KUALA LUMPUR, Aug 19 ― Hiring in the manufacturing sector nosedived to an unprecedented level in the first half of the year, latest industry survey data revealed, as factories and producers felt the full brunt of the movement control order enforced to contain Covid-19.
Businesses recorded a record slump with activity index falling up to 59 points to 31 in the first half compared to the same period last year, while local and export sales fell 50 points each, the Federation of Malaysian Manufacturers (FMM) said today.
Movement restrictions caused severe supply chain disruptions that wreaked havoc across the sector that accounted for more than a fifth of GDP, forcing employers to cull jobs and freeze hiring.
Employment fell 82 points in federation's Business Conditions Survey. Only six per cent of respondents hired more while 69 per cent reported no expansion.
“The first half of 2020 has been most challenging for Malaysian manufacturers,” the federation said.
“The impact of the economic disruptions resulting from the movement control order, control movement control order, and most recently, the recovery movement control order during this period weighed heavily on their businesses.”
Nearly all businesses saw revenue drop in the first half of the year, with 82 per cent of respondents reporting a decrease in income while 80 per cent said their profitability plunged.
Only 8 per cent reported higher revenue while 7 per cent said their profits rose.
FMM president Tan Sri Datuk Soh Thian Lai said the first half manufacturing “crash” had forced most to rely on a lean operation.
“Over half of respondents said they will implement a lean management system,” he told reporters at the semi-annual survey briefing at Wisma FMM here.
“Others said they will focus on upskilling and training as among strategies for recovery in the next six months,” he added.
Manufacturers expect Covid-19’s impact to last throughout the year even as most respondents in its business conditions survey reported some recovery as of June, as the government lifted some restrictions.
But FMM said most of its members were still reeling from the effects. The movement curbs have prompted many to look to automation to cut reliance on manual labour, which could lead to more job losses.
The pandemic has also forced many brick and mortar businesses to digitise, with physical distancing likely to remain for some time.
Up to 49 per cent of respondents said they would actively move their businesses online.
Still, over 60 per cent of respondents in the FMM survey said they have yet to digitise throughout the movement control period. Only 12 per cent reported to have gone online.
But Soh said the federal digitisation incentives provided under the RM265 billion Prihatin and Penjana stimulus package is expected to nudge more manufacturers to make the shift.
“With the half a billion ringgit in incentive, I think more are doing it,” he told Malay Mail after the briefing.
The survey's findings were less clear about the effectiveness of federal aid. FMM said it did find the tax incentives and wage subsidies provided under Penjana to be helpful, but noted a low application rate among its members.
More than half of respondents said they were excluded from the package while a fifth felt it inadequate. Another 25 per cent reported difficulties in getting approval.
