FEDERATION of Malaysian Manufacturers (FMM), in a move to encourage greater consolidations among manufacturers of small and medium enterprises (SMEs), said it is willing to undertake the role as a matchmaker to facilitate mergers and acquisitions among its members.
FMM president Datuk Mustafa Mansur said the federation, which represents the interests of about 2,000 manufacturers and more than 6,000 companies in the country, was capable of taking on the task as it had been actively engaged in providing advice and recommendations to its members.
Speaking to reporters after a meet the banker session between FMM members and Affin Merchant Bank Bhd in Sri Damansara, Selangor, yesterday, Mustafa said local manufacturers, especially the SMEs, should realise that they should undertake a consolidation process similar to that of the banking industry, if they wanted to compete successfully against other regional manufacturers in the face of the Asean Free Trade Area (Afta).
Currently, SMEs account for more than 80% of the total manufacturing establishments in Malaysia. Of the SMEs, 88% are small-scale industries while 12% are medium-sized.
Most of the SMEs are concentrated in the traditional sectors of food and beverages, fabricated metal products, wood and wood products and basic metal. However, only 20% of these SMEs actually export their products.
Mustafa said following the greater implementation of Afta this year, more regional players would come into the domestic market and compete head-on with local manufacturers.
Its time for our SMEs to stop competing against each other, and start consolidating among themselves in order to face the challenges from the region such as those coming from China.
Through consolidation, we hope a small manufacturer will become medium-sized company, while a medium-size player will grow into a big manufacturer. Otherwise, our manufacturers and SMEs will face an onslaught from other players in the region, Mustafa said.
He also said while there was no exact formula to determine the optimal number of SME players in each industry, there was a need for SMEs in certain industries, such as automobile component and part makers, building materials and food to begin consolidating now.
Of course, the consolidation process should take place by itself and not wait until the government steps in, Mustafa said.
The meet the banker session, which saw an attendance by over 90 companies, was the first of a series organised by FMM to expose local manufacturers, especially SMEs, on ways to secure financing for their businesses from various financial institutions. Later sessions would be followed by other presentations from Affin Bank Bhd and Bank Industri Bhd.
Affin Merchant Bank president and chief executive officer Datin Zuraidah Atan said the bank, being a niche player, felt a special fellowship with the SMEs in understanding their needs.
She said Affin Merchant had, over the years, been involved in the listing of numerous manufacturing and services-based companies that started off as SMEs.
Having been much involved in the nurturing of the business and the planning process of the listing exercise, we are pleased to note that these companies are still going strong and some have further grown and developed, Zuraidah said.
She also believed SMEs in Malaysia would transcend from their present state to undertake a more important role in Malaysias industrialisation process.