Malaysia launched a new industrial policy on Wednesday to strengthen its manufacturing sector.

Speaking at the launch of the National Policy of Industry 4.0, Malaysian Prime Minister Mahathir Mohamad said his administration would focus on the manufacturing sector as he believed it was critical for the country to ensure a diversified income stream, relying less on the export of raw materials and commodities.

"It is the manufacturing sector that allows Malaysia to consistently demonstrate dynamism and resilience to grow, while attracting foreign direct investments," he said.

"While Malaysia has abundant natural resources and has diversified to the services sector, it is the manufacturing sector that has played a key role in turning Malaysia into a major player in the global value chain apart from rapidly turning the country into an industrialized nation."

Mahathir said disruptions were inevitable as the country transitioned to the next level of its development and as it sought to adapt to conditions created by Industry 4.0.

Dubbed the "Industry4WRD Policy," it aims to strengthen the country's manufacturing base, improve accessibility of new technology to small and medium enterprises (SMEs) and to develop a skilled and capable workforce.

Mahathir laid the blame of delays in Malaysia's journey to achieving developed nation status by 2020 to the previous two administrations but expressed confidence that progress would be made under the new government.

"When we introduced Vision 2020, we had set out the challenges that Malaysia needed to overcome, to reach a developed nation status within our own time frame," he said.

Mahathir put forward the Vision 2020 nearly three decades ago when he was then prime minister. He returned to office in May after the victory in general elections.