Malaysian producers face difficult times in 2009

Kuala Lumpur: Malaysia's manufacturers may face a "tough year" in 2009 as the global recession cuts demand for computer chips, components and electronic goods, a trade group said after a survey of local businesses.

"Next year will be a very trying time, a tough year," Mustafa Mansur, President of the Federation of Malay-sian Manufacturers, said in an interview in Kuala Lumpur Friday. "We will feel the impact."

Four-fifths of respondents in the trade group's survey expect new orders and sales forecasts will be "strongly" or "moderately" hurt by the global recession. Malaysia on November 4 announced a 7 billion-ringgit (Dh6.97 billion) spending package for public projects to support economic growth that's set to slow to the worst pace in eight years in 2009.

Global economic outlook will worsen in the next six to 12 months, according to 82 per cent of the 113 companies surveyed last month by the Federation of Malaysian Manufacturers.

"With half the world in recession, the downside on Malaysia's manufacturing sector will be significant," said Irvin Seah, an econ-omist at DBS Group Holdings Ltd in Singapore.

He expects four straight quarters of year-on-year declines in orders, starting from the last three months of 2008. Global growth is headed for a "major downturn" next year, with US gross domestic product growth likely slowing to 0.1 per cent, the International Monetary Fund said in October. The US, Japan, Germany and the 15 European nations that use the euro are in recession.

Malaysia's government has forecast its economy to expand 3.5 per cent next year. The $181 billion economy grew at the slowest pace in three years last quarter, prompting Bank Negara Malaysia, the nation's central bank, to cut interest rates for the first time since 2003 on November 24. Exports slid in October for the first time in 15 months. "About 77 per cent of the survey's respondents said their capital investments would be negatively affected," Mustafa said.

- Bloomberg News