KUALA LUMPUR (Aug 19): Malaysian manufacturers remain pessimistic about their business recovery, with over two-thirds of them needing 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, Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said respondents in a survey were pessimistic about their outlook given the contraction in global growth as well as the perception that the Covid-19 pandemic had not been successfully contained with rising cases worldwide reported daily.
In terms of the financial impact of Covid-19 and the movement control order (MCO) on businesses, Soh said the respondents indicated that their revenue and profitability were impacted negatively in the past six months, with 82% saying that they suffered a decrease in revenue, while 81% reported lower profit.
In contrast, only 8% of them enjoyed higher revenue, while 7% enjoyed higher profit. The 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 levels since the commencement of the survey in 2012.
The survey’s business conditions index declined by 12 points to 76 points for the second half of 2020 (2H20), from 88 points for 1H20, indicating that business activity would be scaled down in the coming months.
Meanwhile, projections of local and export sales in the next six months were also lacklustre as both indices descended to their lowest levels on record.
The local sales index fell to 71 points for 2H20 from 86 points for 1H20, while the export sales index declined to 69 points from 87 points for 1H20.
Meanwhile, manufacturers also saw a slowdown in production and capacity utilisation, with 46% of the respondents saying they will likely cut down on their production, up from 33% in the previous survey.
Those considering to operate at a lower capacity rose to 46% from 30% previously.
The indices of production volume and capacity utilisation plunged to their lowest levels in the latest survey, with production volume falling to 78 points for 2H20 from 93 points previously, and capacity utilisation declining to 78 points for 2H20 from 95 points.