Manufacturing growth may slow


BY PAULINE S.C. NG

The manufacturing sector may grow at a lower rate this year than the 5% forecast earlier, said International Trade and Industry Minister Datuk Seri Rafidah Aziz. 

She cited the Severe Acute Respiratory Syndrome (SARS) outbreak and the Iraq war as negative factors that would affect the sector. 

SARS, in particular, had had a significant impact, she noted. Safety and health concerns arising from SARS had led to the cancellation of scheduled regional conferences, international trade fairs and missions, the postponement of sales orders (leading to inventory and holding cost increases), and a drop in business travel to the region and Malaysia, all of which had adversely affected the tourism and related industries. 

But Rafidah assured representatives of 12 local groups present at Miti's annual dialogue with business associations yesterday that while the ministry would not compromise on the safety of the country, it would act in the interests of the business community to ensure that the government's policy directives took industry needs into account. 

Issues raised by the associations in the dialogue session included those of foreign direct investment, incentives to enhance competitiveness, financing for small- and medium-sized businesses, halal certification, and the implications of the Asean Free Trade Area. 

The Malaysian International Chamber of Commerce and Industry (MICCI) commended the government for its moves to improve the investment climate, but lamented the slow progress made. It said greater efforts must be made to develop the right environment of liberalisation, transparency, innovation and efficiency so as to generate the appropriate image for Malaysia locally and overseas. 

“We believe the government's efforts should be concentrated on developing a transparent investment business environment overall, rather than trying to guess the growth areas. There remains considerable growth potential in applying new technology to established industries and this should not be overlooked in the rush to embrace cutting-edge technologies,” the MICCI said. 

Malaysia's diminishing competitiveness in the international market continued to be a cause for concern. The Associated Chinese Chambers of Commerce and Industry Malaysia (ACCIM) noted that despite strenuous efforts by the government, total factory productivity growth had been stagnant in the last seven years, and suggested an investigative study to determine where the faults lay. 

The Malaysian Employers Federation (MEF) proposed that the government reaffirm its commitment to the productivity-linked wage system and facilitate its speedy implementation in the private sector. 

Rafidah said a cabinet committee on national competitiveness, chaired by Deputy Prime Minister Datuk Seri Abdullah Ahmad Badawi, had been established this year to review policies and procedures that impeded national competitiveness. The committee is also expected to provide policy direction and monitor the implementation of initiatives to enhance the public delivery system. 

On the motor vehicle sector, Rafidah reiterated the government's commitment to reducing import duties on all completely-built-up cars to 20% beginning Jan 1, 2005.  

“That's definite,'' she said, adding that import duties would be replaced by an excise tax on all cars. “But it's only a question of how much,” she said. 

The tax schedule, however, was still being finalised, she said. 

In its dialogue paper to Miti, the Malaysian Automotive Association (MAA) said lack of details on the pending motor policy had led to potential buyers adopting a wait-and-see attitude in expectation of lower car prices in future, the softening of used-car prices, and local franchise holders and global vehicle makers being put in a difficult position with regard to their long-term business plans in Malaysia. 

The Malaysia Hardware, Machinery and Building Materials Dealers Association (MHMBA), in its submission, called on the government to slash the 50% import duty on steel products not made locally to not more than 20%, and to abolish the AP (approved permit) requirement. 

While the protective measures helped local steel manufacturers, they had adversely affected the local steel market and its related downstream industries, the MHMBA said.. 

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