Brighter outlook for industrial sector


By YAP LIH HUEY

KUALA LUMPUR: Foreign and domestic investments in the manufacturing sector are expected to be on the surplus this year amid fierce business competition from neighbouring countries and China, says Minister of International Trade and Industry Datuk Seri Rafidah Aziz.  

The manufacturing sector expanded by 3.5% in the first three quarters of last year after experiencing a decline of 6.2% in 2001.  

This sector is estimated to account for 30.4% of last year's gross domestic product (GDP), said Rafidah during a media briefing on the performance of the manufacturing sector in 2002 in Kuala Lumpur yesterday.  

“Malaysia continued to receive encouraging inflow of foreign investments into the manufacturing sector last year. It had accounted for nearly 63.0% (RM11.8bil) of total investments received last year,” she added.  

Foreign investments, which were received both in new projects as well as expansion or diversification projects, registered an increase of 4.0% over 2001.  

A total of 841 project applications were received with investments amounting to RM18.8bil compared to 837 applications with investments of RM16.5bil in 2001.  

She said investments received recorded a 13.7% increase over 2001, which created about 68,000 job opportunities with more than half in the managerial, technical, supervisory and the skilled manpower categories.  

Due to the improvement of the economy, a higher level of domestic investment was seen last year, totalling about RM7bil, an increase of more than one-third over the previous year.  

Almost 80% of the domestic investments received, or RM5.4bil, were in new projects while RM1.6bil were in expansion and diversification projects.  

“It was particularly noteworthy that nearly 60% of the applications received last year (497 out of 841) were Malaysian-owned. These projects were both in the form of wholly-owned projects as well as joint-ventures with Malaysian majority ownership,” she said.  

From January to November last year, total trade increased 6.9% to RM605.6bil. Export earnings turned around to record a strong growth of 5.9%, totalling RM326.1bil.  

“Malaysia is expected to be on track to achieve the projected increase of 4.5% in export earnings this year,” she said.  

Asean, the USA, Japan and the European Union (EU) continued to be major trading partners for Malaysia.  

While the US remained a major export market accounting for a fifth of total exports, Malaysia had benefited from increasing exports to the East Asian region as well as to South countries.  

Asean was the largest trading partner, accounting for 24.7% of total trade for the first 11 months of 2002. Trade with all Asean countries registered increases, except for Brunei and Cambodia.  

In addition, the industrial production index of the manufacturing sector expanded by 4.3% for the first 11 months of 2002.  

Growth was attributed to increases in the production indices of 15 out of 23 major sub sectors, she said.  

The sub sectors are paper and paper products (12.2%), professional, scientific and measuring equipment (8.5%), transport equipment (8.4%), electrical machinery, apparatus, appliances and supplies (8.1%), footwear (7.3%), food manufacturing (6.8%) and non-electrical machinery (6.4%).  

Semi-conductors and other electronic components registered a rise of 13.3% due to increased demand from the Asia-Pacific region and the replenishment of stocks.  

Productivity in the manufacturing sector recorded a positive growth of 2.7% for the first 10 months of 2002.  

She said the improvement was due to the increase in external as well as domestic demand, leading to higher capacity utilisation and increased process efficiency, product quality and design among industries.  

Among the export- and domestic-oriented industries, which recorded increase in productivity were electrical and electronics, professional and scientific equipment, wood and wood products, rubber products, iron and steel, furniture and fixtures, fabricated metal products and plastic products.  

On a different note, Rafidah stressed that the Ministry of International Trade and Industry (MITI) will no longer control the prices of cars effective this year. 

She was responding to speculations by analysts and media reports on what car prices would be like in 2005, when the sector comes under the Asean Free Trade Area. 

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