MoF: O&G, manufacturing and E&E sectors crucial for economy


“Malaysia is also a key player in the E&E global value chain. The E&E sector represents 40% (or RM386bil) of Malaysia’s annual exports, and approximately7% of global semiconductor trade, ” the MoF said.

KUALA LUMPUR: The aerospace industry, oil & gas, manufacturing and electrical & electronics (E&E) sectors have been allowed to operate during the full lockdown from June 1 to 14 as they are crucial to the economy, the Ministry of Finance (MoF) says.

It said in a statement on Monday the continued opening of these sectors is crucial to safeguard the well-being of the rakyat and to ensure the supply chain continuity for essential products and services.

Clarifying National Security Council’s decision to allow these industries to operate during the two-week full lockdown, the MoF said thousands of components were manufactured by the E&E sector.

It pointed out the E&E sector enables critical infrastructure globally, such as healthcare and medical devices, water systems and energy grids, as well as transportation and telecommunication networks.

The MoF said the E&E components produced in Malaysia have also facilitated e-commerce and remote working in the new norm

“Malaysia is also a key player in the E&E global value chain. The E&E sector represents 40% (or RM386bil) of Malaysia’s annual exports, and approximately7% of global semiconductor trade, ” it said.

The MoF said Malaysia is critical as the sole production site for aluminium substrate for all hard drives being produced by a factory in Johor, for onward feeding into the company’s global supply chain.

“Additionally, in 2020, about RM15bil of fresh investments in the E&E sector had been approved, set to create 20,000 more jobs for Malaysians.

As such, even the short-term closure of the E&E sector could disrupt supplies from Malaysia, and jeopardise essential goods in not only Malaysia but also the rest of the world, particularly during these challenging COVID times.

“It will also have the long-term impact of diverting trade and investment from Malaysia, and hurting Malaysia’s competitiveness in the global value chain, ” it said.

The MoF pointed out Malaysia already experienced this through MCO 1.0, when various Malaysian manufacturers reported that their orders had been diverted to other producing countries including China.

The MoF also said to mitigate Covid-19 transmission risk, the government, through enhanced monitoring and enforcement, will ensure that Malaysia’s factories strictly comply to SOPs which limit physical presence at the workplace to 60%.

It also said generally, the services sector, which contributes 57.3% of 1Q 2021 GDP, is also not allowed to operate.

Although the government has allowed various sectors to operate, the government has instructed more sub-sectors to temporarily close.

For example, in the retail sector, only 11 categories of essential retail, such as supermarkets, have been allowed to operate, while more than 20 other categories including electrical shops, jewellery, barbers, car showrooms are not allowed to operate.

In the construction sector, only critical construction, maintenance and repairs are allowed to operate.

“These are in line with the government’s focus on reducing mass gatherings and mobility, ” it said.

On Sunday, the Ministry of International Trade and Industry (MITI) announced 18 manufacturing and manufacturing-related services (MRS) sectors that are allowed to operate under the Movement Control Order (MCO) from June 1 to 14,2021.

However, MITI said this was subject to the companies getting an approval letter from the ministry.

The sectors allowed to operate at 60% workforce capacity are aerospace including maintenance, repair and overhaul (MRO); food and beverage; packaging and printing materials; personal care products and cleaning supplies; healthcare and medical care including dietary supplement; personal protective equipment (PPE) including rubber gloves and fire safety equipment; medical equipment components; electrical and electronics; oil and gas, including petrochemical and petrochemical products; chemical products; machinery and equipment; textiles for manufacturing of PPE only; and production, distillation, storage, supply and distribution of fuels and lubricants.

The five sectors allowed to operate with 10% workforce are automotive (vehicles and components); iron and steel; cement; glass; and ceramics.

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