Although 2008 and 2009 have been sluggish years for the Malaysian economy, the Malaysian RFID market in 2009 was estimated to be approximately US$9.5 million. It is anticipated to grow to roughly $33.8 million by the end of 2016 with a compound annual growth rate (CAGR) of 19.8 percent.
In the last 12 to 24 months, strong traction was seen for RFID in the Malaysian market. Unlike much of the other electronics market that witnessed a decrease in demand during the economic crisis period, RFID followed regional trends to see continuous growth in 2008 and 2009.
According to Frost & Sullivan's Asia Pacific Industry Analyst of Electronics & Security Richard Sebastian, many companies involved in the RFID value chain were able to maintain their profit margins and continued to experience growth during the economic slowdown.
"RFID's unique ability to be a 'step change' technology whereby it's ability to increase operational efficiency at a rapid pace instead of an incremental level ensures this market to be largely unaffected by economic downturn," Sebastian said.
"Moreover, it feels as if the domestic market is more mature now, in terms of accepting this technology where they are willing to go ahead and pursue RFID initiatives, unlike five years ago," he said. "This of course has been strengthened by the fact that the global financial crisis has been a key driver for the RFID industry; it has forced end users to reevaluate their strategies of running a business in order to not only continue competing in the market, but also be sustainable for the long term."
This has further enhanced RFID's value as an enabler of efficiency and in reducing waste in an enterprise. At the same time, the increasing need for higher security either in the monitoring of goods for better visibility to reduce risk of shrinkage or to maintain the integrity of the product to prevent counterfeiting, is also driving demand for this technology.
In terms of industry specifics, the last 12 months have seen more RFID rollouts, with the size and complexity of the projects also increasing. Among the notable projects in the 2009 were end-to-end track and trace projects for the largest energy provider in Malaysia, Tenaga Nasional Berhad (TNB).
"With RFID, TNB is able to manage one of its warehouses that hold inventories worth more than a billion ringgit more efficiently and recoup the return on investment (ROI) in less than a year, prompting the management to follow through the implementation of similar solutions in other warehouses across Malaysia in the coming months," Sebastian said.
Sebastian anticipates that demand for RFID technologies will continue to grow and flourish in various verticals as the market warms up to this technology. "The fact that more potential end users understand that this technology can aid their businesses to move towards better operational efficiency and enhanced safety and security also encourages the market's growth," he said.
With plans by the Malaysian government to drive the nation towards a higher income nation and to achieve the status of a developed nation by 2020, RFID is expected to be a key pillar from a technology standpoint.
"Overall, the foreseeable future looks promising for the RFID industry in Malaysia as the country looks towards greater embracement of this technology although specific needs towards privacy control, with regards to proper usage, is expected to come to the forefront as this technology becomes more ubiquitous in the environment," said Sebastian.