FMM: Export-ready manufacturers likely to hire

By SHAHEERA AZNAM SHAH / Pic By ISMAIL CHE RUS

Employment opportunities in the local manufacturing sector are expected to moderate in the near term, amid manufacturers’ cautious business sentiment on the economic environment.

Appetite to hire, however, is forecast to rise in exportoriented manufacturers, said Federation of Malaysian Manufacturers (FMM) president Datuk Soh Thian Lai (picture).

He said the manufacturing sector has been in a retrenchment mode in the past years due to instability in business environment.

“Each year, around 20,000 local and foreign workers are retrenched in the manufacturing sector due to rationalisation, merger and acquisition exercises, cost-cutting measures and relocation.

“But, employment will still be seen at companies who have been export-ready as they require more workers to meet the export demand,” he told reporters in Kuala Lumpur yesterday.

Soh said according to the FMM-Malaysian Institute of Economic Research Business Conditions Survey for the second half of 2018 (2H18), 20% of 517 companies in Malaysia are positive on the possibility of recruitment, supported by the higher export sentiment to the US amid global trade tension.

“The survey shows that 20% of the respondents would like to recruit because they want to increase their capacity as some of them are eyeing the export market.

“If we are looking at the local context, Malaysia’s unemployment rate is still around 3%. So, we do not expect a massive lay-off of people in the manufacturing sector,” he said.

Despite the looming trade tensions between the US and China, Soh said local manufacturers are sanguine in investment opportunities derived from the deteriorated business activities between the two countries.

“The investment of China into Malaysia last year was huge and there is a possibility for Malaysia to be the substitute investment, if the trade war is worsening,” he said.

However, Soh said manufacturers remain cautious on business activity in 1H19 due to the lower expectations of sales production, coupled with the rising production cost.

“Respondents are more cautious about the outlook of 1H19 than they were in the past survey.

“The index for expanded business activity plunged 23 points with only 27% of respondents optimistic about the pick-up in business activities,” he said.

On another note, Soh said the survey revealed that the respondents want more clarity on the procedures of the Goods and Services Tax (GST) refund.

“Also, 316 out of the 3,200 of FMM members claimed that they have not received a combined RM601 million of a tax refund, and that would be damaging especially to the small and medium manufacturers.

“We hope that the government could implement a better system to resolve this weakness in GST,” he said.