FMM cautious about H1 of 2017 despite slight pick up

Tan Sri Lim Wee Chai

KUALA LUMPUR: The manufacturing industry is lowering its expectations as it remains cautiously optimistic about the first half of 2017 due to uncertainties in local consumption.

The Federation of Malaysian Manufacturers (FMM) said on Thursday the cautious outlook was despite a pick up in business activity in the second half of 2016.

According to findings from the FMM-Malaysian Institute of Economic Research (MIER) Business Conditions Survey, improvements were observed for current local and export sales, production volume and capacity utilisation, albeit with higher cost of production during the period.

However, for the first half of 2017, survey respondents expect local sales to wane during the period, as the local sales index fell 12 points to 87.

FMM president Tan Sri Lim Wee Chai said domestically manufactured products should be promoted to enhance domestic consumption, particularly products competitive in terms of pricing, quality and delivery.

"In order to make the manufacturing industry a more efficient one, there should be a mindset of striving for cost efficiency and high quality products.

"When locally manufactured products are cost competitive, priced reasonably and of good quality, foreign investors who have projects in Malaysia will then use more of our 'Made in Malaysia' products, which will in turn increase domestic consumption.

"We seek the government's support in the purchase of Malaysian goods.

"As an example, the government can probably set some conditions that require investors or project managers to use locally manufactured products, in the contracts given out," he said.

The FMM-MIER business conditions survey for the second half of 2016 received a total of 370 responses.

Index values range from 0 to 200 points.

A value above the growth-neutral threshold level of 100 points indicates an improvement or positive outlook, while that below the threshold indicates a worsening or negative outlook.