Nov 30, 2012

Malaysia - FMM: Local firms should look at developing stronger Asean trade links

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PETALING JAYA: Opportunities in Asean trade abound and should be the focus of local exporters.

They should look at developing stronger Asean trade links as the region continued to grow, said Federation of Malaysian Manufacturers (FMM) president Tan Sri Yong Poh Kon.

He said the global sentiments were largely affected by the persistent negative impact from Europe while China's growth numbers did not inspire.

He urged manufacturers to be less reliant on traditional export markets and look at the new countries to enter.

“The United States used to be our largest export destination but now, it is Asean,” he told reporters after FMM's 44th AGM here yesterday.

Yong believed that Malaysian manufacturers should push for better links with the Asean neighbours.

“We should not only export our manufacturing products but services too, for example, those who run architect or legal firms should begin their practices in other Asean countries.”

According to data collected by FMM and the Malaysian Institute of Economic Research Business Conditions Survey going forward, the Business Conditions Index was lower at 88.9 points compared to 96.8 points six months ago, with 100 points being the growth-neutral threshold level.

“Judging from the response, they don't seem to be as gungho as before about their business outlook currently and for the first half of next year,” he said.

The survey recorded 101.1 points for the outlook on the next six months, 19.1 points down from the 120.2 points in May. The expected local and export sales indices went down as well.

The index was reflective of the latest JPMorgan Global Manufacturing PMI report, stating that global manufacturing contracted for a fifth consecutive month in October.

On the local currency, manufacturers were largely comfortable with the current strength of the ringgit.

“They felt that the current level is just right. It is not volatile which is good for exporters,” he said, adding: “If the ringgit strengthened too fast, it will make them less competitiveness than other countries, hence affecting their export proceeds.”

On the goods and services tax the survey found that only 4.7% of the respondents indicated they were set and ready for the implementation and 6.7% are in the upgrading process of their accounting software.

“I don't think most of them will invest in computer system upgrades yet because it is still not a definitive policy,” Yong said.

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