FMM President’s 2019 New Year Message to Members

Happy New Year to all FMM Council Members, Branches and members

As we begin the New Year revitalised and full of enthusiasm, the manufacturing sector being prudent businesses need to heed the Ministry of Finance’s (MOF) Economic Outlook 2019 observations:

a. Economic growth is projected at 4.9%, up from the 4.8% estimated for 2018. Gross exports are estimated to grow 3.9% (2018: 4.4%) and imports by 4.1%;

b. Risks to growth are uncertainties in the global environment, including the ongoing US–China trade conflict which has significant impact on Malaysian exports as follows:

Almost 50% of exports are incorporated into China’s final products exported to the US;

12% of exports or RM108 billion in 2017 are indirectly impacted by US tariff on China;

The bulk of affected products are electrical and electronics (E&E), in particular electronics, office machines, automatic data processing equipment, electrical machinery and appliances; crude oil, gas, metal ores and other mining goods, chemicals, plastics and rubber products;

Based on the above, Malaysia’s exports will likely decline by 0.08 and GDP by 0.02 percentage points over 2018–2020. MOF’s analysis indicated that a 10% drop in global growth will reduce GDP by 14%. If the US–China trade war escalates causing global output to decline 0.4 percentage points by 2020, Malaysia’s GDP can decline up to 0.7 percentage points;

c. Real GDP growth will be mainly supported by domestic demand from private consumption, expected to expand 6.8% (2018: 7.2%) and to cushion lower public spending, which will only grow 1.8% due to lower capital spending by public corporations and review and re-prioritising of expenditure. Private investment will be supported by new and ongoing projects in technology-intensive services and the manufacturing sectors;

d. The manufacturing sector is to grow firmly at 4.7% (2018: 4.9%), driven by export-oriented industries primarily continuous demand for E&E products, in tandem with the global semiconductor industry;

e. The Government will continue with structural reforms including correcting mismatch in the labour market, improving the quality of education and training, further diversifying export products and markets, enhancing innovation and adoption of technology, as well as unlocking the potential of the digital economy as a future driver of growth.

Further to the above, I would like to reinforce that Malaysia’s new manufacturing era needs 4 key success factors:

a. Clean and Strong Government to fight corruption at all times and to prioritise economic development and the rakyat’s well-being; and a strong, effective and efficient Cabinet and administration which practises accountability and meritocracy to ensure a fair and level playing field, greater transparency and close public–private consultation and partnership;

b. Business and Investment Friendly Eco System to revitalise the manufacturing sector, helping new and existing investors to expand, upgrade and diversify through direct tax benefits, more accessible grants to support investments in technology and innovation, including Industry 4.0 technologies especially for SMEs, and close, regular and meaningful consultation on government policies and procedures to minimise and alleviate rising costs of doing business;

c. High Tech and High Value Production by facilitating and expediting access to the 2019 National Budget initiatives and assistance to support Industry 4.0 technologies implementation, high speed broadband subscription, innovation, productivity, skills upgrading and retraining;

d. LOVE MALAYSIA, BUY MADE–IN–MALAYSIA campaign should be launched expeditiously and monitored closely in government procurement and projects as well as promoted rigorously in domestic and overseas markets; early and fast implementation of Free Trade Agreements; tightening enforcement on smuggling and counterfeits and strengthening intellectual property protection laws.

Taking cognisance of all of the above, I would strongly urge FMM members:

To optimise use of the appropriate Government assistance programmes to implement firm-level initiatives, particularly in adopting Industry 4.0 technologies, skills upgrading and innovation;

To leverage on market expansion and diversification programmes to support firm-level marketing development strategies; and

To give industry feedback quickly to the FMM on challenges faced, whether in accessing government programmes, or in domestic and international markets so that the Government could be alerted and the relevant FMM Working Committees could work with the authorities in seeking appropriate solutions for industry–wide issues.

I conclude that FMM’s vision is MAKING MALAYSIAN INDUSTRIES GLOBALLY COMPETITIVE. We will continue to work harder towards becoming the Government’s partner of choice for consultation and collaboration on industry issues in our endeavour for the manufacturing sector: