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Strong exports boost recovery of manufacturing sector

Strong exports boost recovery of manufacturing sector

07 May 2021

Trade performance for March 2021 showed the sector has continued its upward trajectory with exports growing by 31% to hit RM105b

Improved demand particularly in exports for the manufacturing sector across Asia is one of the key factors that have contributed to its recovery, especially in Malaysia.

Trade performance for March 2021 showed the sector has continued its upward trajectory with exports growing by 31% to reach RM104.95 billion, with total trade also expanding by 25.6% to RM185.74 billion.

Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai (picture) said trade exports, imports and trade surplus recorded double-digit growth for two consecutive months, which is a very positive development and an indication that global trade is also showing some signs of improvement.

This follows a report by IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) that recorded a rise in points from 49.9 in March 2021 to 53.9 in April 2021.

“Most of the national statistical indicators from January 2021 have continued to show that there is a pick-up and improvement in manufacturing performance as can be seen in the trade performance data, industrial production index, manufacturing PMI and employment figures,” Soh told The Malaysian Reserve recently.

He said this was supported by the second-quarter (2Q) FMM-MIER Business Conditions Survey in the second half of 2020 (2H20) that noted business activity, both local and export demand, is expected to pick up in the 1H21 compared to the 2H20.

Soh added that manufacturers are more optimistic of business recovery in 2021, albeit it continues to be cautious given that the pandemic-induced disruptions still exist with interruptions to supply chains and restrictions on mobility.

“At the same time, there is hope that with the rollout of the National Covid-19 Immunisation Programme, as well as similar programmes being undertaken worldwide, there will be some level of normality in the business sector in the later part of 2021,” he said.

However, Soh said given the sudden spike in Covid-19 cases, the industry understands the need to implement another Movement Control Order (MCO) particularly in states with higher levels of cases.

“FMM is strongly of the view that there should not be a nationwide or even statewide MCO, but instead it should be focused and implemented in targeted areas only. In particular, the MCO should not be imposed on economic sectors as the industries and businesses cannot afford another round of lockdowns that could adversely impact business performance and business recovery and possibly wipe out some industries, as well as affect the livelihood of the people,” he said.

Meanwhile, AmInvestment Bank Bhd chief economist Dr Anthony Dass said manufacturing activities are expected to remain healthy moving forward.

According to Dass, the upside movement will depend much on the number of Covid-19 cases, easing of restrictive measures, the vaccine rollout and backlogs.

“The latest manufacturing PMI data showed the economy is on track to report strong growth in April 2021. If points remain above the ‘50’ threshold for the remaining months for the 2Q of this year, supported by healthy exports, positive retail activities and a low base, the GDP is expected to report a strong double-digit growth,” he explained.

Source: The Malaysian Reserve

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