Factories to lead in industry production’s growth - MIDA | Malaysian Investment Development Authority
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Factories to lead in industry production’s growth

Factories to lead in industry production’s growth

15 Mar 2021

Malaysia’s industry production is expected to post stronger growth largely due to the manufacturing sector, said economists.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the manufacturing sector will likely be the critical driver for the economy.

“This is in line with the recent improvement recorded in the JPMorgan Global Manufacturing Purchasing Managers’ Index, which has been hovering above 50 points.

“Sectors that are technology-related such as the electrical and electronics (E&E) are seen to be the main catalyst in light of the adoption of the Internet of Things and artificial intelligence, and demand for smart devices,” he told The Malaysian Reserve (TMR) recently.

Putra Business School economist Dr Ahmed Razman Abdul Latiff said the latest Department of Statistics Malaysia (DoSM) Industrial Production Index (IPI) January report signifies a positive turn-around as IPI continued to grow positively for the past two months.

“This is largely helped by the eight consecutive months of positive growth in manufacturing. However, the mining and electricity sectors are still recording negative growth, but mining has started to minimise its negative growth since December 2020.

“Overall, it confirmed the expectation of many parties that 2021 will see a continuous recovery and positive growth for Malaysia’s industry production,” he said to TMR.

According to DoSM, the country’s IPI grew 1.2% in January 2021 driven by the manufacturing index with an increase of 3.5% year-on-year (YoY) after recording a growth of 4.1% in December 2020.

Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the major subsectors contributing to the growth in the manufacturing sector were E&E products (7.9%); petroleum, chemical, rubber and plastic products (4.5%); and wood products, furniture, paper products and printing (2.4%).

The export-oriented industries pushed the growth of the manufacturing sector by 4.6%, while domestic-oriented industries increased by 1.5%.

The mining and electricity indexes dropped 4.5% and 4.6% respectively.

The drop in the mining sector was due to the decrease in crude oil and condensate index (-9.4%), and natural gas index (-0.5%).

In another report by DoSM, Malaysia’s manufacturing sales in January 2021 grew 4.1% at RM122.9 billion, but on a monthly basis, the sales value decreased by 1.4%.

Commenting on the report, Mohd Uzir said the YoY incease was driven by food, beverages and tobacco products (7.7%), E&E pro- ducts (6.4%) and transport equipment and other manufactured products (5.5%).

“The total employees engaged in the manufacturing sector in January are 2,225,697 persons, a decrease of 2.4% compared to 2,280,915 persons in the same month last year,” he said.

The report also stated that salaries and wages paid amounted to RM7.6 million, decreasing by 1.4% or RM105.6 million in January 2021 against the same month of the preceding year.

Simultaneously, the sales value per employee rose by 6.7% to record RM55,213, while the average salaries and wages per employee was RM3,396.

Meanwhile, sales value of wholesale and retail trade in January this year fell 2.7% YoY to RM111.7 billion due to motor vehicles, which contracted 13.8% to RM10.6 billion.

Similarly, retail trade also recorded a decrease of 2.5% to register RM45.6 billion, and wholesale trade depicted a similar trend with a decrease of 0.4% to RM55.4 billion.

“Online retail sales index, which portrays e-commerce activities, surged to record 28.7% growth YoY.

For the seasonally adjusted retail sales index, it went up 0.5% against the previous month.

“In terms of volume index, wholesale and retail trade registered a fall of 2.9% YoY,” said the chief statistician.

He went on to note that the fall was due to motor vehicles which decreased 13.1%, followed by retail trade and wholesale trade.

Source: The Malaysian Reserve