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KUALA LUMPUR (Aug 19): Malaysian manufacturers remain pessimistic about their business recovery, with over two-thirds of them needing between four months to two years to restore their business to pre-Covid-19 levels, due to the sluggish economic growth projected globally amid the Covid-19 outbreak.
Commenting on the challenges faced by the manufacturing sector, the Federation of Malaysian Manufacturers (FMM) president Datuk Soh Thian Lai said respondents were pessimistic about the outlook given the contraction in global growth as well as the perception that the Covid-19 pandemic has not been successfully contained with rising cases worldwide reported daily.
In terms of the financial impact on Covid-19 and the movement control order (MCO) on business, Soo said the respondents indicated that their revenue and profitability were impacted negatively from the past six months with 82% of respondents said they suffered a decrease in revenues, while 81% reported lower profits.
In contrast, only 8% of them enjoyed higher revenue while 7% enjoyed higher profits. These respondents were largely glove makers.
In the business condition survey carried out jointly by the FMM and the Malaysian Institute of Economic Research (MIER), all forward-looking indicators in the latest survey fell to their lowest level since the commencement of their survey in 2012.
The survey’s business conditions index had declined by 12 points to 76 points in 2H20, from 88 points in 1H20. This indicated that business activity will be scaled down in the coming months.
Meanwhile, projections on local and export sales in the next six months are also lacklustre as both indexes descended to their lowest levels on record.
The local sales index fell to 71 points in 2H20 from 86 points in 1H20, while the export sales index declined to 69 points from 87 points record in 1H20.
Meanwhile, manufacturers also saw a slowdown in production and capacity utilisation, with 46% of the respondents saying they will likely to cut down on their production, up from 33% in the earlier survey.
Those who are considering operating at a lower capacities rose to 46% from 30% previously.
The indexes for production volume and capacity utilisation plunged to their lowest levels in the latest survey, with production volume falling to 78 points in 2H20 from 93 points previously, and capacity utilisation also declining to 78 points in 2H20 from 95 points.
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