By P PREM KUMAR & DASHVEENJIT KAUR / Pic By MUHD AMIN NAHARUL
Five foreign manufacturing companies with total investments of RM308.7 million have ceased their local operations since the Pakatan Harapan government took over in May 2018.
Deputy International Trade and Industry Minister Dr Ong Kian Ming (picture) said the closures were mainly commercial decisions, and not solely due to the transition in the federal government.
“Between May and September 2018, five manufacturing companies involving foreign investors have fully ceased their operations.
“The closure of these companies involved a total of 362 local workers dismissed,” Ong told the Dewan Rakyat yesterday.
He was responding to Tanah Merah MP Datuk Seri Ikmal Hisham Abdul Aziz who asked on the number of foreign investors who have withdrawn their investments from Malaysia since May 10, 2018.
Ong also said there were a few factors which led foreign investors to withdraw their investments from the country.
“The first and main reason is due to market uncertainty amid the slowdown in the global economy, thus resulting in declining demand and sales, increased operating costs and a lack of product demand.
“These had led investors to restructure their companies and business strategies and, in the worst case scenario, for them to withdraw their investments overseas including in Malaysia,” Ong said.
He said investors who are focused on labour-intensive projects have not been able to maintain their company’s operations here due to Malaysia’s shift towards digitalisation and Industry 4.0, focusing on more quality and high-tech investments
“Increased labour costs in Malaysia also leads to difficulty for foreign companies in having any long-term benefits, thus this leads to companies withdrawing their investments in Malaysia,” he added.
Ong also highlighted that the exiting of foreign investors from the country is normal and there are equal amounts, if not more, of concurrent investments flowing into the country.
“Based on our evolving and ever-changing economic environment, there will definitely be foreign direct investments going out from the country and coming in as well, that is how we evolve,” he said.
Ong said recently a company had partially transferred its hard-disk manufacturing business from Malaysia to Thailand because the latter has cheaper labour cost.
At the same time, another hard-disk manufacturing firm has entered Penang with RM1.5 billion worth of investments.
Ong also noted that all companies that stopped their local operations had taken steps to provide relocation for workers that were retrenched.
Among the measures taken include working with the Federation of Malaysian Manufacturers and the Human Resources Development Fund (HRDF) to assist employees to participate in the appropriate skills training programme through the HRDF Outplacement Centre.
“Under this scheme, retrenched local workers will be equipped with additional industry skills or qualifications required to enable them to re-work or be self-employed; and offer appropriate compensation packages to the employees involved,” Ong said.