Facilitate localisation in mega projects, FMM urges government

KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) has called on the government to facilitate localisation in government projects, especially large-scale infrastructure projects that are being undertaken by foreign firms.
“When we have big projects undertaken by foreign contractors, we must strive to give as much as possible, multiplier effect on the country. Malaysia tends to be quite liberal in giving these contracts,” immediate past president Tan Sri Saw Choo Boon told reporters at a briefing yesterday.
“What we are asking the government is, we want to talk to these contractors to see that they benefit the local businesses as much as possible. We are not saying there must be a law to buy Malaysian even at double the price, that would be unfair,” he said.
Saw said there is a directive to buy Malaysian products first for government procurement but it is not being practised seriously as many FMM members have been sidelined for overseas companies despite offering equal quality products.
However, he applauded the government’s move in organising a business-matching session to be held on March 16, whereby contractors of projects like Forest City and railway projects will meet with local suppliers.
“The government is responding to our requests. Slowly we will get there, we cannot solve the problem overnight,” he added.
However, FMM president Tan Sri Lim Wee Chai warned that too much protection would be detrimental to the competitiveness of local manufacturers and stressed on the importance of quality and cost efficiency.
“The bottom line is quality, cost efficiency, no corruption, no favouritism; then this will make the industry more efficient. Any product or service needs good quality, cost efficiency and good delivery,” he said, urging local manufacturers to continue improving via education and training.
Lim said the government should encourage automation, computerisation and the use of Internet of Things (IoT) among local manufacturers in order to be more competitive.
The FMM-MIER Business Conditions Survey revealed that 34% of 370 respondents are automated at the 31-50% level, while 20% are at 51-100% level and almost 30% are at 1-20% level. About 13% of respondents are 21-30% automated and 3% are not automated at all.
Some of the factors hampering automation cited by respondents were high investment cost, lack of technical support, limited labour savings, difficulty in getting government incentives, too dynamic technology and difficulty in getting loans.The survey showed that Malaysian manufacturers are cautious about economic and business prospects in the first half of 2017 (1H 2017) despite recording a pick up in business activity in the second half of 2016 (2H 2016) after six consecutive bi-annual periods of low activity.
“In 2H 2016 we did very well compared with previous years. Going forward, the overall tone of the industry is cautious. At this moment, everybody is cautious due to uncertainties particularly in respect to local consumption.
“However, the government spending on infrastructure projects may help to alleviate this area of concern. If we could have foreign contractors use more local products, that will also help. The expectation is for exports to increase. It is the local consumption that is the area of concern,” Saw said.