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Manufacturers expect little impact from govt review of mega projects

FMM in the News: The Sun Daily, August 23, 2018

KUALA LUMPUR: The government's review of mega projects – including infrastructure deals related to China's Belt & Road Initiative, Kuala Lumpur-Singapore High-Speed Rail and Mass Rapid Transit 3 (MRT3) – has no impact on most manufacturers, according to the Federation of Malaysian Manufacturers-Malaysian Institute of Economic Research (FMM-MIER) Business Conditions Survey released today.

On the overall review of mega projects, about 56% of 434 respondents to the survey nationwide, conducted from June 6 to July 23, believe that it has no impact on them, while 28% foresee more business opportunities, particularly those in chemicals & chemical products; food, beverages & tobacco; fabricated metal products; plastic & plastic products; machinery & equipment; and electrical, machinery & apparatus. Of the 16% who are anticipating a loss in business opportunities, most are from the fabricated metal products industry.

Most respondents (63%) also do not think that renegotiation of Belt & Road Initiatives, including the East Coast Rail Link (ECRL), will affect them. About 26% believe that there will be more business opportunities, most of them in the food, beverages & tobacco; fabricated metal products; plastic & plastic products; as well as wood, paper, furniture and printing industries. The remaining 11% envisage a loss of business, wih most of the votes from the manufacturing fabricated metal products, plastic & plastic products; and non-metallic mineral products.

Cancellation of the HSR and MRT3 is expected to have no impact on 72% of the respondents. Another 21% are anticipating a loss in business opportunities, with those from the fabricated metal products, food, beverages & tobacco, and plastic & plastic products industries looking most apprehensive. About 7% responded positively, with most of the responses from those in the food, beverages & tobacco, as well as the electrical, machinery & apparatus industries.

FMM president Datuk Soh Thian Lai said ground work for the ECRL project has started and at the initial stage most machinery and parts are imported.

"The local content is still not much. When they cancel it, it won't have a big impact (on local manufacturers), except the local workers recruited. Based on labour law, those recruited under ECRL need to be compensated fully," said Soh.

Prime Minister Tun Dr Mahathir Mohamad said in a press conference in Beijing at the end of his visit to China on Tuesday that the ECRL and two gas pipeline projects in Sabah will be cancelled.

In July, he said Malaysia will look to negotiate with Singapore the deferment of the HSR.

Meanwhile, most respondents agree that a minimum monthly wage of RM1,500 is an acceptable goal to be achieved in five years with 50% of the RM500 increase borne by the government. However, they prefer the hike to be implemented in 2019 instead of this year.

On the implementation of the sales and services tax from Sept 1, Soh said consumers will experience less price pressures, given that prices of goods will be reduced in general.

However, manufacturers that will be subjected to the 10% sales tax will need to pass it on to consumers. They include those manufacturing ceramics, industrial products, chemicals, furniture and electronic goods.

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