More local content in mega projects, please

Posted on 03 March 2017
 

Source: The Edge

The Federation of Malaysian Manufacturers (FMM), whose survey shows manufacturers are expecting muted local sales in the first half of 2017, is urging the government to encourage the use of locally manufactured products in mega projects — a move to drive domestic economic activities.

“The country did well [in terms of economic growth] in the second half of last year. However, going forward, the overall tone of the [manufacturing] industry is cautious at this moment because of uncertainties with respect to local consumption.

“Government spending on local projects will solve the problem in this area. There should be certain conditions for foreign direct investments, they must have an understanding with local manufacturers to supply goods for the projects,” said FMM’s immediate former president Tan Sri Saw Choo Boon.

Saw opines that Malaysia is quite liberal in giving out contracts. “When we have big projects undertaken by foreign contractors, we should try to give back as much as possible to the country to benefit local businesses as much as possible,” he said at a media briefing yesterday to reveal the survey results.

FMM-Malaysian Institute of Economic Research (MIER) joint Business Conditions Survey shows that expected local sales index dropped 12 points to 87 for the first half of 2017 against 99 in the second half of 2016 (2H16), indicating that manufacturers are holding rather bleak views on their sales in the first six months, although sales had improved in 2H16.

The index on actual local sales climbed to 87 in 2H16 from 80 in the preceding six months.

Meanwhile, the actual exports sales index climbed 10 points to 109 in 2H16 from 99 in 1H16. The expected export sales index dropped to 111 in 1H17 from 112 in 2H16.

FMM Selangor branch chairman Datuk Soh Thian Lai said the official statistics show encouraging growth on gross domestic product, but there is a disconnect between the figures and how the public is feeling.

“Billions are spent on these mega projects. But how much [materials] are supplied by local manufacturers? We do not have that statistic,” Soh, who is president of the Malaysian Iron and Steel Industry Federation (Misif), asked.

“One way to have a conducive environment is to have better domestic consumption. We do encourage exports as our quality is accepted globally. What we want to know is how we can raise the incomes of the local people,” Soh said.

FMM president Tan Sri Lim Wee Chai, meanwhile, has called for manufacturers to focus on quality and be cost-efficient to stay competitive. “The government has heeded FMM’s suggestions. There will be conferences to present the big infrastructure projects to potential suppliers.

“We (manufacturers) must help ourselves. FMM will want all suppliers to come to form business ventures and see how they can contribute,” Lim said. 



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