in year 2000.
ICT Manufacturing Industries
Total Output and Added Value
Among the ICT manufacturing industries, the highest
number of establishments were from the manufacturing
of electronic valves and tubes. It was also the major
contributor of total output at RM74.7 billion (42.1%)
(Table B15.2). This industry also contributed the highest
added value registered at RM18.9 billion (55.2%).
ICT Services Industries: Computer Services Industries
Among the computer services industries, the highest
number of establishments was software consultancy and
supply services with 158 establishments (55.8%)(Table
B15.2).
In terms of contribution to total output and added value,
the software consultancy and supply services were the
major contributor of RM2.4 billion which accounted for
76.4% and of RM0.9 billion or 68% respectively.
ICT Services Industries: ICT Telecommunications
Services Industries
There were 38 establishments operating in the ICT
telecommunications industries, the highest was the
mobile telephone services (39.5%) with 15
establishments (Table B15.2).
ICT telecommunication services industries contributed
more output in 2000 compared to the computer services
industries. The telephone services industry contributed
* Added Value = Value of Gross Output - Cost
Table B15.2:
Performance Indicators for Industries
in ICT Sector (2000)
Number of
Establishments
Manufacturing of office, accounting and computing machinery
Total Output
(RM Million)
Added Value
(RM Million)
67
39,902.37
5,653.70
Manufacturing of insulated wire and cable
128
6,843.42
1,450.85
Manufacturing of electronic valves & tubes and other electronic components
261
74,714.60
18,859.45
35
8,065.08
1,904.84
Manufacturing of television and radio receivers sound or video
recording or reproducing apparatus and associated goods
159
46,500.04
5,931.84
Manufacturing of instruments and appliances for measuring, checking,
testing, navigation and other purposes, except industrial process
control equipment and Manufacturing of industrial
process control equipment.
21
1,655.84
359.21
Manufacturing of television and radio transmitters and apparatus
for line telephony and line telegraphy
ICT Computer Services Industries
Number of
Establishments
Hardware Consultancy Services
Total Output
(RM Million)
Added Value
(RM Million)
29
414.10
235.48
158
2,441.46
851.66
Data Processing Services
15
233.19
110.30
Database Activities
21
55.78
19.23
Maintenance and Repair of Computers
60
49.00
19.19
Software Consultancy and Supply
ICT Telecommunication Services Industries
Number of
Establishments
Telephone Services (Public & Mobile)
Total Output
(RM Million)
Added Value
(RM Million)
15
15,046.13
9,842.79
Television and Radio Transmission Services
9
968.12
296.26
Data Communications Service
7
714.32
269.45
Paging Services
7
58.23
25.54
Source:
Economic Census 2001 – Information and Communication Technology,
the highest output among all the telecommunication
services (RM15 billion) or 86.6%. The telephone services
industry was also the highest contributor to added value,
which was RM9.8 billion or 94.3%.
PRODUCTIVITY PERFORMANCE OF THE ICT SECTOR
This section analyses the productivity performance of the
ICT manufacturing and services industries based on
Labour Cost Competitiveness ratios namely Added Value
per Labour Cost, Labour Cost per Employee and Unit
Labour Cost. The analyses also include Labour
Productivity, Labour Cost Competitiveness and Added
Value Content.
The Added Value per Employee for ICT Manufacturing
Industries was recorded at RM78.2 thousand (Table
16.3). With the manufacturing of television & radio
transmitters and telephone registering the highest Added
Value per Employee at RM125.3 thousand. The Total
Output per Employee was at RM406.6 thousand,
contributed highly by the manufacturing of office
machinery at RM552.9 thousand. Added Value Content
for ICT Manufacturing Industries was at 19.2%.
Comparing all the ICT manufacturing industries, the
manufacturing of electronic valves and tubes recorded the
highest Added Value Content at 25.2%. In terms of
Labour Cost per Employee, employees in the
manufacturing of electronic valves and tubes enjoyed the
highest remuneration of RM20.2 thousand compared to
other ICT manufacturing industries. This is higher than
the industry average which was at RM18.5 thousand. The
manufacturing of office machinery and television & radio
transmitters and telephone indicated a lower Unit Labour
Cost at 0.03 than the industry average which was at 0.05.
ICT Services Industries: Computer Services Industries
Added Value per Employee for the industry was recorded
at RM100.9 thousand. The data processing services
establishments registered the highest Added Value per
Employee at RM136.3 thousand (Table B15.3) In terms of
Total Output per Employee, the industry average was at
RM260.9 thousand. The software consultancy and supply
services recorded at RM319.5 thousand which was the
highest among the other computer services industries.
The Added Value Content for the ICT computer services
industries was 38.7% with the hardware consultancy
services industry recording the highest Added Value
Content of 56.9%. The software consultancy and supply
services industries registered a ratio of 2.7 for Added
Value per Labour Cost, which was the highest among all
computer services industries. The average for the
industry was recorded at 2.1. For Labour Cost per
Employee, employees of the data processing services
establishments enjoyed the highest annual remuneration
of RM90.2 thousand, followed by other ICT computer
services establishments. The average for the industry was
recorded at RM47.2 thousand. The software consultancy
and supply services industries registered a ratio of 0.1
Unit Labour Cost, which relates to lower labour cost
compared to the others. The industry average was
recorded at 0.18.
ICT Services Industries: Telecommunication Services
Industries
Among the ICT telecommunication services industries,
the establishments that registered the highest Added
Value per Employee were telephone services Industry at
RM258.1 thousand (Table B15.3). While the industry
average was recorded at RM239.6 thousand. In terms of
Total Output per Employee, the average was recorded at
RM385.4 thousand and the data communications
services establishments experienced the highest Total
Output per Employee at RM458.8 thousand compared to
other ICT telecommunication services industries.
In terms of Added Value Content, the industry average
was recorded at 62.2%, with the telephone services
industry recording 65.4% Added Value Content. The
telephone services registered 8.7 Added value per Labour
Cost (Table B15.3), which was the highest among all the
ICT telecommunication services industries. In terms of
Labour Cost per Employee, The employees of television
and radio transmission services enjoyed the highest
remuneration per employee at RM40 thousand while the
industry average was recorded at RM30.2 thousand. The
data communications services indicated a 0.06 Unit
Labour Cost, which relates to lower labour cost compared
to telephone services establishments (0.08), television
and radio transmission services (0.13) and paging
services (0.26). The industry average was recorded at
0.08.
Table B15.2:
Productivity Performance for Industries
in ICT Sector (2000)
Labour Cost
Competitiveness
ICT Manufacturing
Industries
Labour
Productivity
Added
Value
Content
Added Value
per Labour
Cost
(Pure Number)
Labour
Cost per
Employee
(RM
Thousand)
Industry Average
4.22
18.53
0.05
78.17
406.6
19.23
Manufacturing of office, accounting and
computing machinery
4.31
18.18
0.03
78.33
552.86
14.16
Manufacturing of insulated wire and cable
3.06
18.14
0.07
55.46
261.61
21.20
Manufacturing of electronic valves &
tubes and other electronic components
4.84
20.16
0.05
97.66
386.91
25.24
Manufacturing of television and radio
transmitters and apparatus for line telephony
and line telegraphy
6.86
18.26
0.03
125.32
530.60
23.62
Manufacturing of television and radio receivers
sound or video recording or reproducing
apparatus and associated goods
2.96
16.40
0.04
48.52
380.39
12.76
Manufacturing of instruments and appliances
for measuring, checking, testing, navigation
and other purposes, except industrial process
control equipment and Manufacturing
of industrial process control equipment
2.65
16.72
0.09
44.36
204.47
21.69
Unit
Added Value
Total Output
Labour
per Employee per Employee
Cost
(RM Thousand) (RM Thousand)
(Pure Number)
Labour Cost
Competitiveness
Computer Services
Industries
Labour
Productivity
Added Value
Content
(%)
Added
Value
Content
Added Value
per Labour
Cost
(Pure Number)
Labour
Cost per
Employee
(RM
Thousand)
Industry Average
2.14
47.20
0.18
100.97
260.91
38.70
Hardware Consultancy Services
1.52
57.56
0.37
87.57
154.00
56.87
Software Consultancy and Supply
2.70
41.28
0.13
111.44
319.48
34.88
Data Processing Services
1.51
90.15
0.31
136.33
288.24
47.30
Database Activities
1.09
37.31
0.32
40.74
118.17
34.47
Maintenance and Repair of Computers
1.13
27.00
0.35
30.56
78.02
39.17
Unit
Added Value
Total Output
Labour
Cost
(Pure Number)
Added Value
Content
(%)
Table B15.2:
Productivity Performance for Industries
in ICT Sector (2000) (cont’d)
Labour Cost
Competitiveness
Telecommunication
Services Industries
Labour
Productivity
Added
Value
Content
Added Value
per Labour
Cost
(Pure Number)
Labour
Cost per
Employee
(RM
Thousand)
Industry Average
7.94
30.16
0.08
239.55
385.40
62.16
Telephone Services (Public & Mobile)
8.72
29.61
0.08
258.13
394.59
65.42
Television and Radio Transmission Services
2.39
39.97
0.13
95.60
312.40
30.60
Data Communications Service
5.93
29.20
0.06
173.05
458.78
37.72
Paging Services
1.66
19.94
0.26
33.17
756.21
43.87
Source:
Unit
Added Value
Total Output
Labour
Cost
(Pure Number)
Economic Census 2001 - Information and Communication Technology,
Added Value
Content
(%)
Appendices
Appendix A
SHARE OF GDP AND EMPLOYMENT BY SECTORS
The Manufacturing sectors continued to be the leading sector of the economy. In term of GDP share, it decreased to 28.5%
in 2002(2001: 29.8%) (Table A1). This sectors share of employment continued to be the largest at 24.5% in 2002 (2001:
24.5%).
The Agriculture sector’s GDP share recorded a decline in 2002. The GDP share dropped to 7.9% in 2002 (2001: 8.2%)
while it employment share decreased from 17.4% to 17.1% in 2002.
The Mining and Quarying sector’s GDP share increase from 6.5% in 2001 to 6.9% in 2002 while the employment share
decreased to 0.4% in 2002 (2001: 0.4%).
Among the Aggregate Services sector, the GDP share of the Finance Sector and Transport Sector increased by 13.2% and
8.3% respectively, (2001: 12.4% and 7.9%). The Electricity Sector GDP share increased by 4.0% in 2002 (2001: 3.7%)
while Commerce/Trade Sector decreased by 14.1% in 2002 (2001: 14.3%). In term of employment, the share of the
Commerce/trade, Finance and Electricity remained at 17.5%, 4.9% and 0.7% respectively, while Transport sector employment share increased to 5.2%. (2001: 5.1%).
Table A1: Percentage Share of GDP and Employment by Sectors
GDP
Agriculture
Mining and Quarrying
Manufacturing
Construction
Electricity
Transport
Commerce/Trade
Finance
Government
Other Services
Aggregate Services*
2001
2002e
Employment
2001
2002e
8.15
6.51
29.79
3.22
3.73
7.88
14.33
12.44
6.82
7.11
38.39
7.89
6.93
28.54
3.18
4.03
8.25
14.07
13.20
6.71
7.19
39.55
17.42
0.40
24.50
8.29
0.70
5.05
17.47
4.94
10.72
10.50
28.10
*Aggregate Services include Electricity, Finance, Transport and Commerce/Trade
Source:
National Productivity Corporation, Malaysia.
Computed from:
e = estimate
17.11
0.39
24.49
8.25
0.72
5.16
17.60
5.11
10.63
10.53
28.59
Appendix B
THE PRODUCTIVITY FRAMEWORK
Sources of Productivity Growth
Figure B1 shows the outline of the interactive relationship
between employment, capital intensity, productivity, Total
Factor Productivity (TFP), Gross Domestic Product
(GDP), standard of living and quality of life in an economy. This interactive relationship forms the basis for the
macro level analysis in terms of contributions of capital
intensity and TFP towards growth of productivity, and in
terms of contributions from employment and productivity
towards growth of GDP in an economy (usually referred
as economic growth).
several factors such as the quantitative expansion of
physical capital per worker (or capital intensity) and TFP
growth which measures improvement in the qualitative
aspects of labour and capital inputs, and the efficiency
with which these inputs work together.
Improvements in TFP reflect skills upgrading, better
organisation and management systems, technological
advancement and improvement in methods of production, as well as the shift towards higher added value
process and industries. Thus, productivity would yield
better returns if such quantitative increase in capital inten-
There are two prime sources that contribute to the economic growth of a nation, namely growth in employment
and growth in labour productivity. Therefore, an analysis
on the trend of GDP growth would require analysis on
trends of growth in labour productivity and employment.
Growth in employment is normally attributed to several
factors related to the expansion of industries through
industrialisation programmes and the enhancement of
investment climate in the various sectors of the economy.
sity are simultaneously complemented by growth in TFP.
A long-term sustainable growth in the economy cannot
solely depend on expansion strategy alone. This is
because sooner or later, an economy will have to face
competition from other countries offering similar or even
better incentives. A better option as a long term strategy,
therefore, would be to strive for a productivity-driven economic growth involving the qualitative expansion of
labour and capital inputs and the qualitative improve-
A greater concern would be the long-term sustainable
growth in productivity. Productivity growth determines a
nation’s future standard of living. This growth depend on
ments of these inputs. Of these, the qualitative aspects of
capital and workforce improvement would be of greater
concern.
Figure B1: Productivity Framework
Better Quality
of Life
Higher Standard
of Living
Higher
Gross Domestic Product
Higher
Productivity
Increase in
Employment
Higher
Total Factor
Productivity
Higher
Capital
Intensity
Quality of
Workforce
Quantitative Inputs
Quality of
Capital and System
Qualitative Inputs
Appendix C
DERIVING THE SOURCES OF LONG-TERM ECONOMIC AND
PRODUCTIVITY GROWTH
SOURCES OF LONG-TERM ECONOMIC GROWTH
The equation which computes the sources of economic and productivity growth uses a production function as the starting point:
Q
=
f (K,L)
(1)
Q
K
L
=
=
=
Output or GDP
Capital
Number of workers
where
By including a time variable (assumed due to technical progress), the resulting shifts of the production can be represented by:
=
f(Kt, Lt, t)
(2)
Qt
thus implying that the same input quantities yield a different output at different points of time.
Assuming that technical progress
expressed as:
Qt
=
where
Qt, Kt and Lt
A(t)
is both neutral and disembodies (Solow, 1957), the production function (2) can be
A(t) • f(Kt, Lt)
(3)
= output and factor inputs during period t
= technical progress or TFP as a function of time
Differentiating (3) with respect to time and denoting the derivatives by putting a dot over the variable, hence
dQ/dt
=
Q we have
Q
=
A • f(Kt, Lt) + A • ∂f • K + A • ∂f • L
∂K
∂L
(4)
Dividing throughout by Q leads to an expression for the proportionate rate of change in output:
Q
Q
=
=
A • f(Kt, Lt)/Q + A • ∂f • K + A • ∂f • L
∂K Q
∂L Q
(5)
Q
Q
=
A • f(Kt, Lt)/Q + A • ∂f • K • K + A • ∂f • L • L
∂K Q K
∂L Q L
(6)
Appendix C
Solow (1957) assumed that factors are paid the value of their marginal products under competitive equilibrium conditions,
so that
∂Q = A • ∂f = r
∂K
∂K
p
∂Q = A • ∂f = w
∂L
∂L
p
where
p
r
w
=
=
=
prices of output
prices of capital inputs
prices of labour inputs
- Q = A + rK K + wL • L
Q A pQ K pQ L
(7)
In Solow’s notation, the shares of capital and labour are denoted by wK = r.K/p.Q and wL = wL/p.Q
respectively, thus with this assumption the equation (7) becomes”
Q/Q = A/A + wk • K/K + wL • L/L
(8)
Further, assuming constant returns to scale, where percentage change in inputs leads to the same percentage change in
output, the following holds:
wK + wL = 1
Therefore equation (8) becomes:
Q/Q = A/A + wK • K/K + (1-WK) • L/L
where
Q/Q
A./A
K/K
L/L
=
=
=
=
Proportionate rate of change of output
Proportionate rate of change of technical progress of TFP
Proportionate rate of change of capital
Proportionate rate of change of labour
SOURCES OF LONG-TERM PRODUCTIVITY GROWTH
Subtracting L/L from both sides of equation (9) to express the equation in terms of productivity:
Q/Q - L/L = A/A + WK • K/K + (1 - wK) • L/L - L/L
Q/Q - L/L = A/A + WK • (K/K - L/L)
(9)
Appendix C
Therefore
q/q
=
A/A + wk • k/k
where q/q
=
Q/Q - L/L = Proportionate rate of change of productivity
A/A
=
Proportionate rate of change of technical progress or TFP
k/k
=
K/K - L/L = Proportionate rate of change of capital to labur ratio
(10)
Equation (10) denotes that changes in productivity over time are therefore the result of neutral technical progress (or TFP)
and of increases in capital to labour ratio (capital intensity).
SOURCES OF LONG-TERM ECONOMIC GROWTH EXPRESSED IN TERM OF PRODUCTIVITY GROWTH
Subtracting (10) from (9) to derive the relation between economic growth and productivity growth
Q/Q - q/q
= wk • K/K + (1 - wK) • L/L - wk • k/k
= wk • K/K + L/L - wk • L/L - wk • k/k
= wk • k/k + L/L - wk • k/k
= L/L
Therefore
Q/Q
=
q/q + L/L
=
Proportionate rate of change of output
=
Proportionate rate of change of productivity
=
Proportionate rate of change of labour
(11)
where
Q/Q
q/q
L/L
Alternatively, equation (11) can be written as:
Q/Q =
A/A + wk • k/k + L/L
(12)
Equation (11) expresses economic growth in terms of productivity growth and an increase in labour input (employment
expansion), while that of equation (12) expresses it in terms of TFP growth and an increase in labour and capital inputs.
Appendix D
METHODOLOGY FOR COMPUTING THE CONTRIBUTION OF A
SECTOR’S PRODUCTIVITY GROWTH
Formula for computing an economic sector’s contribution for the period t to t+1:
AVs,t
AVE,t
where
AV
L
s
E
t
x
=
=
=
=
=
Growth of
Ls
LE
x
AVs
Ls
t+1
Added Value
Number of workers
Sector of an economy
Total economy
Time period
Interpretation
The contribution of a sector to overall productivity growth is determined by the following factors:
a.
sector’s productivity growth (i.e. growth of AVs/Ls)
b.
growth of the sector’s employment share (i.e. growth of Ls/LE)
c.
sector’s initial productivity level (i.e. AVs/Ls in time period t) relative to overall economy’s initial
productivity level (i.e. AVE/LE in time period t)
d.
sector’s initial employment share (i.e. Ls/LE in time period t)
The product of items ‘c‘ and ‘d’ above is equal to the added value share of the sector.
Appendix E
INTERNATIONAL COMPARISON OF CHANGES IN PRODUCTIVITY
1995-2002 (IN PERCENTAGE)
Selected Asian
Economies
1995
1996
1997
1998
1999
2000
2001
2002
Malaysia
6.6
5.7
5.6
-1.8
3.9
6.1
0.3
2.5
Taiwan
5.2
5.8
5.4
3.3
4.4
4.7
-0.8
2.3
Rep. of Korea
4.7
4.8
3.7
-2.2
6.0
-0.7
0.3
4.2
Singapore
6.1
4.8
3.6
-1.5
9.3
5.3
1.6
3.5
Philippines
2.5
-0.9
3.5
-1.9
0.8
8.9
-4.7
n.a.
Indonesia
10.8
0.8
3.1
-13.7
-0.5
3.7
2.2
4.1
Hong Kong
2.5
-1.0
-4.1
-4.1
3.3
7.0
-1.1
-5.5
Thailand
7.6
7.0
7.7
-7.7
4.6
1.7
0.3
4.5
Selected OECD
Economies
1995
1996
1997
1998
1999
2000
2001
2002
United States
1.2
2.1
2.1
2.8
2.6
2.8
0.4
2.8
Japan
1.5
3.1
0.7
-0.4
1.6
1.7
0.2
0.7
Germany
1.5
1.1
1.6
0.9
0.6
1.4
0.2
0.9
United Kingdom
1.5
1.5
1.4
1.9
0.8
1.9
1.2
1.0
Canada
0.9
0.8
2.0
1.2
2.3
1.8
0.4
1.4
France
1.1
1.0
1.3
2.2
1.2
1.1
0.2
1.1
Italy
3.5
0.6
1.6
0.7
0.4
1.0
-0.2
-1.4
Source: National Productivity Corporation, Malaysia.
Computed from:
- Key Indicators 2002 Population and Human Resources Trend And Challenges
- OECD Economic Outlook, OECD, December, 2002, Vol. 72
- Economic Report, 2002/2003, Ministry of Finance, Malaysia, various issues
- Central Bureau of Statistic, Indonesia; Bank Indonesia
- Singapore Department of Statistics
- Quarterly National Economics Trends Taiwan Area, The Republic of China
- National Income in Taiwan Area of China, various issues
- National Statistical Office, Rep. of Korea, Bank of Korea
- Bank of Thailand; National Economic Social Development Board; Department of Labour
Appendix F
TERMINOLOGY AND DEFINITION
1.
Added Value
Added Value measures the wealth generated by collective efforts of those who work in an enterprise (the
employees) and the capital providers (e.g. investors and shareholders). Added value is different from sales revenue
or value of production because it does not include the wealth created by the suppliers to the enterprise.
Methods Of Added Value Calculation
There are two ways added value can be calculated:
(i)
Addition Method
This is called the wealth distribution method.
Added Value = Labour Cost + Interest + Tax + Depreciation + Profit
It is called wealth distribution because the added value so created is used to pay those who have
contributed to its creation in terms of wages & salaries (labour cost) for the employees, interest and loan
for capital providers, taxes to the Government, depreciation for capital equipment usage and profits to the
owner.
(ii)
Subtraction Method
This is called the wealth creation method.
Added Value = Total Output less Bought-In Materials and Services (BIMS)
In order to produce goods or services, a company has to purchase the necessary raw materials and other
inputs. The difference between the total value of output and total cost of inputs i.e. all inputs and services
bought from another company is called added value.
2.
Total Output (TO)
It is defined as value of products manufactured (ex-factory value) + value of construction work done + change in
Work-in-Progress (WIP) + capital expenditure on own construction + income from services rendered + income
from sales of goods purchased in same condition.
3.
Total Input (TI)
It is defined as value of materials consumed + value of supplies consumed + cost of printing + cost of goods sold
in same condition + water + electricity + fuels + lubricants + supplies + salaries and wages + fees paid to nonworking directors + payments to contractors + payment in kind to paid employees + value of free wearing apparel
+ employer’s contribution to government funds + payments for industrial work done by others + payments for nonindustrial services + interest charges + depreciation + direct taxes.
Appendix F
4.
Labour Cost (LC)
It is defined as payments in the form of gross salary and wages, bonuses, and other cash allowances paid to
employees + salaries, allowances, fees, bonuses and commissions paid to working directors + fees paid to nonworking directors for their attendance at the Board of Director’s meetings + payments in kind to paid employees +
value of free wearing apparel provided + employer’s contribution to government funds.
5.
Bought-In Materials And Services (BIMS)
It is defined as Bought-In Materials plus Bought-In Services, where Bought-In Materials is the value of materials
consumed in production (including transport charges incurred and taxes and duties paid on the materials); while
Bought-In Services is the value of supplies consumed such as packaging materials, consumable stores (including
stationery and office supplies, matrials for repairs and maintenance) + cost of printing + lubricants + cost of goods
sold in same condition as purchases + water + electricity + fuels + payments to contractors + payments for
industrial work done by others + supplies + payments for non-industrial services.
6.
Total Factor Productivity (TFP)
TFP measures the efficiency of the utilisation of both capital and human resources. It is also regarded as a measure
of the degree of technological advancement associated with economic growth. Higher TFP growth indicates
efficient utilisation and management of resources, materials and inputs necessary for the production of goods and
services.
At the national level, Total Factor Productivity (TFP) growth reflects the portion of the growth in the Gross Domestic
Product (GDP) that is not explained by the growth in inputs such as employment, capital investment and natural
resources.
At the firm level, TFP growth implies the upgrading of skilled and technical manpower, application of technology
and creation of new technologies, adoption of best management practices and developing corporate culture and
work ethics.
7.
Productivity Indicators
The followings are the productivity used in this Report
7.1
7.2
Labour Productivity
7.3
7.4
Capital Intensity
7.5
Process Efficiency
7.6
Added Value Content
7.1
Labour Competitiveness
Competitiveness in terms of labour cost indicates the comparability of the industry in producing products or
services at the lowest possible labour cost. Three competitiveness ratios, namely Added Value per Labour Cost,
Labour Cost per Employee and Unit Labour Cost are described below.
Appendix F
RATIO
1.
Added Value
per Labour Cost
=
2.
3.
7.2
RM per
Employee
This ratio indicates how competitive the enterprise is
in terms of labour cost.
This ratio measures the average remuneration per
employee.
A high ratio means high returns to individual workers
and vice-versa.
Pure Number
Labour Cost
Total Output
This ratio indicates the proportion of labour cost to
total output.
A high ratio indicates high labour cost. This could be
due to labour shortage and lack of skilled labour, or
poor labour mix. It could also be due to high labour
turnover.
Labour Productivity
It can be used as one of the ways of gauging the productivity performance of the industry. The commonly used
indicator is added value per employee.
RATIO
1.
WHAT IT TELLS
A low ratio indicates high labour cost which does not
commensurate with added value creation.
Labour Cost
Number of Employees
Unit Labour Cost
=
Pure Number
Added Value
Labour Cost
Labour Cost per
Employee
=
UNIT
Added Value
per Employee
=
Added Value
Number of Employees
UNIT
RM per
Employee
WHAT IT TELLS
Reflects the amount of wealth created by the
company, relative to the number of employees it has.
It is influenced by:
Management efficiency
Work attitudes
Price effects
Demand for the products
A high ratio indicates the favourable effects of labour
factor in the wealth creation process.
A low ratio means unfavourable working procedures
such as:
High bought-in materials and services
Wastages of time and materials
Inadequate salary/wages rates
Appendix F
RATIO
2.
Total Output per
Employee
=
UNIT
RM per
Employee
Total Output
Number of Employees
WHAT IT TELLS
The size of output generated by each employee of the
enterprise.
Give an indication of efficiency and/or marketing
capability.
A high ratio reflects a good marketing strategy
adopted by the enterprise.
A low ratio indicates:
Deliberate business policy of having low
turnover but high profit margin/added value.
Low product profiles and quality.
7.3
1.
Capital Productivity indicates the degree of utilisation of fixed assets and their efficiency with which assets are
utilised. It is defined as added value generated per ringgit of fixed assets. High ratio indicates better performance
of enterprise.
RATIO
UNIT
Added Value
per Fixed Assets
Pure Number
=
Added Value
Fixed Assets
WHAT IT TELLS
Indicates the degree of utilisation of tangible fixed
assets.
A high ratio indicates the efficiency of assets
utilisation.
A low ratio reflects poor assets utilisation
7.4
Capital Intensity
Capital Intensity is the ratio measuring the amount of fixed assets allocated to each employees. It is also known
as fixed assets per employee or simply capital-to-labour ratio. This ratio is used to measure whether an industry
is relatively capital-intensive or labour-intensive.
RATIO
1.
Fixed Assets
per Employee
=
Fixed Assets
Number of Employees
UNIT
RM per
Employee
WHAT IT TELLS
This ratio indicates whether an enterprise adopts a
capital-intensive or labour-intensive policy.
A high ratio indicates high capital intensity
A low ratio means:
Dependence on labour-intensive methods
Low technological inputs
Appendix F
7.5
1.
Process Efficiency
Process Efficiency measures how efficient the business utilises its own resources namely labour, plant and
machinery and capital to generate added value and minimise the bought-in materials and services.
RATIO
UNIT
Process Efficiency
Pure Number
= Added Value
[(Total Input) (Bought-In Materials
and Services)]
7.6
This ratio indicates the efficiency and effectiveness of
the process, which is normally affected by
production techniques used, technological
innovation, managerial and labour skills.
A high ratio indicates an efficient and effective
process system and vice-versa.
Added Value Content
The level of productivity of an enterprise can be also assessed by analysing at the major components of added
value and total output.
RATIO
1.
WHAT IT TELLS
Added Value Content
=
Added Value x 100
UNIT
Percent
WHAT IT TELLS
This ratio can be used to gauge the degree of
utilisation of bought-in materials and services and
changes in the price differentials between products
and purchases.
Total Output
A high ratio indicates efficient usage of purchase or
favourable price differentials.
A low ratio means:
- High costs of bought-in materials and
services.
- Poor products quality
- Low price competition
Appendix G
CONTRIBUTION BY THE MANUFACTURING, SUB-SECTORS
TOTAL OUTPUT, ADDED VALUE, NUMBER OF EMPLOYEES,
LABOUR COST AND FIXED ASSETS, 2001e
Code Sub-Sectors
D
Overall Manufacturing
Total Output
% share of
No. of
% share of
Total Output Employees Employee
Added Value
% share of
Added Value
Labout Cost
% share of Fixed Assets (excluding % share of Fixed
Labour Cost
land and Building)
Assets
208,765,650,707
100.0
1,156,578
100.0
46,202,553,716
100.0
22,883,470,446
100.0
51,683,837,551
100.0
15 Food Products and Beverages
32,149,164,829
15.4
96,295
8.3
4,698,621,522
10.2
1,936,223,747
8.5
4,635,204,143
9.0
16 Tobacco Products
1,543,029,983
0.7
8,976
0.8
274,796,813
0.6
149,962,660
0.7
612,985,767
1.2
17 Textiles
4,769,654,948
2.3
35,684
3.1
1,201,409,090
2.6
647,438,865
2.8
1,700,150,026
3.3
18 Wearing Apparel
4,500,068,351
2.2
72,993
6.3
1,122,251,192
2.4
1,048,002,319
4.6
381,676,423
0.7
19 Leather Products
457,741,567
0.2
7,098
0.6
129,208,496
0.3
87,831,557
0.4
65,100,264
0.1
20 Wood and Wood Products
4,495,514,550
2.2
48,627
4.2
1,024,142,811
2.2
719,159,895
3.1
1,278,713,348
2.5
21 Paper and Paper Products
5,421,816,846
2.60
29,389
2.54
1,303,287,277
2.82
589,656,429
2.58
1,860,028.219
3.60
22 Publishing, Printing
1,987,086,528
0.95
19,091
1.65
678,466,571
1.47
413,382,954
1.81
673,269,919
1.30
23 Petroleum Products
527,254,951
0.3
1,527
0.1
181,556,035
0.4
47,816,756
0.2
70,265,189
0.1
24 Chemical and Chemical Products
19,123,987,240
9.2
41,738
3.6
4,133,255,009
8.9
1,435,743,960
6.3
5,578,232,679
10.8
25 Rubber and Plastics Products
18,980,051,727
9.1
160,306
13.9
5,381,948,124
11.6
2,709,889,283
11.8
5,539,310,346
10.7
26 Non-metallic Mineral Products
9,333,264,986
4.5
49,988
4.3
2,729,421,951
5.9
1,151,761,682
5.0
7,584,621,754
14.7
27 Basic Metals
12,508,992,563
6.0
35,852
3.1
2,151,792,062
4.7
876,810,662
3.8
3,993,856,645
7.7
28 Fabricated Metal Products
10,208,727,503
4.9
61,414
5.3
2,417,722,741
5.2
1,209,075,810
5.3
2,479,429,899
4.8
29 Machinery and Equipments
10,338,037,050
5.0
46,245
4.0
2,660,005,381
5.8
1,187,383,651
5.2
1,359,119,829
2.6
30 Office, Accounting and Computing Machinery
7,271,427,180
3.5
30,867
22.7
1,007,202,086
2.2
631,776,894
2.8
813,310,287
1.6
31 Electrical Machinery and Apparatus Products
10,087,895,059
4.8
65,454
5.7
2,466,437,140
5.3
1,259,635,778
5.5
2,329,422,591
4.5
32 Radio, Television and Communication Equipment 34,098,968,482
16.3
183,249
15.8
7,259,644,685
15.7
3,653,559,759
16.0
7,257,720,624
14.0
33 Medical, Precision and Optical Instrument
4,820,855,170
2.3
29,531
2.6
1,061,633,598
2.3
680,465,539
3.0
721,902,147
1.4
34 Motor Vehicles, Trailers and Semi-trailers
4,650,142,826
2.2
27,942
2.4
1,297,471,229
2.8
561,446,697
2.5
761,890,369
1.5
35 Other Transport Equipment
3,310,596,369
1.6
18,572
1.6
926,806,076
2.0
562,439,817
2.5
573,603,131
1.1
36 Furniture
8,139,813,531
3.9
85,556
7.4
2,089,543,168
4.5
1,320,562,041
5.8
1,410,692,160
2.7
37 Recycling
41,558,468
0.0
186
0.0
5,930,659
0.0
3,443,692
0.0
3,331,792
0.0
e = estimate
NPC BOARD OF DIRECTORS (2002)
CHAIRMAN
Y.Bhg. Tan Sri Dato’ Azman Hashim
Am Bank Group of Companies
DEPUTY CHAIRMAN
Y.Bhg. Dato’ Kalsom Abdul Rahman
Ministry of International Trade and Industry
MEMBERS
Mr. Ir. Mah Lok Abdullah
Y.Bhg. Tan Sri Kishu Tirathrai
Globe Silk Store
Y.Bhg. Tan Sri Dato’ Abdul Khalid Ibrahim
Guthrie Group Bhd.
Y.Bhg. Tan Sri Dato’ Hj. Mohd. Ramli Kushairi
South Malaysian Industries Bhd.
Y.Bhg. Tan Sri Prof. Datuk Seri Panglima
Dr. Abu Hassan Othman
Universiti Malaysia, Sabah
Y.M. Raja Dato’ Zaharaton Raja Zainal Abidin
Economic Planning Unit
Y.Bhg. Datuk Dr. Syed Muhamad Syed Abdul Kadir
Ministry of Human Resource
Y.Bhg. Dato’ Abi Musa Ashaari Muhamad Nor
Ministry of Agriculture
Mr. Al-Azmi Bakar
(until July 2002)
Ministry of Finance
Y.Bhg. Dato’ Mustafa Mansur
Federation of Malaysian Manufacturers
Y.Bhg. Dr. Mohamed Ariff Abdul Kareem
Malaysia Institute of Economic Research
Mr. Md. Jafar b. Abdul Carrim
Malaysia Employers Federation
Mr. Rajasekaran Govindasamy
Malaysian Trade Union Congress
NPC CONSULTATIVE PANELS
CONSULTATIVE PANEL FOR INFORMATION TECHNOLOGY
CHAIRMAN
Y.Bhg. Dato’ Wira Mohamed Said Mohamed Ali
MEMBERS
Dr. Nordin Othman
Prof. Dr. Mohammed Yusoff
Prof. Madya Dr Abdullah Mohd Zin
Prof. Dr. Abdul Razak Hamdan
Mr. Lee Cheng Suan
Tn. Hj Mohd. Azli Lee Abdullah
Y.M. Dr. Raja Malik Raja Mohamed
Mr. Jesse Chooi
Dr. Wong Say Ho
Mr. Ng Boon Sing
Mr. Mohd Rafee Yusoff
Mercatela (M) Sdn. Bhd.
Universiti Kebangsaan Malaysia
Universiti Terbuka Malaysia
Ministry of Science, Technology and Environment
Malaysian National Computer Confederation
Multimedia Development Corporation Sdn Bhd
Persatuan Industri Komputer & Multimedia Malaysia
SMI Association of Malaysia
MIMOS Berhad
CONSULTATIVE PANEL FOR MANUFACTURING SECTOR
CHAIRMAN
Ir. Andy K.H. Seo
MEMBERS
Mr. Choy Ming Bil
Mr. Mohd Shafie BP Mammal
Mr. Mohd Nor Ismail
Mr. Alias Stephen Nah Abdullah
Mr. Woo Mun Meng
Mr. Mohd Shah Hashim
Mr. Kong Ping Yee
Mr. A.H. Yong
Malaysian Textile and Apparel Centre
Malaysia Trade Union Congress
Sapura Electronic Industries Sdn. Bhd.
ChipPAC Malaysia Sdn. Bhd.
Enviri Industries Sdn. Bhd.
Malaysian Rubber Products Manufacturers Association
The Electrical & Electronics Association of Malaysia.
CONSULTATIVE PANEL FOR HOSPITALITY INDUSTRY
CHAIRMAN
Y.Bhg. Dato’ Azman Shah Haron
Antara Holiday Villas
MEMBERS
Mr. Christopher Raj
Mr. John Jack Kiefer
Tuan Syed Shaikh Syed Mohammad
Y.Bhg. Dato’ Anthony Yeo
Mr. Ng Kooi Chai
Mr. Mohd. Shah Tan Sri Abdul Kadir
Mr. Mohd. Nadzri Jelas
Dr. Soh Chee Seng
Tuan Hj. Shahril Saat
Tuan Hj. Idros Mohd
Prof. Madya Dr. Za’faran Hassan
Mr. Shaharuddin M Saaid
Mr. Mohd. Ilyas Zainol Abidin
Mr. Phillip Siew
Shangri-La Kuala Lumpur
Sunway Lagoon Resort Hotel
Rangkaian Hotel Seri Malaysia
Genting Highlands Resort
Antara Holiday Villas
Golden Arches Restaurants Sdn. Bhd.
Eastpine Sdn. Bhd.
Ministry of Human Resources
Ministry of Culture, Arts, and Tourism
Malaysia Tourism Promotion Board
Universiti Teknologi Mara
Malaysia Association of Hotel Owner
Malaysia Association of Hotel
Tai Thong Group of Restaurants
CONSULTATIVE PANEL FOR HEALTHCARE
CHAIRMAN
Y.Bhg. Tan Sri Dato’ Dr Abu Bakar Suleiman
MEMBERS
Y.Bhg. Datuk Dr. Ridzwan Bakar
Y.Bhg. Datin Dr. Suraiya Hani Hussein
Y.Bhg. Datin Paduka Siti Sa’diah Sheikh Bakir
Dr. Jacob Thomas
Dr. Michael Dosim Lunjew
Dr. Noor Hisham Mansor
Dr. Yao Sik King
Prof. Madya Siti Rabikhatun Mohd. Zain
Prof. Dr. Syed Mohamed Al-Junid
Mr. Jayasiri Jayasena
International Medical University
Association of Private Hospitals of Malaysia
Malaysian Society for Quality in Health
Kumpulan Perubatan (Johor) Sdn. Bhd.
Subang Jaya Medical Centre
MATRADE
Kumpulan Perubatan (Johor) Sdn. Bhd.
Ministry of Health
Malaysian Nurses Association
Jabatan Kesihatan Masyarakat,
CONSULTATIVE PANEL FOR PRODUCTIVITY MEASUREMENT
CHAIRMAN
Y.Bhg. Dato’ Kalsom Abdul Rahman
MEMBERS
Mr. Mohd. Shah Hashim
Dr. Hjh. Rabieyah Mat
Mr. Abdul Hadi Othman
Datuk Dr. Victor Wee
Mr. Cheng Ping Keat
Dato’ Lew Chin Hoi
Mr. Mohd. Shah Dato’ Abu Bakar
Mr. James Liew
Prof. Madya Dr. Tham Siew Yean
Prof. Dr. Mokhtar Abdullah
Mr. Mat Noh Hussin
Department of Statistics
Khind Industry Sdn. Bhd.
MMC Metal Industries Sdn. Bhd.
Persatuan Pembekal Proton
Malaysian Rubber Gloves Manufacturers Association
CONSULTATIVE PANEL FOR AGRICULTURE
CHAIRMAN
Y.Bhg. Tan Sri Dato’ Abdul Khalid Ibrahim
MEMBERS
Tuan Hj. Abu Hanipah bin. Abd. Wahid
Y.M. Tunku Mahmud b. Tunku Yahya
Mr. Chua Piak Chwee
Ms Rahimah Md. Said
Prof. Dr. Mad Nasir Shamsudin
Y.Bhg. Dato’ Foong Lai Choong
Tn. Hj. Kasmuri Hj. Sukardi
Kumpulan Guthrie Berhad
Kumpulan Guthrie Berhad
Malaysian Agricultural Research &
Development Institute (MARDI)
International Tropical Fruit
Network (TFnet)
Ministry of Agriculture
Universiti Putra Malaysia
IOI Plantation
Golden Hope Plantations
CONSULTATIVE PANEL FOR HUMAN RESOURCES
CHAIRMAN
Mr. Md. Jafar Abdul Carrim
Malaysian Employers Federation
MEMBERS
Mr. V.T. Nathan
Mr. Abdul Wahab Abu Bakar
Ms. Ainon Marziah Wahi
Mr. Abdul Hadi Othman
Mr. M. Manogaran
Mr. V.T. Chandra Segaran
Tuan Hj. Shamsuddin Bardan
Dr. Soh Chee Seng
Ms Zanifa Md Zain
Dr. Mohamed Rashid Navi Bax
Shearn Delamore & Co.
Nestle (Malaysia) Bhd
Petroleum Nasional Berhad
ONC Consultants Sdn Bhd.
The Malaysian Agricultural Producers Association
Malaysian Employers Federation
Ministry of Human Resources
Ministry of Education
CONSULTATIVE PANEL FOR LOGISTICS AND TRANSPORT
CHAIRMAN
Mr. Mirzan Mahathir
Konsortium Logistik Berhad (KLB)
MEMBERS
Prof. Madya Hamzah Abd. Jamal
Mr. K. Sagaram
Mr. Manual Gomez
Prof. G. Naidu
Datuk Elias Kadir
Mr. Chandrasekaran P.
Prof. Madya Dr. Nor Ghani Md. Nor
Universiti Teknologi Malaysia
Northport Berhad
Research Associates Sdn Bhd
Kontena Nasional Bhd.
Ministry of Transport
CONSULTATIVE PANEL FOR DEVELOPMENT FINANCIAL INSTITUTIONS
MEMBERS
Mr. Megat Zabidin Megat Husain
Mr. Baharuddin Muslim
Mr. Hamid Che Mat
Mr. Zulkarnain bin Hj. Ahmad
Mr. Yaakob Masir
Mr. Joshua Lee
Mr. Mohd. Ariffin bin Marzuki
Mr. Zulkarnain Bin Hj. Ahmad
Mr. Yaakob Masir
Bank Pembangunan dan Infrastruktur Malaysia Bhd
Exim Bank of Malaysia Berhad
Bank Kerjasama Rakyat Malaysia Berhad
Bank Pertanian Malaysia
Bank Industri dan Teknologi Malaysia Bhd
Malaysian Industrial Development Finance Berhad
Bank Simpanan Nasional
Bank Pertanian Malaysia
Bank Industri dan Teknologi Malaysia Bhd
CONSULTATIVE PANEL FOR CONSTRUCTIONS
CHAIRMAN
Y.Bhg. Tan Sri Datuk Hj. Mustapha Kamal
Hj. Abu Bakar
MKN Holdings Sdn. Bhd.
MEMBERS
Y.Bhg. Datuk Hj. Roslan Awang Chik
Y.Bhg. Dato’ Goh Chye Keat
Y.Bhg. Dato’ Hj. Abdul Rahman Abdullah
Y.Bhg. Datuk Dr. Bernard T.H. Wang
Y.Bhg. Dato’ Ir. Low Keng Kok
Y.Bhg. Datuk P. Kasi
Ir. Tuan Hj. Mohd Mazlan
Mr. Mat Noh Hussin
Mr. Lawrance Chan Kek Tong
Mr. Lim Pay Chye
Association of Malay Contractor, Malaysia
IJM Corporation Berhad
Construction Industry Development Board
Chartered Institute of Building Malaysia
Master Builders Association Malaysia
P. Kasi Chartered Institute
Institute of Engineers Malaysia
Housing Developers’ Association Malaysia
PCL Architect
CONSULTATIVE PANEL FOR ENERGY & UTILITY
CHAIRMAN
Mr. Ahmad Jauhari Yahya
Malakoff Berhad
MEMBERS
Y.Bhg. Datuk Ir. Mohd Annas Hj. Mohd Nor
Dr. Mohd. Zamzam Jaafar
Dr. Norhayati Kamaruddin
Ms. Che Zurina Zainul Abidin
Mr. Lum Kim Fook
Ms. Sudzi Zainuddin
Dr. Philip Tan
Suruhanjaya Tenaga
UNITEN
UNITEN
Tenaga Nasional Berhad
Tenaga Nasional Berhad
Genting Sanyen
NPC MANAGEMENT TEAM
DIRECTOR-GENERAL
Mr. Ir. Mah Lok Abdullah
DEPUTY DIRECTOR-GENERAL
(Development)
Ms. Nik Zainiah Nik Abd. Rahman
DEPUTY DIRECTOR-GENERAL
(Research)
Dr. Ab. Wahab Muhamad
DIRECTORS
Research
Dr. Awang Musa
(until July 2002)
Ms. Shahuren Ismail
Mr. Goh Swee Seang
(w.e.f. Oct. 2002)
Ms. Lee Saw Hoon
(w.e.f. Oct. 2002)
Mr. Mohd Razali Hussain
(w.e.f. Oct. 2002)
Development
Mr. Othman Ismail
(until Sept. 2002)
Mr. Mohd Jasni Abd. Aziz
(w.e.f. June 2002)
Mr. Ab. Rahim Yusof
(w.e.f. Oct. 2002)
Mr. Abdul Latif Abu Seman
(w.e.f. Oct. 2002)
Regional Offices
Mr. Othman Ismail
(w.e.f. Oct. 2002)
Mr. Mustapha Sufaat
(w.e.f. Oct. 2002)
Mr. Ahmad Fadzil Mahmud
Mr. Burhanuddin Saidin
Mr. Che Razali Che Ismail
Mr. Shafee Hashim
(until Sept. 2002)
Mr. Isa Abu Bakar
(until Sept. 2002)
REGIONAL OFFICES
Regional Offices
East Coast Region
18th Floor, Teruntum Complex
Jalan Mahkota
25000 Kuantan
Pahang Darul Makmur
Tel: 09-5131788/5131789
Fax: 09-5138903
E-mail: [email protected]
Sarawak Region
Lot 894,
Lorong Demak Laut 3A
Demak Laut Industrial Park
93050 Kuching
Northern Region
Locked Bag 206,
Jalan Bertam
13200 Kepala Batas
Pulau Pinang
Tel: 04-5754709
Fax: 04-5754410
Sabah Region
Lot 7.7 & 7.8
7th Floor, Block E,
KWSP Building,
49, Jalan Karamunsing
88000 Kota Kinabalu,
Sabah.
Tel: 088-235837/233245
Fax: 088-242815
Sarawak
Tel: 082-439959/438960
Fax: 082-439969
Southern Region
No. 8, Jalan Padi Mahsuri
Bandar Baru Uda
81200 Johor Bahru
Johor Darul Takzim
Tel: 07-2377422/2377644
Fax: 07-2380798
Index
INDEX
A
Accessibility 155
Adaptability 32
Added value 39, 41, 50, 60, 90, 125, 158
Added value content 28, 39, 41, 50, 60, 125, 160
Added value per employee 28, 39, 41, 50, 60, 90, 94, 125,
160
Added value per fixed asset 31, 39, 41, 50, 60, 90, 95, 127
Added value per labour cost 31, 39, 41, 50, 60, 90, 127,
160
Advanced manufacturing technology (AMT)
75, 78
Agriculture 4, 117
Agrolink 119
Ancillary services 94
Apparel 39, 45, 64
B
Banking 90, 91
Benchmarking 89, 95, 119
Best practices 89, 95, 117, 119
Boutique agricukture 120
C
Capability 72
Capital
growth 15
intensity 16, 18, 95
investment 2
productivity 95, 119
structure 16, 18, 28
Cargo
usage 106
throughput handled 96
Chemical and chemical products 39, 53, 67
Clinical outcome 113
Collective agreement 104, 135
Combined model 140
Commerce and trade 85
Commercial banks 90
Competitiveness 103, 132
Consignment 105
Construction 4, 79
Container throughput handled 96
Crude palm oil 117
D
Demand intensity 16, 18, 28
Domestic-oriented 28
E
Economic
growth 1, 4
restructuring 16, 18
Education and training 16, 18
Efficiency 102, 152, 155
Effectiveness 152, 155
Electrical and electronic 39, 62, 75, 78
Electricity 4
Employment 23, 39, 41, 50, 60
growth 87, 125
share 87
F
Fabricated metal products 39, 48, 64
Facilities 155
Finance 4, 85
Finance companies 90
Financial productivity indicators 94, 113
Fixed assets per employee 31, 39, 41, 50, 60, 90, 94, 127
Fixed component 139
Food products and beverages 39, 41, 63
Food production 117
Footwear 39, 44, 64
Full Time Equivalent (FTE) 112
Fund for food 119
Furniture 39, 56, 69
G
Government 4, 152
Government services 90
Gross Domestic Product 2, 15, 79, 90, 117
Group farming 119
H
Healthcare 112
Human resource development 135
Human Resource Development Fund 1
INDEX
I
Industrialised Building System 79
Information technology 77
Information and communication technology (ICT) 157
Innovation 72
Innovative technological capability 72
ICT computer services industries 158, 160
ICT manufacturing sector 158, 160
ICT services sector 158, 160
ICT telecommunication services industries 158, 160
Iron and steel 39, 57, 69
K
Key performance indicators 112
Knowledge
capital 32
management 32
work 32
worker 32
workforce 35, 36
K-based economy 17, 89
L
Labour cost competitiveness 28, 90
Labour cost per employee 23, 28, 39, 41, 50, 60, 90, 95,
127, 160
Labour
growth 15
productivity 117
Land productivity 117
Logistics 105
chains 105
services 105
service provider 109, 110
systems 105, 110
M
Machinery 39, 50, 67
Manufacturing 4
Market intelligence network 120
Merchant banks 90
Morale 103
Multi-skilled workforce 102
Multi-skilling 35, 102, 103
Multi-skilling incentives schemes 140
O
Organisation for Economic Co-Operation and
Development (OECD) 9
Output growth 23, 85, 86, 125
Output-input concept 153
P
Patient satisfaction 113
Plastic product 39, 60, 69
Port industry 94
Private hospitals 112
Process efficiency 28, 31, 39, 41, 50, 60, 95, 99, 127
Product engineering 76
Production technology 77
Productivity 18, 23
Productivity
award 150
driven growth 131
growth 1, 4, 9, 10, 12, 88, 133
level 88
model 139
Productivity and Quality 79, 131
Productivity-Linked Wage System (PLWS) 135, 139
Profitability model 139
Public sector productivity 152
Q
Quality 155
Quality Control Circles 141, 144
Quality of labour 28
Quality Management Excellent Award 146
R
Research & Development (R&D) 120
Routine operating capability 72
Rubber products 39, 51, 67
S
Sales value per employee 28, 62
Service sector 85
Ship
call 96, 101
turnaround time 96, 101
Small and medium industries 125
Staff utilization 113
Staffing 155
N
Non-metallic mineral 39, 59, 69
INDEX
T
Technical
efficiency 113
progress 17, 18, 28
Technological capabilities 72
Textiles 39, 42, 63
Total Factor Productivity 1, 15, 18, 131
Total Factor Productivity growth 1, 15, 17. 18, 23
Total output 39, 41, 50, 60, 158, 160
Total output per employee 39, 41, 50, 60, 125, 160
Transport 4, 85
Transport equipment 39, 47, 64
Twenty-foot equivalent unit 96
U
Unit labour cost 23, 39, 41, 50, 60, 90, 95, 127, 160
Utility 85
V
Variable component 139
W
Weighting 153
Wood and product of wood 39, 54, 67
Work environment 103

10th productivity report

Transcription

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