FMM: Biz activities to remain sluggish in 2H19

The slowdown is attributed to the ongoing US-China trade war, Brexit, as well as the global economic downturn

by S BIRRUNTHA/ pic by MUHD AMIN NAHARUL

MEMBERS of the Federation of Malaysian Manufacturers (FMM) are bracing for a slowdown in the second half of this year (2H19), amid uncertainties arising from external factors.

FMM president Datuk Soh Thian Lai said the slowdown is attributed to the ongoing US-China trade war, Brexit, as well as the global economic downturn.

“If you look at the international scenario, there are no signs of ending or final results, and by looking at Malaysia’s 1H, the current scenario is weak.

“So, it depends on the government projects. If there are more government projects to release, we can look at the 2H in a more positive way.

“As of now, we are indicating more of a cautious outlook for the 2H and expecting the government to focus on economic growth,” he told reporters at the FMM and Malaysian Institute of Economic Research (MIER) 1H19 business condition survey media briefing in Petaling Jaya, Selangor, yesterday.

Soh said the survey indicated that only 29% of its respondents showed an increase in business activities, while 28% are expecting a slowdown.

He also urged these industries — such as electrical and electronic (E&E) and petrochemical — to be aware of the upcoming business slowdown in the 2H.

“The industries that rely on exporting products to the US have to be a bit careful, especially those SMEs (small and medium enterprises) that produce pro-ducts involving multinational exports.

“Currently, more than 50% of electrical and electronic products are exported to China for processing and then it goes to the US,” he said.

As such, Soh encouraged local companies to take the opportunity to try and export the products straight to the US without going through China.

“On our part, FMM is now trying to work with the Malaysia External Trade Development Corp to bring these companies with high potential to access to the US market,” Soh said.

Meanwhile, the survey also revealed that the overall indices tracked during the 1H19 have fallen, compared to 2H18.

According to Soh, the manufacturing sector recorded a significant decline in 1H19 with The Business Conditions Index posting a score of 78 points against 107 points in 2H18.

In terms of trade, only 25% of FMM members expect higher export sales in the 2H19.

The survey also showed that there will be a decline in expectations for exports, production, capacity utilisation and investment in 2H19 compared to 1H19. Most companies have undertaken training programme and upgrade their machinery to strengthen their productivity and competitiveness in 1H19.

It also noted that during the 1H, automation has been the first choice for those who have implemented or considered implementing Industry 4.0.