As the world grapples with supply chain disruptions, inflationary pressures in the United States and shifting trade policies, global logistics is undergoing a profound transformation. The once-reliable supply routes are evolving, driven by geopolitical shifts, reshoring trends and rapid digitalisation.

Amid this upheaval, Malaysia is stepping up as a critical logistics powerhouse. Strategically located at the heart of global trade routes, the country is leveraging its advanced infrastructure, digital innovation and sustainability-driven policies to reshape the future of logistics in Asia and beyond.

With Malaysia's GDP growing by 5.1% in 2024, driven by strong domestic demand and a rebound in exports, the logistics sector continues to showcase its resilience, adaptability and increasing global significance. Backed by government-led initiatives and rapid digital transformation, Malaysia is not just keeping pace with global trends — it’s setting new standards.

Malaysia’s digital logistics revolution

The Malaysian Investment Development Authority (MIDA) is leading the charge in promoting digitalisation of the logistics industry, ensuring that Malaysia remains at the forefront of Industry 4.0 adoption.

A key initiative driving this change is the Smart Logistics Complex (SLC) scheme under Budget 2025, which requires logistics companies to integrate at least three advanced technologies, including automation, artificial intelligence (AI) and the Internet of Things (IoT).

Companies developing a smart logistics complex of at least 30,000 sqm can benefit from a 60% income tax exemption, equivalent to an investment tax allowance. The SLC scheme covers a wide range of logistics services, such as regional distribution centres, integrated logistics services, hazardous goods storage and cold chain logistics.

"By mandating the integration of Industry 4.0 elements, the SLC scheme directly incentivises logistics companies to embrace advanced technologies, automate their processes and enhance their digital capabilities," said MIDA chief executive officer Datuk Sikh Shamsul Ibrahim Sikh Abdul Majid.

Empowering SMEs for growth and competitiveness

While multinational corporations play a major role in Malaysia’s logistics growth, small and medium-sized enterprises (SMEs) are the backbone of the industry. Recognising this, MIDA has launched several initiatives to empower SMEs with cutting-edge technology and financial incentives.

One such initiative is the Integrated Logistics Services (ILS) incentive, which offers financial assistance to help SMEs adopt advanced technologies in their operations. This programme has already facilitated the growth of numerous SMEs, enabling them to scale their operations and better serve customers both domestically and internationally.

“SMEs are the pillar of Malaysia’s logistics industry. They are essential for the nation’s growth and through initiatives like ILS, we are ensuring that they have the tools they need to succeed,” he said.

He added that Budget 2025 allocates RM3.8bil to support SMEs in adopting digital solutions, reflecting the government’s commitment to fostering innovation across industries.

In addition, MIDA’s IILS status programme has helped Malaysian logistics companies expand their footprint beyond borders.

“Both initiatives are seen as stepping stones for local companies to provide comprehensive services and further expand their market, serving both domestic and global markets,” he said.

As of Dec 31, last year, MIDA has approved 112 ILS projects worth RM13.36bil and granted 303 companies IILS status, further underscoring the success of these initiatives.

A local champion

PKT Logistics Group stands as a beacon of Malaysian innovation in the logistics sector. Since its inception in 1974, the company has transformed from modest beginnings into a comprehensive logistics provider, consistently showcasing its commitment to innovation and resilience. With sustainability at the forefront of its operations, PKT has embraced green technologies such as solar-powered facilities and lean transportation practices, aligning its efforts with Malaysia’s climate objectives.

“As a proud homegrown enterprise, PKT is unwavering in its dedication to nurturing the local environment and community,” said PKT Logistics Group chief executive and managing director Datuk Seri Michael Tio.

“Through our logistics services, we ensure the timely delivery of the right products to the right places, effectively meeting the diverse needs of industries and consumers alike.”

Tio emphasised that PKT embodies the quintuple helix growth model by fostering robust collaborations with government agencies, industry partners, local educational institutions and communities. The company actively champions environmental preservation through its PKT Green Action Plans, paving the way for a sustainable logistics industry.

“As a socially responsible organisation, PKT is committed to empowering local communities by creating employment opportunities, enhancing skill sets and driving sustainable socioeconomic growth through a workforce that is 100% local,” he added.

He explained that MIDA’s support through initiatives like the IILS status, Investment Tax Incentive (ITA) and Green Investment Tax Allowance (GITA) has been instrumental in driving the company’s growth, innovation and sustainability efforts.

Moreover, PKT places a strong emphasis on talent development, investing significantly in industry-academia programmes and upskilling initiatives by PenSkills designed to equip the workforce for the evolving demands of the logistics industry. Notably, the “Jom! Bekerja Sambil Belajar” programme serves as a vital bridge between education and employment, ensuring a continuous influx of skilled experienced professionals into the sector.

Leveraging Malaysia’s global connectivity

As part of the Nippon Yusen Kabushiki Kaisha (NYK) Group, Tasco Bhd is a testament to Malaysia’s strategic advantage as a global logistics hub.

“Malaysia’s well-developed infrastructure, including its ports and transportation networks, makes it an ideal base for managing operations across Asean and beyond. Its strategic location offers direct access to key international shipping routes, making it an ideal point for both import and export activities,” said Tasco Bhd group chief executive officer Andy Lee.

Additionally, Lee said that its Malaysian operations allowed them to leverage local expertise, ensure cost-effective distribution and deliver fast, more reliable service to customers in both regional and global markets - particularly through its Free Commercial Zone scheme, which enhanced their competitiveness relative to other countries in the region.

He explained the company’s use of artificial intelligence ensures streamlined operations and enhanced service delivery.

He pointed out that “Through the ILS incentive tax scheme, they have provided valuable assistance by offering an investment tax allowance of 60% on eligible capital expenditure incurred within five years.

“The allowance can be offset against 70% of statutory income for each year of assessment, helping to reduce the cost of establishing and expanding our operations in Malaysia.”

He added, “Motivated by the ILS incentive tax scheme, we have embarked on expanding our operations with over RM500mil in investment earmarked.”

Beyond expansion, Tasco is prioritising sustainability, with a target to reduce greenhouse gas emissions by 45% by 2030 and achieve net-zero by 2050. By integrating renewable energy and energy-efficient transportation, the company is aligning with Malaysia’s national climate commitments.

Malaysia’s rise in global logistics rankings

Malaysia’s global reputation as a logistics powerhouse is strengthening, as evidenced by its 15-spot climb to 26th place in the 2023 World Bank Logistics Performance Index (LPI).

The government’s strategic frameworks—including the New Industrial Master Plan 2030 (NIMP 2030), the Malaysia Digital Economy Blueprint (MyDigital) and the National Fourth Industrial Revolution (4IR) Policy — are shaping the future of Malaysia’s logistics sector, focusing on high-value industries and sustainable trade practices.

Malaysia’s commitment to sustainability

With a national target to achieve net-zero greenhouse gas emissions by 2050, Malaysia is making sustainability a cornerstone of its logistics industry.

MIDA is driving green logistics initiatives by mandating tax-incentive recipients to adopt solar energy, green-certified buildings, water harvesting systems and electric vehicle fleets. The introduction of the National Industry Environmental, Social and Governance Framework (i-ESG) is further ensuring that logistics companies align with global ESG standards.

Additionally, the Domestic Investment Accelerator Fund (DIAF) is providing critical funding for SMEs to integrate sustainable and AI-driven technologies into their logistics operations.

"We are fostering a logistics ecosystem that is both technologically advanced and environmentally responsible. Through strategic investments in renewable energy, green-certified infrastructure and AI-driven technologies, we are ensuring that Malaysia remains at the forefront of sustainable supply chain solutions." Shamsul added.

The future of logistics: Malaysia’s global vision

With a thriving economy, business-friendly policies and cutting-edge infrastructure, Malaysia is not just adapting to global supply chain challenges — it is redefining them.

As logistics companies worldwide seek efficiency, resilience and sustainability, Malaysia is emerging as the preferred hub for global trade and supply chain innovation.

With strong government support, a commitment to digitalisation and an aggressive push towards sustainability, Malaysia’s logistics industry is poised to lead the next era of global trade.