KUALA LUMPUR, Feb 17 — Malaysia is still ranked number one as the most attractive manufacturing market of choice for manufacturers, a global index has shown.
In a survey of the 30 top manufacturing site nations worldwide, Cushman & Wakefield’s Manufacturing Risk Index 2017 found that Malaysia retained its crown and that Asia Pacific countries took up seven spots within the top half of its index.
“For consecutive years, Malaysia tops our Established Index ranking as an attractive market for locating manufacturing facilities,” the report by the global real estate services firm on the index said.
“Malaysia’s infrastructure services are conducive to productivity with the quality of infrastructure relatively high, despite some concerns surrounding water availability and power outages of late.
“While other middle-income countries may be catching up with Malaysia in terms of infrastructure standards, a recent report by the World Bank indicated that Malaysia still has a higher rank than many of these peers in terms of overall logistics performance in relation to quality of trade and transport infrastructure,” it said, referring to the World Bank’s 15th Malaysia Economic Monitor report titled “The Quest for Productivity” released last December.
Why Asia Pacific?
Explaining their dominance of almost half of the index’s top half rankings, Cushman & Wakefield noted that Asian Pacific nations offers diverse choices for manufacturers seeking a location.
“Given the varying maturity level of technology adoption and priorities across Asia Pacific, each country in the region has a specific focus on areas of innovation to promote sector growth — such as smart manufacturing in the form of automation in China due to wage inflation or the offer of a connected society and strong conditions for doing business in Singapore, despite a higher cost profile,” it said.
In the Manufacturing Risk Index, Malaysia like last year took the first spot for a highly automated scenario where conditions and cost both take up 40 per cent each and where cost has a 20 per cent weightage, while Taiwan (2nd), China (3rd), South Korea (5th) also joined the top ranks by keeping their 2015 rankings.
Singapore, Thailand and Japan also managed to stay in the top half despite a decline in annual rankings, with Singapore and Thailand now in the 12th spot and 14th spot respectively after both fell by five rungs and ceded their previous rankings to new entrants Hungary and Czech Republic, while Japan fell four spots to the 15th place as Switzerland shot up seven rungs to take Japan’s former spot of 11th place.
The rest of those in the top 15 are the US (4th), Canada (6th), Sweden (8th), the Netherlands (10th), and Poland (13th).
The countries in the index are the top 30 nations in terms of manufacturing output, the report said.
One size does not fit all
As for the alternative scenario where a manufacturer is seeking for lower manufacturing costs where the weightage will shift to cost (60per cent) and conditions and risks both at 20 per cent, Malaysia would still be ranked number one like last year.
As for the alternative scenario of a manufacturer exposed more to market operating conditions where conditions will have a weightage of 60 per cent and risks and cost both at weightages of 20 per cent, Malaysia would fall to the seventh rank.
The criteria of “conditions” used for the index covers talent, labour force (25per cent), logistics, access to markets (25per cent), time to first supply (25per cent), sustainability and corporate responsibility (15per cent) and business environment (10per cent); while “risks” cover economic risk and energy risk both at 30 per cent and natural disaster risk and corporate risk both at 20 per cent each.
As for the category of “costs”, manufacturing labour costs per hour and hourly price of electricity supply for industrial and heavy use form the bulk at both 40 per cent each, while registering property costs and construction costs were both placed at 20 per cent each.
