Malaysian Manufacturers Need Two Years for Business Recovery ?

The Star

Malaysian manufacturers are pessimistic about their business recovery. Over two-thirds need four months to two years to restore business to pre-Covid 19 levels. This is based on sluggish growth projected globally.

Revenue and profitability have been impacted negatively in the past 6 months. Only 8% enjoyed higher revenue/ profit – and these were glove makers. About 46% of the respondents in the survey done by FMM – MIER say they will cut down production. Currently, they are operating at 50% of capacity.

About 42% of the respondents are planning to cut costs by reducing up to 30% of workforce by December 2020. Retrenchments will continue into 2021 albeit at a slower pace – 10% to 20%.

In terms of business sustainability, about 34% of respondents believe their companies may not survive beyond 12 months. Government support on wage subsidies and loan moratorium are key to survival. The most vulnerable group, micro enterprises, may need cash assistance. FMM suggested the loan moratorium period be extended to December 2020. This will help with recovery and retention of workers.

The unemployment rate is between 4.9% to 5.3% (for June/May) according to the Department of Statistics, Malaysia. That suggests close to 800,000 people are unemployed. More graduates will try to join the labour market and many will take a year or more to find suitable employment.

The Government has to address these issues – loan deferments, cash advances, employment – in a practical one-year action plan if the economy is to achieve any semblance of growth in 2021.

Reference:

1.     Two-thirds of Malaysian manufacturers need up to two years to return to pre-pandemic levels ⁠— survey, 19 August 2020, The Edge

2.     Almost half of manufacturers plan 30% job cuts by year-end — FMM-MIER survey, 19 August 2020, The Edge