THE United States is expected to reduce its imports from Malaysia as the economy slows in the next few months.
Exports to other markets, such as Singapore and China, could also be affected, said the Federation of the Malaysian Manufacturers.Some of the Malaysian exports to Singapore are re-exported to the United States, FMM's president Tan Sri Yong Poh Kon said. The saving grace for exporters is the weakening of the ringgit against the US dollar which would make them more competitive."The decline in the price of crude oil and commodities is also encouraging, particularly if there is a concurrent review of energy prices that is reflective of market conditions," he said.
Yong said there was no sign to indicate that manufacturing companies in Malaysia would start to retrench workers.He noted there was an increase of 23 per cent in new vacancies reported to the Manpower Department in the first six months of this year compared with the same period last year. "As a precautionary measure, some of these vacancies would likely be reviewed and withheld until business conditions are clearer and more certain," he added.The 2008/2009 Economic Report estimated there are 3,369,000 employees in the manufacturing sector.Yong said based on official figures, the percentage of foreign workers in the sector could range from 20 per cent to 35 per cent. However, the numbers quoted by various quarters often seem to be much higher than the approvals given by the International Trade and Industry Ministry."FMM believes there is a huge increase in casual foreign workers because outsourcing companies have been bringing in workers without having jobs in hand," said Yong.The outsourcing companies would then offer workers to any company which requires them. "FMM has recommended to the government that the Human Resources Ministry be the only body to approve and monitor the employment of foreign workers."Yong also indicated that the Employment Act 1955 stipulates that where an employer is required to reduce his workforce due to redundancy, the employer must not terminate the services of local employees unless the services of all foreign employees employed in a similar capacity are terminated first. "As the foreign workers are normally under contract, it would be logical for companies not to renew their contracts if there is a slowdown which results in reduction of the labour force," he said.The other cost-cutting measures expected from the manufacturing sector include increasing productivity of employees through either training or retraining, and intensifying mechanisation and automation.FMM also wants the authorities to reduce the cost of utilities especially energy prices."The pump prices of petrol and diesel have come down but the manufacturing sector has yet to see similar adjustments to our energy costs," said Yong. Yong said the FMM expected the manufacturing sector to weather the difficulties ahead by exporting, as was the trend seen during the 1998 Asian financial crisis.The Congress of Unions of Employees in the Public and Civil Services (Cuepacs) said employers should not use this economic uncertainty as an excuse to retrench workers."I don't agree with the move to retrench workers just because there is a global uncertainty. I don't think it will be fair to the affected workers. If the civil services and public sectors want to cut costs by cutting back on overtime, it would not be as bad as retrenching workers," said Cuepacs president Omar Osman.He said it was not certain how the global economic crisis would affect Malaysia, so employers should think carefully before they take drastic steps .Omar said Cuepacs did not want to see employers react the way retailers responded to the rising price of oil price by automatically raising the price of goods."Now that the oil price has dropped, I don't see the price of goods falling when actually they should," he said.