MCO: Malaysia runs risk of SME-reliant MNCs taking business elsewhere, warns AmCham

AmCham in a statement said that MNCs and direct clients overseas are unable to access much-needed products made in Malaysia due to the MCO. — Picture by Miera Zulyana
AmCham in a statement said that MNCs and direct clients overseas are unable to access much-needed products made in Malaysia due to the MCO. — Picture by Miera Zulyana

KUALA LUMPUR, April 3 — The American Malaysian Chamber of Commerce (AmCham) today warned that the temporary halt on small and medium enterprises (SME) due to the movement control order (MCO) will cause multinational companies (MNC) that work closely with them to either scale-down operations or move somewhere else.

AmCham in a statement said that MNCs and direct clients overseas are unable to access much-needed products made in Malaysia due to the MCO.

“Some corporations in Malaysia are sole-sourced suppliers of critical products needed for the global supply chain.

“During the current crisis, MNCs may have no choice but to scale down their operations and move elsewhere,” said AmCham.

AmCham also points out that the closure of these MNCs will impact the local supply chain, potentially risking the closure of Malaysian SMEs and result in a shortage of essential products needed in the fields of medicine, healthcare, communications and computing.

“We expressed grave concerns that the typically robust and reliable ecosystem of high-quality SMEs found in Malaysia will be adversely affected.

“The country has been successful in progressively moving up the value chain. MNCs either chose to set up operations in-country as they were able to tap into an increasingly skilled workforce or source directly from reliable qualified vendors,” the statement read.

“Local SMEs have been the backbone of Malaysia’s economy moving steadily up the value chain, growing, adopting new technology and embracing the government’s push for Industry 4.0.

“Recent large investments made by US firms both new and re-investments were celebrated just a few months ago. All this is now in jeopardy,” it further read.

Meanwhile, Lee Heng Lee, founder and CEO of Exis Tech, said that companies on the ground are calling for a more balanced and workable approach to maintaining the local ecosystem.

“We hope that the government will allow businesses to continue, of course with the necessary precautionary and sanitisation measures in place so that local SMEs can continue to supply essential products and services to the E&E industry,” he said in the statement.

AmCham Malaysia CEO Siobhan Das, on the other hand, said that Malaysian companies, SMEs included, might find themselves in a difficult position once the MCO is eventually lifted.

She said many fear the loss of jobs and key customers as the global supply chain shifts to adjust to these gaps.

She also pointed out that recovery from the crisis will be hard, but stressed it will be stronger and faster if a balance can be struck.

“In the Economic Impact Survey 2018 that AmCham conducted with 27 of its E&E member companies, each company was supported by an average of 190 local vendors with contracts valued at RM100,000 or more.

“Collectively, the E&E industry alone contributes to RM78 billion or 5.6 per cent of the national GDP of RM1.4 trillion and employs 560,000 people,” she said.

She applauded the government’s move to set up a Special Cabinet Committee and expressed hope that it can quickly introduce measures that will shore up local businesses that in turn support the global supply chain.

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