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Factories shutdown risks devastating economic impact: FMM

FMM In The News: THE MALAYSIAN RESERVE, Wednesday, July 14, 2021 - THE Federation of Malaysian Manufacturers (FMM) said shutting down factories will have a devastating economic impact to the nation.

“The importance of the manufacturing sector to Malaysia’s economy must be appreciated by all. If all factories are forced to shut, the impact would be most devastating on the economy,” FMM president Tan Sri Soh Thian Lai said in a statement today.

He also said that the lockdown in Selangor and Kuala Lumpur was implemented not due to rising work clusters as claimed in a recent media article but to address the worrying and fast-rising sporadic cases in the Klang Valley.

According to FMM, the manufacturing sector has been the pillar of economic growth as evident from the fourth quarter of 2020 (4Q20) economic performance, where the manufacturing sector was the only economic sector with a positive growth of 3%.

This performance continued in the first quarter of 2021 (1Q21) with stronger growth where manufacturing led all other economic sectors with a growth of 6%.

“As the catalyst of growth contributing around 23% of gross domestic product (GDP), including 86% of total exports and the main source of demand for output from the other economic sectors, it is very clear that the manufacturing sector must be allowed to continue to operate amidst the Covid-19 pandemic,” Soh added.

FMM stated that businesses cannot be sustained if factory operations are closed or reduced in capacity, which will lead to knock-on effects in the economy with significant loss of jobs due to the extensive supply chains and networks involved in manufacturing.

“If industries remain closed for too long, it could cause economic stagnation and irreparable damage to the economy including the possible exodus of foreign investors and reduction in domestic investments,” the federation head said.

Soh further said that the manufacturing industry gives its fullest commitment and support to the government’s efforts in fighting the Covid-19 pandemic.

Quoting Health DG Tan Sri Dr Noor Hisham Abdullah during an engagement with the business community on July 4, Soh further said that close to 70% of the total cases were sporadic cases, while 30% came from clusters of which 62% are workplace clusters.

“Factories only account for 30% of these workplace clusters. This works out to be around only 6% of the total number of cases that can be attributed to factories,” he said.

Recently, MoH has reported that only 15,069 (9.7%) out of a total of 156,105 infections cases from June 1 to June 26, were attributed to the manufacturing sector.

Moreover, on July 9, Health DG was quoted saying that only 16% of the record-high 9,180 cases reported for the day were from clusters, while the remaining 84% were based on testing of individuals.

According to FMM’s analysis of the official data published by MoH in the website, Telegram and social media platforms from June 1 to July 12, the daily new cluster-based cases reported have ranged between 1% to 17% of the overall cases reported daily.

“In addition, new manufacturing cluster cases over the same period as a percentage of the overall daily cases reported have ranged between 0.3% to 8.3%.

“Based on the graph reported by the National Crisis Preparedness and Response Centre (CPRC) of MoH, it is very clear that cases linked to clusters especially manufacturing clusters are low,” said Soh adding that other data has also showed that factories are not the main sources of infections.

On June 30, Senior Minister of Ministry of International Trade and Industry (MITI) Datuk Seri Mohamed Azmin Ali said the manufacturing sector accounted for just 9.3% or 12,872 from the total 138,649 cases reported between June 1 and June 23, based on data obtained from CPRC.

Besides that, cases from manufacturing contributed a maximum of 7.3% only of the overall daily cases, based on the new cluster cases reported daily by MoH from July 1 to July 9, as well as tracked by FMM.

The federation acknowledged that the risk of factory infections cannot be totally eliminated especially now with the high percentage of sporadic cases and with the virus in the community.

“This most certainly cannot be equated to the lack of Covid-19 standard operating procedures (SOP) compliance by factories and is a very unfair conclusion to be made.

“With the rise in the sporadic cases, managing the entry of infections into the factory or hostels has become more challenging for the industry despite the SOP and preventive measures in place including swab tests because the virus may still go into factories especially through the asymptomatic sporadic cases,” FMM said.

FMM will continue to ensure strict adherence to the SOPs and preventive measures at the workplace and workers’ quarters as compliance with Act 446, as well as accelerating the process of getting all employees vaccinated through Program Immunisasi Industri Covid-19 Kerjasama Awam Swasta (PIKAS).

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