Multi National Companies Shutting Down In Malaysia

Here is more news about factories owned by multi national corporations that have or are shutting down. 

popular Korean BBQ chain Bulgogi Brothers shut down

Michelin-star-awarded restaurant Tim Ho Wan shut down

people have begun to ask, "Who is next?"

not just F&B businesses pulled out of Malaysian market

foreign companies from different industries (finance, insurance) exited recently

last year Royal Bank of Scotland (RBS) wind down 

after more than 120 years operating in the country 

Manulife Global shut down its technology department in Malaysia.

some major global companies have shut down manufacturing plants 

retrenched workers in the last two years.

11 companies announced closure of factories in Malaysia in the last two years:

1. Japan Tobacco International (JTI)

close plant in Shah Alam by end 2017. 

cigarette brands such as Mevius, Winston and Camel.
270 staff laid off 
Why closing : "extremely challenging operating environment".
relocating to other JTI production facilities.


2. Rubicon Technology Inc

based in US

plant at Prai cease operations 30 Nov 2016 

Why closed : To focus on optical and industrial sapphire market.


3. Suzuki Motor Corporation

Aug 2016 Suzuki closed motorcycle assembly plant at Prai in Penang.
Why closed : Weak market demand.
relocating to Japan

4. Seagate Technology Plc

close 2 manufacturing facilities in Penang, NS by end 2017. 

3,000 Malaysian staff at Penang facility.
Why closing : to reduce cost structure.
relocating to Korat, Thailand

 

5. British American Tobacco (BAT)

announced March 2016 close factory in Petaling Jaya, Selangor 

manufactures Dunhill and Rothmans cigarettes

lay off 230 staff in the process.
Why closing : Falling sales due to high duties; illegal cigarettes.
relocating to other BAT Group factories

 

6. Samsung

Feb 2016, Samsung closed TV mnfctrng plant in Seremban

620 employees affected 

Why closed : Challenging business environment etc

 
7. Western Digital Corp (WD)
 

close Bayan Lepas plant in Penang in March 2016. 

450 employees affected 
Why closed : To integrate business.
relocated  to Johor (according to The Edge Property)


8. Amphenol Corp

US firm, comm equipment, closed in Penang 31 Oct 2015. 

affected 150 workers.
Why closed : revenue from Malaysia declined
relocated to China


9. Fairchild Semiconductor International Inc

oldest semiconductor multinational set up in Penang in 1972.  

July 2015 Fairchild  close in Bayan Lepas, Penang.
around 1,000 people retrenched.
Why closed : manufacturing realigning exercise.

10. STR Holdings Inc

US-based STR closed effective 2 Aug 2015.
Why closed : Underutilisation, increasing costs in Malaysia following (GST) etc

relocating to Spain and China facilities


11. SunEdison Semiconductor Ltd.

US-based cease operations in Ipoh end 2016. 

650 staff affected by exercise.
Why closed : improve quality, lower costs, and maximise utilisation.
relocating to other existing plants

My comments :   

Bear in mind, in Malaysia it is always race, race and race.

 

People say different things why businesses are shutting down. Some say low wages in Malaysia cannot sustain high purchasing power etc. 

My answer is we have always had low wages in Malaysia. Yet Malaysia has been a haven for thousands of foreign companies for decades.  The low wage argument does not hold well.  

Despite the low wages, for decades the prices of goods at the supermarkets reflected the wage levels in Malaysia.

Things are going south AFTER 2014. That is when the GST was implemented.

Others say that other countries also have GST or VAT. Yes but in other countries the GST and the VAT affects everyone equally.

It is not the same in Malaysia.  Here it is race, race, race.

The largest consumer base in Malaysia are the Malays and bumiputras.  In Malaysia the Malays and bumiputras still need the NEP. They depend on the govt handout system.  And a vast majority of them are wage earners or salary earners with fixed monthly incomes.   

This means their purchasing power is easily dented by higher costs of living (aka price increases aka inflation).  15% price hike simple means their purchasing

The GST has caused prices to increase by at least 15%.  That was the immediate impact when GST was implemented in 2014. It should have tapered off by now. However prices are still increasing.  Also caused by a falling Ringgit and fluctuating fuel prices. This has severely impacted Malay/bumiputra purchasing power.

The non Malays, very largely make up the business classes and the entrepreneurs. A large number are also wage earners but there are also substantial numbers whose incomes come from revenues - business revenue, trading revenue etc. This means they can "pass through" higher costs to their customers (through higher prices).  They are business people.  

But higher prices means less sales. So they suffer as well. Hence so many restaurants and businesses are shutting down.  But in the long run the nons will find ways to overcome this. Already they are multiplying Malaysia's exports. 

If the Malays / bumiputras cannot afford the goods and services produced by the non Malays, the nons will just have to find new markets, overseas to sell their output.  It is as simple as that. This is already happening.

More will live in super condos with high walls.

More will not.