KUALA LUMPUR, Feb 27 — The manufacturing sector expects cautious growth and lower expectations from sales to employment in 2019, as global economic challenges still confront Malaysia.
Federation of Malaysian Manufacturers (FMM) president Datuk Soh Thian Lai said growth for the year would likely depend on the private sector’s investments and consumption.
“If there are more investments and consumption from the private sector, we believe economic growth will stay positive around the 4.5 per cent range.
“We have export markets (given that we are among the top 20 trading nations) and are looking for more access to increase export activities,” he told a media briefing at the FMM-Malaysia Institute of Economic Research (MIER) Business Conditions Survey for Second Half 2018 here, today.
In 2018, exports of manufacturers grew 6.7 per cent to RM998 billion, driven by higher domestic and private consumption along with the three-month tax holiday period.
Soh said according to the FMM-MIER Business Conditions Index (BCI) survey results for the first half (1H) of 2019, businesses are taking a cautious stance as the country’s development budget had not been fully put in place by the government, besides the external factors as the US-China trade war and Brexit.
Manufacturers are worried about their expenditure and possible deflation reported following a decline in the Consumer Price Index (CPI). “They are also concerned over some big infrastructure projects, including the East Coast Rail Link (ECRL) that has still not been decided by the government. If the big projects are on, it will have a positive spillover effect on the economy,” Soh said.
On the same note, former president, now FMM council member Tan Sri Saw Choo Boon said, the close to RM45 billion development budget approved by Parliament should be implemented soonest possible.
“If the government could allocate this development budget and make it clear to the market, I believe the confidence level of investors and businesses, will be further enhanced,” he added.
Meanwhile, on the employment rate, Soh said 20 per cent of respondents (from the survey) are looking to recruit more employees due to their capacity to increase utilisation, and expectation of stronger exports.
Among the segments expected to hire more people are warehousing logistics, electric and electronics, rubber products and halal foods.
Soh said other issues which remain a concern to manufacturers is implementation of the Sales and Service Tax (SST 2.0) and the Goods and Services (GST) tax refund.
“There is still lack of clarity on application procedures for exemption and other technical issues which we need to talk to the Customs Department about.
“Besides that, the cost of doing business by most respondents, was higher by up to 10 per cent,” he said.
Soh added that the FMM is hoping Finance Minister Lim Guan Eng (the government) will honour the promise to speed up the GST refunds claims to before year-end as it is crucial for the small and medium enterprises to have financial liquidity, while enabling them to grow and compete. — Bernama
