FMM: Weak sales projections in first half of 2020

A survey conducted by the Federation of Malaysian Manufacturers (FMM) and the Malaysian Institute of Economic Research (MIER) is projecting a gloomy domestic sales during the first half of this year (1H20).

According to the FMM-MIER Business Conditions Survey, manufacturers’ outlook for business in the 1H20 is generally lacklustre as uncertainties continued to weigh amid the Covid-19 outbreak.

In tandem with the expected decline in sales, it said both production volume and capacity utilisation are also expected to fall with 33 percent of respondents indicating that they are likely to produce smaller volumes and 30 percent considering lowering their capacities.

“Production cost is likely to be higher in 1H20 with 51 percent of respondents projecting an increase in their cost, up from 43 percent previously,” FMM said in a statement today.

However, it said, capital investment remained positive with 24 percent of respondents looking to increase their capital investments in the months ahead.

Recruitment, on the other hand, is likely to remain relatively flat in 1H20 with only 17 percent of respondents planning on increasing headcount soon.

It said about 43 percent of the respondents are also reducing foreign workers and looking at automation to tackle issues in sourcing foreign workers such as higher remuneration demand, a zero-cost policy which raised recruitment cost, freeze/gender restriction by source countries and lack of interest among foreign workers to work in Malaysia.

Findings of the survey showed that 34 percent of the respondents are automated at the 31-50 percent level.

Meanwhile, a quick survey to ascertain the impact of the Covid-19 outbreak on manufacturers and trade showed the impact on production due to reduced supply of raw materials from China, including moulded and metal press parts and ingredients for food and beverage products, are the main concern of manufacturers.

“Exports most affected include machinery and equipment, automotive components, electrical and electronic products, toiletries, steel products and processed food products,” It said.

The 16th edition of the bi-annual collaboration between FMM and MIER drew 490 respondents nationwide.

- Bernama