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       PETALING JAYA: The adoption of automation and robotics in the domestic manufacturing sector remains low, despite 39% of Malaysia’s exports driven by the electrical and electronics (E&E) industry.

       It is also far lower in the palm oil industry, which is very dependent on human labour despite the fact the country accounts for 26% of the world’s palm oil production.

       As it is, Malaysia’s dependence on foreign labour is very high.

       This poses a huge problem throughout the Covid-19 pandemic, when borders were closed, said Kenanga Research in its latest report.

       “To boost adoption, a mindset shift among senior management, decision makers, and workers is necessary.

       “The reluctance to embrace technology is seen as a threat to their jobs,” it added.

       Though job loss in the short term is inevitable, Kenanga Research said the adoption is expected to create higher value jobs in the longer term and it is one of the key ingredients towards a high-income nation.

       There is also a need for a good ecosystem that can help improve awareness alongside passive initiatives such as grants and monetary incentives, said the research house.

       Furthermore, the government should also strive to bring up the first success story of a local robotics company and showcase it to the world.

       This will create the ecosystem and the precedence for further start-ups to follow suit, said Kenanga Research.

       The adoption of automation, robotics and integrating it with artificial intelligence in a manufacturing facility can reduce operating costs like electricity, which will further increase the environmental, social and governance (ESG) rating of a company.

       A well calibrated robotic system will see significant improvement of production yield rates with the elimination of human error versus the traditional manufacturing environment.

       It also reduces wastage and money spent on waste processing, which is becoming more important with the growing emphasis of ESG by multinational customers and the investing community.

       Kenanga Research noted that automation can significantly reduce employee turnover issues, especially in the electronic manufacturing services industry, which is highly labour-intensive.

       “Investments into robotics are higher, but the return on investments (ROI) is about 2.1 years based on the current employment conditions in Malaysia.

       “In fact, a ROI of two to three years is acceptable while in countries such as Singapore or Japan, the ROI would be much lower due to the high labour cost in developed countries” said the research house.

       It is worth to note that Asia stands out as the region with the highest robot density (robots installed per 10,000 workers) of 118 versus the world average of 113, especially in countries such as Singapore and South Korea.

       Furthermore, China and Japan ranked among the top two in terms of annual installations of industrial robots, which shows that the robotics industry in Asia has promising prospects, said Kenanga Research.