Labour uncertainty, higher costs may push foreign companies to relocate - MP

 

Foreign companies in Malaysia may be forced to relocate to nations with cheaper labour such as Indonesia or Vietnam, due to labour uncertainty and higher costs.

Special Select Committee on International Relations and Trade chairperson Wong Chen said the government must resolve matters about labour supply and costs, or risk more companies exiting Malaysia.

The Subang MP was responding to Panasonic Manufacturing Malaysia Berhad’s (PMMA) closure of two of its product manufacturing departments in Shah Alam.

“The closure of two departments in PMMA is regrettable and the government should have a quick discussion with Panasonic to get feedback on their exit decision for the two departments.

“I think the closure of the departments could be related to a global consumption slowdown and even stiffer competition. However, a constant complaint from the manufacturing industries in Malaysia over the last two years has been about the supply of foreign workers.

“If we don't resolve and make the process faster, cheaper and more transparent then labour supply may continue to become inconsistent and as such labour costs will increase,” Wong (above) told Malaysiakini.

The non-executive chairperson of the Finance Ministry's Malaysia Debt Ventures Bhd (MDV) said the government needs to assure all industries that it is fully committed to a more transparent and efficient labour policy.

Malaysia, Wong said, must also urgently improve overall governance and deliver better education so that local workers are intellectually free and creative to allow the country to pursue “higher-end manufacturing”.

“Over time, we will slowly lose out as a low labour cost centre. So the challenge now is to better prepare our workers to be able to handle higher-end manufacturing industries,” he added.

Find competitive edge

Meanwhile, Economy Minister Rafizi Ramli said Malaysia should focus on attracting investment on a different competitive edge such as green compliance and renewable energy.

Rafizi asserted that an economy where the energy mix-up is more green-compliant is more interesting.

“The decision for private companies to leave is normally part and parcel of their overall planning. When they decide to invest in Malaysia, they look at how their operations in the country can fit their specific needs.

“What we can do as a country is to focus on the higher value and for this we have to bring out and market our competitive edge.

“That means our leadership in some new sectors and that’s why green (technology) is very important because multinational corporations have to abide by green compliance requirements internationally,” he told reporters after the stakeholder session on the half-term study of the 12th Malaysia Plan with the Selangor government in Shah Alam today.

Economy Minister Rafizi Ramli

The Pandan MP said companies that would open factories in Malaysia are those that are willing to pay the salaries that the local workforce, which can produce higher services and products at a higher price, demands.

“I think as we put out more infrastructure, policies and initiatives, the industries and MNCs will recognise our new sets of competitive edge.

“While we can’t stop those who no longer fit into this high-income value chain, they will have to decide what they want to do, but we will get more who fit into this economic profile.”

PMMA plant slowdown

Earlier today, Malaysiakini reported that PMMA had shut down two departments in its SA1 plant, at Section 15, Shah Alam.

This comes amid PMMA's defeat in two lawsuits last year, where it alleged that its former suppliers, then executive director Chen Ah Huat and employees, defrauded it of millions of ringgit in payment for work that could not be verified were delivered.

A source privy to the matter divulged that Chen was made to leave in 2013, and subsequently 15 managers were also terminated.

The company also launched a zero-corruption framework emphasising transparency, integrity and whistleblowing.

Months after it lost the lawsuit, PMMA shut down its kitchen appliances manufacturing operations in its SA1 plant on March 17, affecting 75 local workers.

Sixty of those workers left on the mutual separation scheme (MSS) while 15 others were moved to other departments.

However, in its annual report, PMMA did not link the closures to the lawsuits, instead chalking it up to the Panasonic Group’s realignment of global production.

The company also cited rising labour costs and said it aims to continue adopting automation to reach “Smart Factory” status in 2030.

Last year, public-listed PMMA also relocated its rice cooker manufacturing department at the SA1 plant to India, retrenching 150 Malaysians.

“Operations (at SA1) are running at a minimum," the source said.

Over the past five years, the company laid off 689 local workers, including outsourced and temporary workers, and sent home 392 migrant workers, but also created 63 new jobs for locals in 2020, according to company reports. - Mkini