RFID Economic Impact and Benefits for Malaysia
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This document analyzes the potential economic impact of RFID adoption in Malaysia. It finds that RFID could significantly increase Malaysia's gross value added and GDP by billions of dollars from 2011-2015. Specifically: - With a $100 million investment in key sectors and a certain level of adoption, RFID could increase Malaysia's GDP by over $15 billion over this period. - The return on investment for sectors like government services and manufacturing would be around 5 months, while wholesale/retail would see returns in around 2 years. - Modeling shows RFID adoption could boost Malaysia's total factor productivity, a measure of economic growth, by up to 0.3% annually from 2011-2015.
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RFID Economic Impact and Benefits for Malaysia
- 1. RFID Economic Impact and Benefits for Malaysia Prepared for National RFID 2009 Roadmap Planning Workshop 2nd December 2009
- 3. Financial Impact of RFID – Country or Industry
- 6. Analyzing ROI for Key Sectors
- 7. Evaluation of Total Factor Productivity and Labor Competitiveness
- 8. Snapshot of Socio-Economic Gains to Overall EconomyPart 3 – Outlook and Conclusion
- 10. Complete and real-time visibility
- 12. Level of Activeness between Regional Programmes Summary of Level of Activeness for National RFID Programmes (World), 2009 Note: Tier 1 refers to countries considered more active in national level RFID rollouts compared to those countries under Tier 2 Source: Frost & Sullivan,2009
- 14. The region’s standing as the global hub for manufacturing related activities where RFID has tremendous potential. Europe Activeness of National RFID Programmes Asia Pacific North America Latin America Middle East Africa Time Maturity Development Growth Decline Source: Frost & Sullivan,2009
- 15. Financial Impact of RFID to Country, Industry or International Projects
- 18. This signified a return on investment (ROI) of over 1,300%.
- 19. The 3 sectors analyzed within the healthcare industry to understand the benefits gained was:
- 20. pharmaceuticals
- 25. Financial Impact of RFID – Country or Industry
- 28. Analyzing ROI for Key Sectors
- 29. Evaluation of Total Factor Productivity and Labor Competitiveness with RFID
- 30. Snapshot of Socio-Economic Gains to Overall EconomyPart 3 – Outlook and Conclusion
- 31. RFID Value Creation Analysis to the Malaysian Economy
- 32. Value Added Influenced by RFID Through Anticipated Level of Adoption Total Value Added Influenced by RFID Through Level of Adoption (Malaysia), 2011-2015 Source: Frost & Sullivan, 2009
- 33. Value Added Influenced by RFID Through Anticipated Level of Adoption Comparison of Total Gross Value Added with and without RFID (Malaysia), 2011 to 2015 2.25% difference in 2015 = USD 9,544 million (RM33,404 million) 0.93% difference for total value added with and without RFID from 2011 to 2015 = USD 15,965 million (RM 55,878 million) Gross Value Added (USD million) Source: Frost & Sullivan, 2009
- 36. Value Added Influenced by RFID Through Anticipated Level of Investment Value Added Influenced by RFID Through Anticipated Level of Investment in Core Sectors (Malaysia), 2011 to 2015 Total portion of value added influenced by RFID from 2011 to 2015 is USD 1,105 million (RM 3,867.5 million) Source: EPU, SD and Frost & Sullivan, 2009
- 38. This difference in values observed is due to the number of enterprises found in each sector resulting in a difference to percentage of adopters. Agriculture, livestock, forestry & fishing: 0.23% difference in 2015 Government services: 0.40% difference in 2015 Transport, storage & communication: 0.22% difference in 2015 Source: Frost & Sullivan, 2009
- 40. This difference in values observed is due to the number of enterprises found in each sector resulting in a difference to percentage of adopters. Manufacturing: 0.12% difference in 2015 Wholesale & retail, trade, accommodation & restaurants: 0.01% difference in 2015 Source: Frost & Sullivan, 2009
- 41. Total Value Added Influenced by RFID (Level of Adoption + RM 100 million Investment) Portion of Value Added influenced by RFID to Nominal GDP (Malaysia), 2011-2015 Total during 10 MP period = RM 59, 744 million Total Contribution of RFID Value Added to Total Nominal GDP (Malaysia), 2011-2015 Source: Frost & Sullivan, 2009
- 42. Analyzing the ROI for Selected Sectors
- 43. Deriving the Total Returns Factor RFID Investment Return Analysis by Sector (Malaysia), 2011 to 2015 Total returns factor from 2011 to 2015 by sector with the use of RFID Source: Frost & Sullivan, 2009
- 45. ROI for Manufacturing RFID Investment Manufacturing (Malaysia), 2011 to 2015 Return on Investment: Approximately 5 months Source: Frost & Sullivan, 2009
- 47. ROI for Transport, Storage and Communication RFID Investment Return Analysis for Transport, Storage and Communication (Malaysia), 2011 to 2015 Return on Investment: Approximately 9 months Source: Frost & Sullivan, 2009
- 48. ROI for Wholesale and Retail Trade, Accommodation and Restaurants RFID Investment Return Analysis for Wholesale and Trade, Accommodation and Restaurants (Malaysia), 2011 to 2015 Return on Investment: Approximately 27 months or 2.3 years Source: Frost & Sullivan, 2009
- 49. ROI for All Sectors (5 Core Sectors Average) RFID Investment Return Analysis for All Sectors Average (Malaysia), 2011 to 2015 Return on Investment: Approximately 7 months Source: Frost & Sullivan, 2009
- 50. Evaluation of Total Factor Productivity and Labor Competitiveness with RFID
- 51. TFP Model without RFID TFP Model without RFID (Malaysia), 1999 to 2015 Source: WB, EPU, DS and Frost & Sullivan, 2009
- 52. TFP Model with RFID TFP Model with RFID (Malaysia), 1999 to 2015 Incorporates usage of RFID for 10 MP period (2011 to 2015) Source: WB, EPU, DS and Frost & Sullivan, 2009
- 55. An increase of 0.55% is observed to Malaysia’s TFP and real GDP growth as per illustrated in this study for the corresponding periods of 2011 to 2015 with and without leveraging on RFID. GDP and TFP Growth with RFID (Malaysia), 2000 - 2015 0.55% difference to TFP with and without RFID translates to 19.71% increase Growth (%) Source: UNSD,WB, EPU, DS and Frost & Sullivan, 2009
- 56. Labor Productivity Level with and without RFID Labor Productivity Level without RFID (Malaysia), 2011 - 2015 Labor Productivity Level with RFID (Malaysia), 2011 - 2015 . USD 0.247 (RM 0.865) difference or equivalent to an increase of 2.36% to the nominal GDP per hour worked observed for 2015 Source: Frost & Sullivan, 2009
- 57. RFID Contributes to Labor Productivity Level GDP and TFP Growth with RFID (Malaysia), 2000 - 2015 USD 0.247 (RM 0.865) to the nominal GDP per hour Worked = USD 1.967 (RM 6.916) per 8 hour work day = USD 17,070 million (RM 59,745 million) to the nominal GDP of Malaysia Source: WB, EPU, DS and Frost & Sullivan, 2009
- 58. Snapshot of Socio-Economic Gains to Overall Economy
- 60. Huge potential for domestic & international markets
- 61. Reduce dependency on foreign products
- 62. 75% of process innovations in EU enabled through IT usage
- 63. RFID will boost innovation of products and services
- 64. Optimize & streamline entire supply chain and enable greater end user satisfaction
- 65. Aid in producing more K-workers with creation of more skill-based and high-tech related jobs
- 66. Increased transparency in supply chain for higher efficiency in distributing & monitoring goods
- 68. RFID ensures the 5 R’s are achieved
- 69. Increase of TFP
- 70. Increase of labor productivitySource: Frost & Sullivan,2009
- 71. Strategic Recommendations Strategic Recommendations for National Level RFID Programme (Malaysia), 2009 Source: Frost & Sullivan, 2009
- 72. Strategic Recommendations Strategic Recommendations for National Level RFID Programme (Malaysia), 2009 Source: Frost & Sullivan, 2009
- 74. Financial Impact of RFID to Country, Industry or International Projects
- 77. Analyzing ROI for Key Sectors
- 78. Evaluation of Total Factor Productivity and Labor Competitiveness with RFID
- 79. Snapshot of Socio-Economic Gains to Overall EconomyPart 3 – Outlook and Conclusion
- 80. Summary & Conclusion Government
- 81. Thank You
Editor's Notes
- Malaysia’s current broadband penetration as of end of 2008 is 21.4%.Its till lags behind in broadband penetration compared to other more developed nations in Asia Pacific e.g. South Korea (92.8%), Hong Kong (85%), Singapore (78.5), Taiwan (66%), Australia (63.7%), Japan (62.7%) and New Zealand (55.7%).
- In conclusion, RFID has the potential to contribute a total value added of USD 17,070 million (RM 59,744 million) to the Malaysian nominal GDP over the 5 year period from 2011 to 2015. This is based on the anticipated value added derived from level of adoption and invested sum of USD 28.57 million (RM 100 million) into the 5 core thrust sectors. In total, this translates to approximately 1.00% of the nominal GDP contribution from value added derived from RFID initiatives during this stated period.
- In conclusion, RFID also showcases potential to bridge the gap of earning capacity per capita for every hour worked between Malaysia and other more affluent nations. Although the labor productivity analysis does show an increase of USD 0.247 (RM 0.865) to the nominal GDP per hour worked and this increase may seem small, it should be noted that this translates to approximately USD 1.976 (RM 6.916) per 8 hour working day average in 2015. When further analyzing this data, this increase of USD 0.247 to the nominal GDP per hour worked is equivalent to an increase of USD 17,070 million (RM 59,745 million) to the nominal GDP based on an estimated working population of 20,384,000 in 2015. This significant increase will contribute towards the Malaysian Government’s aim of moving the country towards a higher economy nation.
- A strategic roadmap for RFID usage for the short, medium and long term need to be in place to achieve overall vision and aims. Relevant government ministries and agencies driving adoption need to be well coordinated to avoid overlap of activities.Stakeholders need to work closely together to ensure all plans materialized and no areas/sectors are overlooked. Invite foreign companies specializing in RFID related technologies to initiate R&D activities.More emphasis on R&D activities to be put in universities to develop innovations and future
- Stonger government intervention to increase traction among end user segment.Government to work more closely with other stakeholders to promote and educate people on the possibilities with RFID through funding or mandates to increase adoption rate. Benefits of RFID deployment will not be achieved without understanding and fine-tuning various processes within the enterprise to accommodate this technology.A large portion of adopters will be related to government related sectors/applications; they need to ensure all business processes have been customized when planning an RFID rollout.