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RCEP: A UNIFYING SET OF RULES

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JAN - MAR 2021 w w w . fmm.or g.my KDN NO.PP 16730/08/2012 (030376) BUSINESS IN ACTION @ FMM

EDITORIAL ON THE COVER

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Dr Yeoh Oon Tean www.fmm.org.my www.fb.com/fmm.org.my Editorial Team Manager Mohd Af s Mohamad Advertising Enquiries Mohd Af s / Sammy Phuah Senior Executive [email protected] Natalie Ng +603-6286 7376 / 7211 C

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Y Paul & Marigold Federation of Malaysian RCEP: A UNIFYING SET OF Manufacturers (7907-X) CM www.paulandmarigold.com RULES What the formation of Wisma FMM the world’s biggest trade bloc MY Editor (NM Fernandez) No 3, Persiaran Dagang, PJU 9 means for Malaysia CY Creative Director (Huda Ali) Bandar Sri Damansara CMY Senior Designer (Nina Elysa) 52200 Kuala Lumpur +603-62867200 K Contributors +603-62741266/7288 Mila Lee Liza Chan Printed by Percetakan Zanders Sdn Bhd Editorial Enquiries No 16, Jalan BK1/11 [email protected] Bandar Kinrara 47180 Puchong Selangor Darul Ehsan

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JAN - MAR 2021 w w w . fmm.or g.my KDN NO.PP 16730/08/2012 (030376) BUSINESS IN ACTION @ FMM

EDITORIAL ON THE COVER

JAN- MAR 2021 w w w . fmm.or g.my KDN NO.PP 16730/08/2012 (030376) Advisor Follow us on BUSINESS IN ACTION @ FMM Dr Yeoh Oon Tean www.fmm.org.my www.fb.com/fmm.org.my Editorial Team Manager Mohd Af s Mohamad Advertising Enquiries Mohd Af s / Sammy Phuah Senior Executive [email protected] Natalie Ng +603-6286 7376 / 7211 C RCEP: A UNIFYING SET OF RULES M Editorial & Design Published by

FMM Branches Kedah/Perlis, Penang, Perak, Selangor and Kuala Lumpur, Negeri Sembilan, Melaka, Johor, Eastern (Pahang, Kelantan & Terengganu), Sarawak and Sabah

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A STEADFAST COMMITMENT TO GROWTH

The outlook on economic recovery is one of optimism, as a momentous trade agreement will soon come into force. Leaders from 15 Asia-Pacific nations signed the Regional Comprehensive Economic Partnership (RCEP) agreement in November of last year, bringing to a close nearly eight years of negotiations. The 15 RCEP partner nations – ASEAN member countries, Australia, China, Japan, New Zealand, and the Republic of Korea - have an estimated GDP of RM10.43 trillion, accounting for about 29% of the world’s GDP and making up 30% of the world’s population. FMM is a strong advocate of the agreement, as we believe that the RCEP will contribute significantly to Malaysian companies towards their post-pandemic recovery by stabilising manufacturing production as well as diversifying and sustaining supply chain connectivity within the region. The signing was timely for local businesses, as under the RCEP, the existing ASEAN Plus One FTAs will be streamlined while gaps in the existing agreements will be managed to create a highly competitive landscape. The RCEP and what it means for Malaysian companies as a whole is outlined in this edition’s cover story, with a detailed focus on manufacturing. This edition will also focus on the specific s we move cautiously into the second quarter approaches’ companies can take to upskill and of 2021, many are undoubtedly still recovering reskill their workforce, be it in the areas of training A from unprecedented circumstances forced upon and development, technology or marketing. them by the ramifications of the COVID-19 pandemic. The road to recovery is an uphill battle, and the For the second time around, a movement control future is an uncertain one, yet I remain confident that order to curb the spread of COVID-19 was put we are up for the challenge. in place in January which affected almost the As we continue to adapt to business operations in the entire country, yet the announcement has given new normal, let us continue to support one another the reassurance to the manufacturing sector that as we work towards an eventual return to positive their operations could continue to operate with growth and complete recovery. stringent compliance to the comprehensive Standard Operating Procedures (SOPs). Sincerely, Despite these bleak states of affairs, it is worth noting our nation’s resilience in overcoming challenges, Tan Sri Dato’ Soh Thian Lai adapting to changes and to continue to strive in the President face of adversity. Federation of Malaysian Manufacturers

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COVER STORY RCEP: A UNIFYING SET OF RULES

What the formation of the world’s biggest trade bloc means for Malaysia

06 18 AT A GLANCE TECHNOLOGY & DIGITALISATION A POSITIVE OUTLOOK EMBRACING 3D PRINTING ON A LARGER SCALE IN MALAYSIA As the first quarter of 2021 draws to a close, the general Additive manufacturing is fast becoming the way outlook on the industry is one forward in various industries. of positivity. 16 14 BUSINESS CONTINUITY & SUSTAINABILITY BRANDING & MARKETING THE ROAD AHEAD DRIVING BUSINESS GROWTH THROUGH DIGITAL It has been a year since the STRATEGIES implementation of the initial Movement Control Order To improve leads and sales, (MCO) and many businesses manufacturing companies have undeniably struggled should make digital marketing to regain their footing since a priority then.

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OUTLOOK M M W W

s the first quarter of 2021 draws to a close, the general outlook on the industry is one of positivity. In A Asia, China leads the Asia-Pacific (APAC) recovery which saw industrial output growth strengthen during the second half of 2020. IHS Markit APAC Manufacturing Purchasing Managers’ Index (PMI) data for January 2021 showed that manufacturing production in recent months had improved, suggesting that there would be positive growth in manufacturing output in the months to come. As lockdowns ease and COVID-19 cases stabilise in many countries, substantial recovery is on the horizon across the region. Predictions for manufacturing production in coming months within the APAC region are aligned with the rapid economic growth worldwide, at a pace of around 5% year-on-year (y/y). The GDP growth outlook for APAC is expected to surpass that, at around 5.8% y/y, a key driver being China’s economic growth at around 7.6% y/y in 2021. The top five manufacturing industries that led the IHS Markit Asia Industry PMI rankings in January 2021 were as follows: automobiles & auto parts; household & personal use products; machinery & equipment; metals & mining and chemicals; and construction materials. In Japan, both output and new orders expanded at the fastest rate since December 2018, recording positive growth in new export orders as well, as the Flash Au Jibun Japan Manufacturing PMI rose from 49.8 in January to 50.6 in February. Early 2021 saw South Korea’s manufacturing sector output reflecting positive growth with seasonally adjusted South Korea Manufacturing PMI rising to 53.2 in January from 52.9 in December. In India, companies have increased output at a faster pace in response to rapid expansions in total sales and new export orders. Manufacturing in the US continued to recover in early 2021, based on evidence of a pickup in demand for goods. The Institute for Supply Management’s manufacturing index remained in growth mode, from 58.7 to 60.5. (A reading above 50 indicates an expansion of activity in the manufacturing sector)

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At the end of 2020, Germany The job market remains uncertain emerged top in European in all sectors, and manufacturing manufacturing as Euro-area trends in staffing will evolve based manufacturing grew more than on the demands of safety measures it has in over two-and-a-half- in 2021. years. Based on IHS Markit’s Manufacturers have experienced monthly surveys, growth was led disruption across the board in by Germany and a temporary varying degrees, from reducing increase in demand from the staff in the non-essential goods United Kingdom indicated sector, to adding product lines and customers were stockpiling increasing production as well as leading up to the end of the Brexit increasing workers to supply goods transition period. like personal protective equipment While Euro-area factories have (PPE). adapted well to the challenges, Overall, companies will be looking it was reported in February to hire personnel in the IT and data 2021 that services were facing analysis areas of expertise. roadblocks with lockdowns and supply constraints as well as trade In 2021, experts predict that bottlenecks. assistive technologies supported by video, virtual and augmented Input costs are at their highest in reality will be given a boost. Many nearly a decade, thanks to almost manufacturers who deal in on-site all-time high delivery delays. installation and equipment repairs were impacted by movement TOP TREND PREDICTIONS control regulations. FOR 2021 Technologies such as video Health and safety have taken top conferencing and virtual or priority in making plans for the augmented reality will enable future, with manufacturers taking technicians to talk their customers numerous measures to incorporate through basic troubleshooting and safety precautions while ensuring servicing tasks and demonstrate operations run smoothly. visually via portable devices. In addition to basic safety These may signal the future of field precautions, physical distancing servicing, and is a trend to look as well as constant sanitisation out for this year as globally, more of workplaces will have to be and more people begin relying on implemented. digital connectivity.

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Industry applauds national immunisation programme As 2021 moves into its second quarter, the vaccines for COVID-19 is on everyone’s minds. The Federation of Malaysian Manufacturers (FMM) expressed its support for the government on the national immunisation policy announced by the Prime Minister Tan Sri Muhyiddin Yassin in mid- February. FMM has called on members in the industry to give their full cooperation and support to the National COVID-19 Immunisation Programme as it is rolled out in phases. In his statement, FMM President Tan Sri Dato’ Soh Thian Lai thanked the government for the comprehensive policy and programme that will help break the chain of infections and eventually end the pandemic. This will ensure that in time, economic recovery will be sped up and businesses will resume regular operations. “We also note that steps would be taken to tackle the undocumented foreign workers in the country given that this group is a big COVID-19 threat and risk to the nation and would impact the effectiveness of the immunisation programme if not addressed,” he said in his statement. “The industry will continue to play its part in this fight against COVID-19, and each and every one of us have the collective responsibility to support the government’s continued efforts in fighting the COVID-19 pandemic, in particular to have 80% of the population inoculated, towards ensuring the wellbeing of the rakyat and in rejuvenating the nation’s economy.” Positive outlook for employment As businesses grapple with heavy losses and concerns over unemployment loom, the National Employment Council (NEC) met for the second time on February 9. The Council, of which FMM President Tan Sri Dato’ Soh Thian Lai is appointed as a member, was set up to execute the strategies to create and preserve jobs in line with the first objective of Budget 2021, which is “People’s Wellbeing”. Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz estimated that more than 160,000 new jobs will be created this year through committed investments. “It is hoped that through the joint efforts of all parties involved, the unemployment rate of 4.8% recorded at end-December 2020 can be

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Foreign investments on the horizon A total of 240 high-profile foreign investment projects in the manufacturing and services sectors have been identified by the Malaysian Investment Development Authority (MIDA), with a combined potential investment value of RM81.9 billion. MIDA said that it had received and evaluated RM47.7 billion worth of potential investments which once approved, will likely be implemented this year or next. MIDA added that that while the foreign direct investment (FDI) landscape has and will continue to pose challenges, it is highly competitive and accelerating investments is an important priority to recover Malaysia’s growth. Under the National Economic Recovery Plan (Penjana), among the tax incentives to spur investment activity were 10-15 year tax exemption for new FDI in the manufacturing sector, with capital investment of RM300 million or more. MIDA said initiatives include the implementation of the Project Acceleration and Coordination Unit (PACU) and various platforms such as i-Incentive to accelerate the realisation of investments.

reduced in the coming months, especially with the government’s ongoing efforts such as the MyFutureJobs portal https://www.myfuturejobs. gov.my/ and the Ministry of Human Resources’ e-LATiH platform https://latih.hrdf.com.my/,” he said. The government has also approved RM12.76 billion of applications for the Wage Subsidy Programme 1.0 (WSP 1.0) as of January 29, according to Tengku Zafrul. He also said that 322,177 employers and 2.64 million employees have received WSP benefits under the Prihatin Rakyat Economic Stimulus Package (Prihatin) and the National Economic Recovery Plan (Penjana). As for WSP 2.0 under Kita Prihatin, RM741.16 million has been channelled to 64,345 employers to enable them to continue operating and maintain 518,793 employees.

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FMM_BIA_Jan-Mac2021_FINAL-gutter.indd 10 08/04/2021 4:25 PM Business in Action @ FMM JAN - MAR 2021 COVER STORY 11 RCEP: A UNIFY ING What the formation of the world’s SET OF RULES biggest trade bloc means for Malaysia

owards the end of 2020 as the however are permitted to retain tariffs world reeled from the effects of for imports in sectors that are considered T the global COVID-19 pandemic, a as important or sensitive. piece of exciting news hit headlines as a The agreement also lays out common landmark agreement was signed. standards for goods to be included Leaders from 15 Asia-Pacific nations under the RCEP for preferential tariff signed the Regional Comprehensive treatment. Its advantage over the many Economic Partnership (RCEP) existing bilateral FTAs is that the RCEP agreement, nearly eight years from allows manufacturers to source for when negotiations began for the trade parts from participating parties while and investment accord. adhering to the rules of origin without incurring tariffs under a bilateral FTA. The momentous occasion took place virtually on November 15, 2020, during It aims at becoming a unifying set of an RCEP Leaders’ Summit that coincided rules to help facilitate the development with the 37th ASEAN Summit. of regional supply chains among parties, and will enter into force 60 The 15 countries involved include the 10 days after six ASEAN member states Association of Southeast Asian Nations and three non-ASEAN member states (ASEAN) member countries as well as have ratified the agreement. five of their free trade agreement (FTA) partners – Australia, China, Japan, New The Federation of Malaysian Zealand, and the Republic of Korea. Manufacturers (FMM) applauded the signing, noting that apart from the Representing the largest trading bloc to lowering of trade barriers, it will help date, RCEP represents 30% of the global attract foreign companies keen on population, 26% of global exports, 25% entering an integrated ASEAN market. of global imports and 29% of global gross domestic product (GDP) in 2019. FMM President Tan Sri Dato’ Soh Thian Lai said the RCEP will greatly contribute The agreement aims at producing an to the country’s post-pandemic recovery integrated market that will ease the by creating resilient supply chains. provision of goods and services by each member nation zeroing in on “FMM is a strong advocate of the RCEP trade, investment, intellectual property, agreement. We have always maintained e-commerce, small and medium that RCEP will contribute significantly enterprises (SMEs) and economic to Malaysian companies to improve cooperation. market access, participate in new value chains, increase economic activities, A comprehensive agreement, the RCEP and strengthen supply chain links across spans 20 chapters and covers many Asia. areas not included in the existing FTAs between ASEAN countries and its “Although Malaysia has implemented dialogue partners, and it intends to regional FTAs with China, South Korea, boost competition in a way that drives Japan, Australia and New Zealand productivity. through ASEAN, RCEP will see the integration of the ASEAN Plus One It primarily aims to eliminate a range FTAs into a single and more cohesive of tariffs on imports, specifically for trade and investment architecture in the goods that already qualify for duty-free region. treatment under existing FTAs. Countries

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of the global of global RCEP 30% population, 26% exports, represents

of global of global gross domestic 25% imports and 29% product (GDP) in 2019

He added that the November 15, capture a bigger market share beyond 2020 signing of the agreement was Malaysia’s borders, through the RCEP. very timely for Malaysian businesses, “The 15 RCEP member countries have as under the RCEP, the existing ASEAN an estimated GDP of US$25.8 trillion Plus One FTAs will be streamlined and (RM10.43 trillion), accounting for about greater market access commitments 29% of world GDP and making up 30% will be made while gaps in the existing of the world’s population. This makes agreements will be reduced to create a RCEP the largest trading bloc in the highly competitive economic area. world by GDP size,” said Dr Juita, in an “This agreement will enhance interview with BIA. transparency in trade and investment. “With such a large market, the The trade pact will also facilitate manufacturing sector may be able to technical cooperation with advanced capture a bigger market share beyond industrialised countries like Japan, Malaysia’s borders. The manufacturing South Korea, New Zealand and sector may also benefi t from the Australia which will assist Malaysian lowered tariffs and the elimination of small and medium enterprises (SMEs) in non-tariff barriers, making importing developing better and more competitive intermediaries or raw materials much products to enable their greater easier at a lower cost.” inclusion in global and regional supply chains. Many are hopeful that the RCEP will help drive regional economic integration “With the unprecedented challenges as countries slowly begin offsetting posed by COVID-19, it is imperative to inward-looking policies in the midst of stabilise manufacturing production while curbing the spread of the virus. sustaining and diversifying supply chain connectivity within the region. “With the rise of protectionism and trade tensions in the past few years “FMM believes the RCEP will greatly compounded by the spread of the contribute to the country’s post- pandemic, the fi nalisation and signing pandemic recovery by creating resilient of RCEP was a strong signal by member supply chains,” he said, urging ASEAN countries to continue their commitments members to ensure ratifi cation by all towards further regional integration and its signatories to ensure that the RCEP trade reforms in the Asia-Pacifi c region,” comes into full force at the earliest she opined. possible time. While the ratifi cation process is still A POSITIVE OUTLOOK ON THE underway, Dr Juita foresees some bumps FUTURE in the road ahead for some countries. According to Dr Juita Mohamad, “The ratifi cation process might be a Fellow in the Economics, Trade challenging for different countries as and Regional Integration (ETRI) new and upgraded bills and laws need Division of Institute of Strategic and to be passed at the national level. International Studies (ISIS) Malaysia, the This process might be hindered by the manufacturing sector may be able to change in government and its priorities down the line,” she opined. Business in Action @ FMM JAN - MAR 2021 COVER STORY 13

“There is also the pressure to ratify the cannot take part in the global value Long term, the RCEP has great potential agreement for member countries. This is chains then the RCEP’s benefi ts will not to impact the global economy positively. because the fi rst movers will reap bigger trickle down to the grassroots level,” said “In the long run, I hope that the welfare gains compared to late-comers. Dr Juita. RCEP will be upgraded in its depth This was true for the CPTPP.” The signing of the RCEP is indicative of of commitment to include other Close to home, the process of ensuring a greater need for regional integration non-traditional provisions such as that the RCEP proves benefi cial to all and will pave the way for ASEAN to environment, labour and the like. Only parties lies in part with the Malaysian have more of a voice on the global when such a comprehensive trade deal government. stage. is created can we have growth with minimal impact to our environment while “The government needs to ensure that “RCEP has signalled that ASEAN still safeguarding our workers at home and there is a level playing fi eld between the believes in regional cooperation and abroad,” said Dr Juita. bigger fi rms and the SMEs. If the SMEs small and middle economies are able to come together to cooperate even during The integration of regional economies the pandemic. It signals that you do not under the RCEP is expected to lead to have to be big, to be winners,” added increased foreign investment amongst its Dr Juita. participants and from companies based outside the trade bloc hoping to take advantage of the RCEP to increase their presence in the region. It also includes investment-friendly provisions such as investor aftercare (which includes dispute resolution) and intellectual property protection provisions. Business in Action @ FMM 14 BRANDING & MARKETING JAN - MAR 2021

here’s no denying that in this day and age, digital marketing is the T road ahead for many businesses. DRIVING BUSINESS Malaysia’s economy - as well as businesses around the world - has taken a hit due to the COVID-19 pandemic. GROWTH And with the ensuing movement control order, many consumers have turned to online sales instead of shopping at their favourite brick and mortar stores.

THROUGH E-SHOPPING IS CONVENIENT AND SAFER AMID THE PANDEMIC While some manufacturing companies have not fully embraced digital DIGITAL marketing, Advend Group of Companies chief executive officer Santharuban Thurai Sundaram said in an interview with BIA that going digital STRATEGIES is the way forward for companies to improve sales. “Digital marketing was once an option To improve leads and sales, to explore but today it is a key priority, especially with COVID-19 and restricted movements imposed. People are staying manufacturing companies should indoors and are online more frequently. This makes digital platforms the perfect make digital marketing a priority avenue to reach consumers. Companies

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can reach an enormous audience in “For marketers, it can keep data at the marketing execution, Pramodh a way that is both cost-effective and center of everything they do. With data, explained. measurable,” he explained. they can segment and target audiences “Marketers today are constantly flawlessly with a complete view of Pramodh Menon, the account director inundated with fresh ideas, new each customer. The servicing team will for advertising agency Misteeq Media platforms to promote their businesses, be able to understand the complete agrees, stating digital marketing is and new technology to take advantage. history of each customer to create a essential to any organisation’s marketing While these innovations are often more personalised service experience,” strategy. exciting and beneficial, keeping up explained Pramodh. with the changes can quickly become “Digital marketing is a valuable asset to overwhelming for marketers. business growth and it helps to establish KEEPING UP WITH TIMES a robust online presence. Based on “Although still viable, businesses In the past, many manufacturing DataReportal’s Digital 2021 Report, we can no longer rely on traditional companies relied on tactics like direct have 5.22 billion unique mobile phone marketing tactics alone. Search engine mail, trade shows and telemarketing. users with 4.66 billion Internet users and optimisations and cold calls may have However, these methods do not yield the 4.20 billion active social media users worked in the early 2000s, but today, same results these days, Santharuban globally. The Internet has become an you have to market to people’s search said. integral part of everyday life to conduct intentions instead of search engine searches, browse social media, and “Technologies and marketing techniques keywords. purchase products online. have evolved by leaps and bounds. Santharuban said companies should Things have changed over the years “Your customers are online, which evaluate their business needs and match with programmatic advertising. highlights the importance of digital it with the available tools online. Do not marketing. They are browsing the web “We now have an option to jump on the digital bandwagon without looking for your products or services. target customers in highly specific knowing how to implement a holistic There are conversations happening demographics - such as field of work, digital marketing strategy, he advised. online. If you choose to not be a part occupation, and area of interest - “The inadequate understanding of of it, then you risk losing those leads to without knowing them in advance. This business objectives have become the your competitors,” said Pramodh via an saves cost and time.” biggest challenge for companies to email exchange with BIA. The marketing expert added that digital produce useful leads. In the last five advertising should be the primary focus years, digital marketing has shifted the BUILDING AUDIENCE PERSONAS for marketers. entire landscape on ways to drive a Pramodh thinks manufacturing business. “Facebook continues to take the lead as companies can benefit with a proper the most used platform that almost all “Instant communication and interacting Customer Relationship Management businesses can advertise.” with potential customers have become (CRM) strategy that is attuned with like spinning a roulette wheel. Social digital marketing. SETTING CLEAR GOALS media acts as the wheel itself; it “It is crucial for internal teams to provides a channel to promote products, While digital marketing is a powerful work together to support the inbound services and drive interaction. growth driver, some manufacturing experience throughout the buyers’ companies still face a fair share The bottom line is with the right digital journey. The alignment and process of hurdles to promote their goods. marketing strategies, companies can get efficiencies lead to less friction and It includes implementing outdated a bigger return from their investment. positive experiences that your customers marketing strategies on their digital will ultimately go through. Without any doubt, you will be closing deals and growing your business in the coming years. He advises companies to invest in a CRM system to manage customers’ databases. CRM is a process of managing interactions with existing, past and potential customers. “The misconception is that a CRM system is an after-sales tool that manages existing customers. A proper CRM system integrates marketing, sales and services. It helps with data collection and management, reporting, automation, messaging and content creation.

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THE ROAD AHEAD T has been a year since the implementation of the initial Movement Control Order (MCO) and many businesses have undeniably struggled to regain their I footing since then. On top of addressing the economic crisis that has cascaded onto a global scale, the Malaysian government has on numerous occasions stepped in to alleviate the financial impact suffered by businesses and industries bearing the brunt of the pandemic. According to the 1H2020 Business Conditions Survey by the Federation of Malaysian Manufacturers-Malaysian Institute of Economic Research (FMM-MIER) last year, nearly 40% of Malaysian manufacturers said their businesses would only be sustainable for less than a year.

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38.9% said they could not sustain their The programme now allows applicants targeted moratorium, of which 98% had business for the next 12 months after who do not meet the minimum been approved. He explained that the revenues plummeted due to COVID-19. contribution conditions or those whose applicants were mainly individuals who contracts were not extended after having had lost their jobs and businesses in The government has introduced five been renewed for at least three times sectors that are still heavily affected by economic stimulus packages worth previously to apply for the assistance at the ongoing pandemic. RM320 billion to date, believing that a rate of 30% of their monthly salary for such direct fiscal injection can be “Of the approved applications, 60% a period of three months. effective in increasing liquidity and were for reduction in monthly instalment business transactions in the market. As of December 3 last year, a total payments. These applicants were mainly of 101,385 people have applied for borrowers whose salaries had been Earlier this year, Prime Minister Tan Sri the EIS assistance and 52% of the deducted,” he shared. Muhyiddin Yassin announced the Permai applicants were those with monthly Assistance Package (Permai) worth Also lending its support is the Human incomes of RM2,000 and below. RM15 billion which includes the Wage Resources Ministry which granted levy Subsidy Programme 3.0 that is open In an interview with the News Straits exemption to all Human Resources to employers operating within states Times, Sunway University Business Development Fund (HRDF) registered placed under the MCO. School economics Professor Dr Yeah employers. All HRDF registered Kim Leng shared that the latest Permai employers within three key economic Regardless of sector, eligible employees package would benefit distressed sectors namely manufacturing, services, are allowed to receive, for a period households and small and medium mining and quarrying, with 10 or more of one month, a wage subsidy of enterprises. Dr Yeah said that the employees contributed 1% of their total RM600 for employees who earn less government’s relief and support monthly payroll to the HRDF levy. Since than RM4,000 a month. The previous measures namely the expanded April last year, more than 30,000 of the wage subsidy limit for employees was Wage Subsidy Programme and said employers automatically enjoyed a increased from 200 to 500 for each grants for SMEs, extension of loan six-month exemption that was part of the employer. guarantee facility to foreign firms could government’s effort to reduce employers’ The Federation of Malaysian substantially reduce the economic financial burden during the pandemic Manufacturers (FMM) President Tan burden due to the MCOs. while sustaining the domestic labour Sri Dato’ Soh Thian Lai in a statement market. In an article which ran on The Star said that manufacturers are hoping online in November, on the topic of More such efforts by the government that the government would extend the reducing burdens, many business are welcomed to keep many industries programme from the one month period proprietors welcomed the targeted and businesses afloat. For now, the announced. moratorium that went into effect in companies must take advantage of the “While we welcome the Wage Subsidy October last year. Speaking at the reliefs at hand to ensure that they can Programme 3.0 which has been Dewan Rakyat, Finance Deputy Minister I emerge from this pandemic intact and extended to cover 500 employees Datuk Abd Rahim Bakri said that there with minimal damage. in a company for one month, the were 650,000 applications for the FMM hopes for it to be extended for three months since there would be a cascading impact on businesses when they resume operations after the MCO,” he said. The newly announced Permai package provides respite for various sectors reeling from the consecutive MCOs since last March, with more companies warning possible further retrenchments this year. As for Wage Subsidy Programme 2.0, RM741.16 million has been distributed to 64,345 employers enabling them to continue operating their businesses while still securing the jobs of 518,793 employees. Malaysians who had lost their jobs during the MCO period can seek relief from the Employment Insurance System (EIS) programme, which conditions were relaxed under the Permai package.

FMM_BIA_Jan-Mac2021_FINAL.indd 17 06/04/2021 3:28 PM Business in Action @ FMM 18 TECHNOLOGY & DIGITALISATION JAN - MAR 2021 EMBRACING 3D PRINTING ON A LARGER SCALE IN MALAYSIA Additive manufacturing is fast becoming the way forward in various industries

At the 2015 World Economic Forum’s Global Agenda Council on the Future of Software and Society, it was forecasted that by 2025, 5% of all consumer products will be made using 3D printers. It was also predicted that additive manufacturing would be so advanced that the transplant of a 3D-printed liver could happen by then. Foreshadowing the future, the current COVID-19 pandemic has made clear the importance of 3D printing in the medical field as the technology can, and has been successfully, used to save lives. A group of engineers at Johns Hopkins University in the United States had developed a 3D-printed part that allows multiple patients to use a single ventilator simultaneously, in their effort to overcome the shortage of medical equipment.

dditive manufacturing has become a key component in various A industries worldwide, radically altering how companies conceptualise, design and produce their products. Better known as 3D printing, the use of this revolutionary technology is becoming increasingly widespread thanks to its advantages over traditional manufacturing techniques. Reported to have the ability to halve costs while delivering twice the performance, 3D printing has been a staple at various companies for years to increase production namely at GE (for jet engines, medical devices and home appliance parts), Lockheed Martin and Boeing (for aerospace and defence), Google (for consumer electronics, Invisalign (for dental devices) and more.

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On the local front, a team of lecturers The surgery, which was conducted purposes. However, its full potential is from Universiti Sains Islam Malaysia at the Avisena Specialist Hospital in yet to be fully explored, he said. (USIM) produced face shields for Shah Alam, Selangor in December “It is vital for our country to adapt the distribution to healthcare workers during last year was reportedly the first technology to remain competitive in the COVID-19 pandemic. The team surgery of its kind in South-East Asia. the current global economy. Additive utilised 3D printing machines to develop Additionally, the technology’s manufacturing is now recognised as a the personal protective equipment (PPE) environmental sustainability is also crucial part of Malaysia’s future in the to be distributed to Ampang Hospital a major selling point as detailed 10-10 Malaysian Science, Technology, in Kuala Lumpur and Tuanku Ja’afar by a 2013 Michigan Technological Innovation and Economy (MySTIE) Hospital in Negeri Sembilan. University study. It showed that 41- Framework (4D/5D printing). This has The effort was led by USIM’s Applied 64% less energy was used to 3D print spurred more local companies and Physics lecturer Dr Mohd Ifwat an item, as opposed to manufacturing government agencies to utilise 3D Mohd Ghazali who stressed that this it overseas and shipping it to the printing in their research as well as for technology is applicable in almost all US. The green impact was also commercial products,” he explained. industries, and is highly sought after in quantifiable with lower carbon Apart from the automotive, medical, the medical field. dioxide emissions from the process dental and aviation industries, Mohd as well as lower energy consumption “3D printing has a plethora of potential Ifwat identifies several other fields in over the lifecycle of a product. in the medical field, from customising Malaysia that can benefit from 3D medical parts based on patients’ needs Plastics and metals namely titanium, printing. “Those in the food industry to application in education for the aluminium and stainless steels are can customise ingredients, have the students. Doctors can even use it for a not the only material that can be freedom to design and create a variety medical simulator to mimic surgeries. Its utilised for 3D printing as those of textures using a single tool, whereby cost-effectiveness as well as its ability to employing the technique can increase the fashion industry can benefit from produce bio-compatible products are also its green ability by using a variety creating personalised designs and major selling points in this area,” said of sustainable and environmentally fast prototyping. Both industries will Dr Ifwat in an email interview with BIA. friendly feedstocks such as post- also benefit from less wastage of raw consumer single use plastics, spent materials,” he added. Mohd Ifwat cited another example of coffee grounds and even algae. 3D printing in the medical field in which In essence, 3D printing has many Dr Firdaus Hanapiah, a consultant oral Although 3D printing appears to be a advantages for companies to readily and maxillofacial surgeon, successfully relatively new technology in Malaysia, embrace the technology with possible conducted a mandibular replacement Mohd Ifwat says that it has in fact savings in inventory and facility costs surgery with custom made 3D printed been around for several decades, making the adoption even more titanium mandible implant. adding that some local companies attractive. It is clear that this technology have on a small scale used it as a is here to stay, and is best approached tool for research and educational with open arms and fast.

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IMPROVING EMPLOYEE PERFORMANCE Training and development for employees are paramount in determining the success of an organisation

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“When HSES is the core value of the organisation, training and production demands will be managed accordingly. In most organisations, employees cannot commence work until they are given the essential HSES and operational training. This is to ensure work is carried out safely and productivity achieved,” said Jane, who works at a pipe coating facility in Kuantan. While technical training skills are essential, Jane explained that organisations should focus on critical mployees who are motivated and that 94% of employees would stay thinking skills too. respected will strive harder to longer in companies willing to invest in E achieve their goals. In the long-run, their professional development. “Some workers lack emotional their work performance will skyrocket, intelligence. They lack self-awareness and they could be a positive influence PRODUCTIVITY THROUGH and do not put much thought into the on their co-workers. TRAINING consequences of their actions and how it could affect them and those around them. Companies should invest in But Mohan observes many training transformative training programmes and development programmes focus “Often, the focus is on the hard skills like to harness employee’s strengths, said on job skill sets, with little emphasis technical skills, education and industrial Way2Success Resources consultant on multi-tasking skills. Hence, skills- knowledge. But emotional intelligence is trainer Mohan P Kuppusamy in an based training takes precedence over also a critical factor to further improve interview with BIA. He explained that developmental training. HSES and other businesses.” transformative training is ‘contagious,’ “As a result, many trainees attend and can work wonders to boost training programmes because they are EMPOWERING EMPLOYEES company morale. asked to do so by their organisation. Companies should also zoom in “Transformative training should focus They are rarely given the bigger picture on personal development training on character building and mindset of the value of attending such training. programmes for employees, added resetting. This can be done concurrently It is important to allow staff to select Jane. by linking the transformation process the types of training they require to “Organisations should equip employees to an employee’s work performance. improve their job scope. This can ensure with job-specific training to enhance Through transformative training, more involvement and ownership in their current skills. For example, if a employees become stronger emotionally, the participation and utilisation in the group of staff wants to improve their more innovative and success-driven,” daily work,” said Mohan, a certified communication and leadership skills, explained the trainer. professional coach. they should source these training for Training programmes are essential He added it is essential for heads of employees. because it can help employees increase departments to discuss with employees “Personal development plan must be productivity and acquire new skills. and ascertain the types of training incorporated in any organisation’s Plus, it helps employees perform at their they’d like to attend. business plan. Upskilling training has optimum level too. “This could help with the progression many advantages - from improving Employees are, after all, the backbone to their growth within an organisation. employee motivation to enabling a of any manufacturing business. When The human resources department should company to stretch its ringgit further. companies select the right people and proactively intervene and ensure a And it does not cost much. The process harness their strengths, the business can mandatory stand on the number of should begin by assessing weaknesses improve tremendously. training hours for skills based and in employees’ current knowledge.” developmental based training for staff at Research portal Guide2Research’s Mohan, who has over 35 years in various levels of the organisation.” article 68 Training Industry Statistics: sales, marketing and management, has 2020 Data, Trends & Predictions states Health, Safety, Environment and Security noticed a positive emphasis on training that training contributes to the high (HSES) manager Jane Raju concurs, and development in the last decade. level of employee satisfaction and low explaining in an interview with BIA “Many organisations have engaged turnover rates. Employee satisfaction that training programmes are an external trainers to provide fresh and loyalty do not rely on compensation essential requirement to enhance perspectives to employees. In this way, and other benefits and opportunities for employee awareness, proficiency and we can stimulate critical-thinking and organisations’ growth. Training enables competency. healthy debates which will contribute employees to develop a positive attitude Most companies have established to better retention. Such takeaways are toward enhanced proficiency, which orientation programmes for new the most effective learning outcomes. results in improved productivity. employees, followed by on the job Hence, the entire learning and Professional networking and career training, plant familiarisation and development roll-out becomes a “have- development portal LinkedIn’s 2018 specific training based on the scope of to-do and have-to-attend” instead of Workplace Learning Trends reported work and role. “will-to-do” and “want-to-attend” culture.

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Breaking down impacts on employment Discussions on planning and implementation measures, as well as the various considerations to be taken into account while managing the impact of the COVID-19 pandemic on employment were held over a complimentary webinar on October 1, 2020 co-organised with Lee Hishammuddin, Allen & Gledhill. Titled “Managing the Impact of COVID-19 Pandemic on Employment”, the webinar covered measures to be taken from the perspective of employment and industrial relations laws and practices in Malaysia, as well as some best practices in accordance with industrial jurisprudence when companies Screenshot of the Tax Webinar with Lee Hishammuddin, Allen & implement cost cutting measures and business reorganisation Gledhill’s Tax, SST and Customs Practice held on October 1, 2020 exercises. Partner Shariffullah Majeed and associate Nurul Aisyah A session on tax-related topics Hassan also discussed the topic of exposure of employers to the risk of constructive dismissal claims and the need to An insightful webinar co-organised with the Lee carefully implement these measures in order to manage Hishammuddin, Allen & Gledhill law firm was held over potential constructive dismissal claims arising from measures Zoom on October 1, 2020 to update members on the recent taken owing to the pandemic. developments on income tax, SST and customs measures announced in ‘PENJANA’. During the complimentary webinar, titled “Recent Tax Development and Tax Measures Introduced Post COVID-19 Movement Control Order Period”, speakers from the firm’s Tax, SST and Customs practice Jason Tan Jia Xin (partner), Ivy Ling Yieng Ping (senior associate) and Chris Toh Pei Roo (associate) covered several topics. They discussed recent developments and updates on income tax, SST and customs measures announced in ‘PENJANA’, common tax issues during a recession or difficult times, as well as the suggested steps to manage a tax audit and investigation post-MCO. Legal remedies on how to approach a tax assessment and bill of demand post-MCO was also a topic that came to light Screenshot of the Employment Webinar with Lee Hishammuddin, during the two-hour session. Allen & Gledhill’s Employment Practice held on October 1, 2020

The road to recovery Chief Executive Officer of the Malaysian Investment Development Authority (MIDA) Dato’ Azman Mahmud led an exclusive session as part of FMM’s E-Seminar Series on Economic Recovery to inform members of the global and local current investment climate. Held on November 10, 2020 the session, part 3 of the series kicked off with a welcome address by FMM President Tan Sri Dato’ Soh Thian Lai, followed by key speaker Dato’ Azman Mahmud’s presentation, ending with a Q&A Session moderated by Tan Sri Saw Choo Boon, FMM Council Member and Chairman of FMM Strategic Policies and Research Committee. During the session, attendees were given the opportunity to learn Screenshot of the FMM E-Seminar Series on Economic more about investor support for business recovery, which included Recovery with MIDA CEO Dato’Azman Mahmud held on November 10, 2020 government incentives and initiatives. Apart from this, they also obtained insight into specific initiatives to assist with productivity and digital enhancement. These included supply chain support, automation and digitalisation.

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Business assistance recovery A half-day webinar by Ernst and Young Malaysia, held on November 20, 2020 via Zoom titled “FMM-EY Budget 2021 Webinar on Areas Related to Manufacturing” highlighted the latest proposals and initiatives introduced in Budget 2021. Asaithamby Perumal, Partner, International Tax Services of Ernst & Young Tax Consultants Sdn Bhd and Chua Meng Hui, Director, International Tax and Transaction Services, EY Malaysia focused on topics pertaining to business recovery and the wellbeing of the rakyat amidst the COVID-19 pandemic.

They also delivered practical insights into the Screenshot of the FMM-EY Budget 2021 Webinar on Areas Related to Manufacturing key proposals within the budget that relate to held on November 20, 2020 the manufacturing sector and its employees.

Focus on mental health An online session held on November 25, 2020 via Zoom covered the topic of how the mental wellbeing of employees is just as important as their physical health. Hosted by UNITAR, the session included input from Dr Sangeeta Kaur, Yayasan Health on World (YHOW) co- founder, panellist Dato’ Aliyah Karen, Yayasan Health on World (YHOW) co-founder and panellist Billy Urudra, Chief Development Officer of Duopharma Biotech Bhd. The talk was moderated by Nuzha Mohamed Taha, Senior Lecturer, Psychology and Counselling, UNITAR International University. Organised by FMM and sponsored by UNITAR under the FMM Webinar on Compliance to Act 446 and its Regulations FMM Business Promotion Package 2020, speakers discussed managing work and family issues during trying times, as well as how the pandemic has impacted mental health. Insights into Act 446 On December 3, 2020 FMM held a webinar to update members on the key areas of amendments to the Act 446 and key areas of compliance under its regulations. The Department of Labour Peninsular Malaysia’s Head of Legal Unit, Suraiya Ch’ng Abdullah, spoke about the application of the Act, the process of obtaining the Certificate for Accommodation and its fee, accommodation conditions, allowable accommodation fees to employees, minimum requirements of the accommodation facilities and employer’s responsibility. FMM Vice-President, Dato’ Nathan K Suppiah, delivered the welcome remarks for the session and FMM HRM Committee Vice-Chairman II, Mazlan Haron, served as moderator. Webinar Session: Mental Health in the Workplace

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Developing and implementing Adequate Procedures An informative webinar over December 9–10, 2020 titled “MACC Act Section 17A: 2-Day Webinar on Developing Adequate Procedures” was led by Dr Mark Lovatt, CEO of Trident Integrity Solutions. The session aimed at shedding light on corporate liability for corruption offences as introduced by the MACC (Amendment) Act 2018. The “Adequate Procedures” as outlined in the official Malaysian government Guidelines were explained and the session included a “how-to” on developing materials based on the Guidelines for companies in their own anti-corruption programmes.

Contributing aid To support relief efforts by the Malaysian Red Crescent Society (MRCS) Malaysia in helping those whose lives were affected by floods, FMM held a mock cheque handover at the Head Office on January 8 of this year. Presented by FMM Vice- President Dato’ Goh Boon Kim to Consultant for #responsMALAYSIA and MRCS representative Dato’ Dr Hartini Zainudin, the aid is meant to contribute to flood relief efforts. Also present were FMM CEO Dr Yeoh Oon Tean and MRCS Deputy Chairman of Logistics FMM contributed RM50,000 for MRCS Flood Relief Fathul Rahman Amin.

Discussion on government assistance Food & Hotel Malaysia (FHM) Virtual Exhibition Organised by Malaysian Investment Development Authority (MIDA), a discussion with the with Virtual B2B FMM SMI, Youth & Entrepreneurship Committee on the difficulties faced by SMEs in fulfilling deliverables on government financial assistance was held via Zoom on January 20, 2021. A virtual exhibition was held to assist members in getting Chaired by MIDA Deputy Chief Executive Officer II Ahmad Khairuddin Abdul Rahim, the potential distributors, agents session aimed at helping attendees better understand the industry’s proposal to extend and customers abroad as the timelines for project deliverables, and to receive feedback on the Domestic Investment travel restrictions prevent them Strategic Fund (DISF) and other government funds. from engaging in physical The virtual discussion addressed the industry’s concerns over difficulties faced in delivering the interaction. milestones under the government’s financial assistance programmes, including the Domestic During the exhibition, Investment Strategic Fund. members managed to MIDA acknowledged that the COVID-19 pandemic had disrupted project implementation and procure a total of 72 B2B will hand over a proposal to the relevant authorities to increase the extension to two years, to transactions with a potential start from January 2022. of USD400,000 in sales.

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KEDAH/PERLIS

Resolving issues on technical specifications of building conversion application Azleen Abdul Rahman On October 1, 2020 FMM from Labour Kedah/Perlis held a meeting with Department Majlis Perbandaran Sungai Petani Kuala Lumpur (MPSP) to seek clarification regarding briefing the HR technical specifications of building/ practitioners on Labour house conversion applications. Department The briefing was to ensure FMM Permit Approval members comply with the Employees’ Procedures, Minimum Standards of Housing, Audits & Accommodations and Amenities Inspection (Amendment) Act 446, 2019 set by the local council. Guidance on Permit Approvals, Audits and Inspections MPSP Building Department Director FMM organised a seminar for human resources practitioners, focusing on the Suhairi Mustafa gave a thorough process chart of allowable permit applications under Employment Act 1955. The explanation of the approval process event also narrowed down on preparing employers for audit and inspection visits. for the certificate of completion and Kuala Lumpur Labour Department’s Senior Assistant Director Azleen Abdul Rahman compliance (CCC) on the conversion of was the speaker at the seminar, held on October 28, 2020. non-residential buildings.

COVID-19: Staying safe and in compliance 23 participants from 20 FMM member and non-member companies attended a seminar on practical guidelines to comply with the Worker’s Minimum Dr Vijaya briefed participants Standard of Housing and on the COVID-19 Vaccine Amenities (Amendment) Act Study by Clinical Research 2019. The event took place on Centre (CRS) Sultan Abdul November 30, 2020. Kuala Halim Hospital, Sungai Petani Lumpur Labour Department’s Senior Assistant Director Azleen COVID-19: Volunteers for clinical trial Abdul Rahman chaired the briefing to raise awareness Sungai Petani’s Sultan Abdul Halim Hospital’s (SAHH) Clinical Research Centre (CRC) is on the COVID-19 pandemic among nine hospitals selected to participate in the nationwide COVID-19 vaccine study. It and infectious diseases such is recruiting volunteers, and FMM Kedah/Perlis is encouraging members to participate in as dengue, leptospirosis and the study. In a Zoom meeting on January 26, 2021, SAHH CRC Head of Department Dr tuberculosis. Vijaya Kumar L. Suppan briefed participants on the vaccine study, focusing on assessing the vaccination’s safety and effectiveness against the COVID-19 virus.

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PENANG

Audit preparation is key FMM Penang held a webinar over Zoom titled “Payroll Health Check: How to get ready for Statutory Audit on Payroll”, co-organised with Crowe KL Tax Sdn Bhd. Crowe KL Tax Sdn Bhd director Shalina Jaafar and Global Mobility Services associate director Monaliza Mohd Ali spoke during the event, held on November 25 of last year, on understanding the important updates from Statutory Bodies such as MIRB, EPF, SOCSO and the Human Resource Department Fund (HRDF) which relate to payroll and employer. Their presentation placed emphasis on how as responsible employers, Monaliza Mohd Ali, Associate Director of Crowe KL Tax Sdn Bhd briefed on the important preparation for a payroll audit should updates from the Statutory Bodies which relates to payroll and employer be at the top of your to-do list, and how this should not be left to the last minute, as an early start will help to alleviate stress arising from intense scrutiny by the authorities during the audit. By making sure they are well prepared for the audit, this will ensure employers are able to identify and avoid serious mistakes, including incorrect reporting, to the authorities. A similar event was held for FMM Kedah/Perlis and FMM Eastern on December 17, 2020 via Zoom.

Meeting the challenges of Industry 4.0 Speaking at the event were Swift Bridge Technologies (M) Sdn Bhd managing director SK Chong, Newbillion Industries Sdn A competitive edge is crucial for the survival of any SME, Bhd marketing manager HK Cheah, MIMOS Sdn Bhd director even more so in today’s business landscape as we move Shamsul Anuar Abdul Wahid and Malaysian Investment into the Industry 4.0 journey. To give companies an idea Development director Yusni Md Yusop, and also in attendance on how they can improve, from their production process to were FMM Penang SYEC chairman Richard Teh and Vice- updating their business models, FMM Penang SMI, Youth Chairman Cheng Boon Seng. & Entrepreneurship (SYEC) held a webinar on the topic on December 9, 2020 attended by 50 participants. During the webinar, titled “Industry 4.0 for SMEs”, speakers touched on how Industry 4.0 is the new industrial revolution, focusing on digitalisation and integration of the value chain, and how it changes the production processes and logistical activities along the supply chain. The main goal of the implementation of Industry 4.0 in a company is to reach higher productivity and flexibility, which cannot be achieved solely through improvements in the production process through incremental and disruptive process innovation. Updating the business model of the company, as well as technological and organisational transformation are the key to survival and further improvements within any SME.

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PENANG

Fund-raising dinner In partnership with OCBC Bank, FMM Penang organised the FMM- OCBC Charity Event 2020 dinner at the Eastern & Oriental Dinner on January 9, 2021 attended by the Chief Minister of Penang, YAB Chow Kon Yeow. The aim of the event was to raise funds for various charitable organisations involved in programmes benefiting the welfare and development of children, as well as the promotion and development of education and selected front-liner bodies in the state. Also in attendance were Penang deputy chief minister YB Prof Dr P Ramasamy Palanisamy, Penang State Executive Councillors – YB Dato’ Haji Abdul Halim Haji Hussain, YB Soon Sip Chee, YB Jagdeep Singh Deo Karpal Singh and YB Zairil Khir Johari. Dato’ Jimmy Ong, Chairman of FMM Penang and organising chairman, and FMM Penang Immediate Past Chairman Dato’ Seri Dr Ooi Eng Hock also attended the dinner.

Keeping abreast with Act 446 updates FMM and the Department of Labour Peninsular Malaysia hosted a webinar on “Compliance to Act 446 and its Regulations” on January 19, 2021 attended by 48 members.

Led by the Department of Labour The importance of COVID-19 testing Peninsular Malaysia Putrajaya Head of Legal Suraiya Ch’ng Abdullah, the Screening for COVID-19 is still very much ongoing nationwide, and session aimed at helping attendees companies are being equipped with plenty of information on the process and understand key areas of amendments to the tools to carry out testing. Act 446 and key areas of compliance To ensure that members are well-informed of the existing methods for under the Regulations. These include screening, FMM Penang hosted a webinar on January 6, 2021 to encourage accommodations facilities, allowable employers to carry out mass screenings using the RT-PCR tests. accommodation charges and Certificate for Accommodation. Currently, FMM is collaborating with the Penang State Government under a programme called Penang S.A.F.E., which uses a pooled RT-PCR testing The Employees’ Minimum Standards method to reduce the costs of the test, as they often involve large numbers of of Housing, Accommodations and workers. Amenities (Amendment) Act 2019 (Act 446) and its Regulations came into force Speaking during the session were Prof Dr Lee Toong Chow, adjunct Professor on September 1, 2020. The maximum of University of Queensland and Info-Kinetics Sdn Bhd MD, as well as Penang fine for failure to comply with the General Hospital Emergency Department senior consultant physician Dr Teo amendments is RM50,000. Aik Howe.

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PERAK

Briefing on Workers’ Minimum Standards of Housing and Amenities (Amendment) Act On December 16, 2020, FMM Perak hosted a webinar to brief members on Workers Minimum Standards of Housing & Amenities (Amendment) Act 2019 and Regulations 2020. Speakers from Majlis Bandaraya Ipoh (MBI), Jabatan Tenaga Kerja and BOMBA were present during the online meeting. Chaired by MBI Senior Labour Officer Yuslina Sahadan, the meeting encompassed several concerns, including living conditions of migrant workers amid the COVID-19 pandemic. At the online meeting were MBI Assistant Director of Health M. Raman Maran, MBI Assistant Director of City Planning Jaslina Shaidin, MBI Director of City Development & Control Muhammad Syahril Sapiran and BOMBA Senior Fire Chief Syed Azman Syed Ghazali.

(from left) M. Raman Maran, Assistant Director of Health (MBI), Yuslina Sahadan, Senior Labour Officer, Syed Azman Syed Ghazali, Senior Fire Chief, Jaslina Shaidin, Assistant Director of City Planning (MBI), Muhammad Syahril Sapiran, Director of City Development & Control (MBI) and Mahinder Singh, Manager of FMM Perak facilitated the webinar via Zoom

Connecting homegrown business to Perak’s MNCs To foster direct contractual linkages between local suppliers and MNCs, FMM Perak organised a Task Force Meeting on Industrial Linkage Programme. Held on December 22, 2020, the meeting’s objective was to forge a partnership with MIDA Perak and MITI Perak and link potential MNCs in Perak with small and medium-sized enterprises (SMEs). The meeting was chaired by Strategic Policies Sub-Committee Chairman Tony Cheam and co-chaired by SYEC Sub- Committee Chairman Edmund Wong. In attendance were MITI The meeting chaired by Tony Cheam (centre), co-chaired by Edmund Perak Director Rosazliza Azman and MIDA Perak Director Wong (5th left) with representatives from MITI Perak, MIDA Perak and Izran Abdullah. other committee members

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SELANGOR & KUALA LUMPUR

Webinar on new regulation guidelines On November 10, 2020 a webinar organised by FMM Selangor & Kuala Lumpur was attended by 61 participants, on the topic “Understanding the Fundamental of the Employees’ Minimum Standards of Housing, Accommodations and Amenities”. Led by the Selangor Labour Department Director Ahmad Mudi Onn Nor, the webinar aimed at helping attendees have a better understanding of the details of the new regulations, and to help ensure employers complied with the new regulations. MoU Signing Ceremony between FMM Selangor & Kuala Lumpur and Fusionex Group

Briefing on RCEP An overview of the objectives of the Regional Comprehensive Economics Partnerships (RCEP) and Future Proposed Free Trade Agreement (FTAs), attended online by 36 participants from 26 companies was held on December 18, 2020. Speakers Masita Mat Isa, Director of the Strategic Negotiations Division (MITI) and Suhaili Ismail, Senior Principal Assistant Director (MITI), shared their insights on the objectives of the RCEP and its implementation that will be benefits to industries. The RCEP is an agreement to broaden and deepen ASEAN’s engagement with Australia, China, Japan, Korea & New Zealand. The Launching of FMM Selangor & Kuala Lumpur E-Commerce Marketplace

MoU with Fusionex COVID-19 in the workplace A Memorandum of Understanding (MoU) signing ceremony The COVID-19 pandemic continues to affect all areas of between FMM Selangor & Kuala Lumpur and the Fusionex business. FMM Selangor & Kuala Lumpur held a webinar on Group was held on October 6, 2020. The event took place at COVID-19 management guidelines to help companies deal the FMM Selangor & Kuala Lumpur branch office. with the crisis, work out a new normal and understand the SOPs set by authorities. Attended by FMM President Tan Sri Dato’ Soh Thian Lai, CEO of Invest Selangor Berhad Dato’ Hasan Azhari Hj Idris, Group Held on December 23, 2020 via Zoom, the speakers were CEO of Fusionex Group Dato’ Seri Ivan Teh, the occasion DOSH Putrajaya Occupational Health Division Deputy Director was graced by guest of honour YB Dato’ Teng Chang Khim, Dr Dayanath Manivasagam, JKN Selangor Public Health the Selangor Executive Councillor (EXCO) and Chairman of Physician Dr Haikal Ghazali, JKN Selangor Head of State Standing Committee for Investment, Industry & Commerce, Inspectorate and Legal Unit CT Zawiah Ghani and OSH Med Small & Medium Enterprise (SME). Solutions Sdn Bhd Public Health Physician Dr Anza Elias. 168 participants attended the three-hour session, which gave companies a clearer picture on how to prevent the spread of COVID-19 at the workplace.

Session on Malaysia’s pricing landscape The Malaysian transfer pricing landscape has evolved rapidly of late. FMM Selangor & Kuala Lumpur held a webinar titled “Evolving Transfer Pricing Landscape in Malaysia”, on January 26, 2021 over Zoom. Attended by 13 participants from 11 companies, the speakers were PKF Malaysia Director Owen Tan and PKF Manager Goh Tooan Heng, who spoke on how the Inland Revenue Board (IRB) has become increasingly aggressive and vigilant in scrutinising both local and cross border related party transactions. Topics included matters pertaining to Budget 2021 and the numerous tax changes related to transfer pricing which have been proposed. These include hefty penalties and a widening of the powers of the IRB in making transfer pricing adjustments.

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NEGERI SEMBILAN

Handling chemicals safer and better FMM Negeri Sembilan collaborated with SOCSO to organise the Total Chemical Management seminar from October 22-23 last year at d’Tempat Country Club, Bandar Sri Sendayan in Seremban. The seminar aimed to educate chemical users and handlers who are exposed to hazardous materials on best practices to establish total chemical management procedures; as well as to control the entrance of unregistered chemicals at the workplace. Led by FMM Institute trainer Izil Kamal, six participants explored the existing and future improved chemical learning requirements, use of proper personal protective equipment, functions of local exhaust ventilation and procedures to follow in the event of chemical spills and release.

Training in session conducted by Izil Kamal with participants

Using new platforms to learn In accordance with the government’s health and safety regulations on containing the spread of COVID-19 cases in Malaysia, FMM Negeri Sembilan organised all its seminars online via Zoom. From November 2020 until January 2021, FMM Negeri Sembilan successfully conducted webinars on Managing Performance of Work from Home Employees, Licensed Manufacturing Warehouse Concept, Introduction of Malaysian Employment Law and Policy to Foreign Workers, HR for Non-HR Managers, and Occupational Safety and Health (Noise Exposure) Regulations & Noise ICOP 2019. Although the initial response was low, possibly due to employers and employees learning to adapt to the new form of training, the number of participants has since gradually increased over time. This positive response has motivated FMM Negeri Sembilan to conduct more webinars in the future.

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MELAKA

Updates on ATIGA Form D and RCEP FMM Melaka engaged MITI to update members on the recent changes made to ATIGA Form D and updates on Regional Comprehensive Economic Partnership (RCEP). Updates on the online application of trade forms through DagangNet was also discussed. The webinar, held from November 30 to December 1, 2020, was chaired by MITI Industry & Trade Support, Trade and Industry Cooperation Section Senior Principal Assistant Director Suhaili Ismail; MITI Strategic Negotiation Division Director Masita Mat Isa and Dagang Net Technologies Regional Management Regional Manager Mohammad Yasnain.

Masita Mat Isa, Director, Strategic Negotiation Division explaining the Suhaili Ismail, Senior Principal Assistant Director asnwering quastions benefits of RCEP to industries in Malaysia on ATIGA Form D

FMM Melaka organised tax budget webinar On December 10, 2020 FMM Melaka organised a webinar to update members on Budget 2021 and updates in Malaysia’s tax regime. Tax consultant Yong Mei Sim shared snapshots of the budget, which focuses on three integral goals – the rakyat’s well-being, business continuity and economic resilience.

Abd Malek Omar explaining on the current and future direction on effective waste management

Integrated environmental solutions FMM Melaka invited consultant Abdul Malek Omar to share his knowledge on scheduled waste management according to the Environmental Quality (Scheduled Waste) Regulations 2005. In the web conference, he advised to adopt a holistic Yong Mei Sim explaining on the additional reliefs that was tabled in approach to managing scheduled waste management that Budget 2021 integrates recycling, composting, and energy recovery. The educational webinar took place on January 25-26, 2021.

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JOHOR

A fruitful visit to overcome Working towards a better industrial strategy in Pasir Gudang industry issues Majlis Bandaraya Pasir Gudang is currently drafting the Pasir Gudang Strategic Several industry issues were Plan 2021-2025 in its effort to develop an industrial area conducive to business highlighted during the meeting development. between FMM Johor Chairman Saw This was shared during the Branch’s courtesy visit to the new Pasir Gudang City Seong Ho and Johor State Housing Council Mayor Tuan Asman Shah Abd Rahman. The Branch was led by FMM and Local Government Committee Johor Chairman Saw Seong Ho, who was accompanied by Vice-Chairman Sonny chairman YB Tuan Haji Ayub Jamil Nizam Ahmad, Committee Member Marc Ching on January 6, 2021. on December 21, 2020. MBPG also conveyed its plan to organise a town hall session twice a year to YB Tuan Haji Ayuh Jamil agreed provide a platform for representatives from various industries, local authorities and to discuss with local authorities agencies within Pasir Gudang to meet and discuss industrial related matters. and Johor Manpower Department about streamlining the approval process of the support letter required under Section 24(H), Employees’ Minimum Standards of Housing, Accommodations and Amenities (Amendment) Act 2019 (Act 446). He also agreed that the imposition of Office License at various rates by different local authorities, is unnecessary. On a separate note, YB said that although the developer is yet to hand over the industrial land, he will engage local authorities to provide maintenance services to SILC Industrial Park as the Assessment Tax has been collected. Saw Seong Ho presented the token of appreciation to Tuan Asman Shah during the courtesy call

A consortium to engage and solve social and industrial issues FMM Johor collaborated with Universiti Teknologi Malaysia Faculty of Engineering to organise a virtual visit to learn more about the AIMS4STAR Consortium that is aimed at solving a variety of local, industrial and national issues. Held via Webex, the tour on January 19, 2021 was led by UTM Faculty of Engineering Dean Professor Dato’ Ir Dr Mohammed Rafiq Abdul Kadir. During the session, the 51 participants - 18 FMM members and 31 UTM staff and invitees - learnt about how AIMS4STAR can help industries improve processes, formulate new products, apply new designs as well as save costs where possible. Industry members were also encouraged to provide feedback on research results, methods and usage of tools, on top of understanding how the society can benefit from this collaboration

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EASTERN

Keeping up with the newest policies FMM organised its annual FMM-Customs Round Table Talk 2020 dialogue with Pahang’s Customs Department on November 4, 2020. The objective was to obtain additional information and updates from the relevant departments, including Kuantan Port Authority, Malaysia Productivity Corporation, MITI Pahang, MIDA Pahang, SME Corp Malaysia Pahang, and SIRIM Pahang. Guests in attendance were FMM Eastern Chairman Ir Kua Jit How, Vice- Chairman Dato’ Stanley Goh and Pahang Customs Department Director Haji Abdul Ghafar Mohamad. Group photograph at the end of the Round Table Talk

FMM Crisis Relief Fund FMM contributed RM50,000 to Pahang State Government to help alleviate the difficulties faced by flood victims in the state. FMM was represented by FMM Eastern Chairman, Ir Kua Jit How, to hand over the contribution to Pahang Menteri Besar, YAB Dato’ Seri Haji Wan Rosdy Wan Ismail. In attendance was Pahang State Secretary YB Dato’ Sri Dr Sallehuddin Ishak. The cheque presentation took place on January 8, 2021.

Group photograph after the meeting with Yang DiPertua Dato’ Hajah Aida Munira Abdul Rafar

Finding solutions to infrastructure concerns On December 30, 2020, Majlis Perbandaran Bentong’s Yang DiPertua Dato’ Hajah Aida Munira Abdul Rafar met with FMM Eastern to discuss infrastructure issues in Bentong. FMM Eastern was represented by its Chairman Ir Kua Jit How and Vice-Chairman Ir Burhannud-Din Ishak.

Ir Kua Jit How (far right) presenting the mock cheque of RM50,000 to Pahang Menteri Besar. Looking on is Pahang State Secretary, YB Dato’ Sri Dr Sallehuddin Ishak

FMM’s checklist to purchase Forging better ties a vacant piece of land On February 8, 2021, FMM FMM Eastern Chairman Ir Kua Eastern Chairman Ir Kua Jit Jit How chaired a meeting with How paid a courtesy visit to Perbadanan Kemajuan Negeri Pahang TNB’s new general Pahang (PKNP) Industrial Manager manager Datuk Baderul Haji Md Daud Abdul Rahman Sham Saad, to foster a closer to discuss FMM’s intention to working relationship with the purchase one acre of land to utility provider. build its own office and training centre. The discussion was held on January 18, 2021. Haji Md Daud Abdul Rahman proposed land in Gebeng, which could be suitable Ir Kua Jit How presenting a souvenir for FMM Eastern Branch. to Datuk Baderul Sham Saad

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SARAWAK

A meeting of minds to solve issues in Sarawak An engagement session between FMM Sarawak and Malaysian Industrial Development Authority (MIDA) Sarawak was held on December 16, 2020 to update FMM members on the latest incentives. Co-chaired by FMM Sarawak Chairman Dato’ Sri Victor Hii Lu Thian and MIDA Sarawak Director Redzuan Abdul Rahman, the session was attended by 22 participants including Ministry of International Trade and Industry (MITI) Sarawak Director Griffith Jones Goba. During the engagement at the Borneo Convention Centre Kuching (BCCK), FMM members also took the opportunity to discuss various matters affecting the business community in the state as well as clarify issues under MIDA, MITI and other relevant Group photograph of FMM members with MITI, MIDA, SIRIM, MPC, MATRADE and authorities. MIDF officers

Fostering a healthy relationship with Sarawak Tourism Ministry FMM Sarawak welcomed a courtesy visit from Dato’ Sebastian Ting Chiew Yew, Assistant Minister for Tourism, Arts and Culture Sarawak on December 17, 2020. The visiting party was greeted by FMM Sarawak Chairman Dato’ Sri Victor Hii Lu Thian, and the group proceeded to have a short discussion on several topics related to various local industries. FMM Sarawak hopes that Dato’ Sebastian Ting could help convey the various issues faced by the local manufactures to the Sarawak state government; and to foster a better working relationship and networking opportunities between FMM Sarawak and the Tourism Ministry.

Boniface delivering his presentation for the Certificate in Boilerman

Conducive training in operating steam boiler Nine participants attended the FMM Sarawak Certificate in Boilerman training session from December 14–17, 2020 at FMM Sarawak branch office. This was in preparation for the Department of Occupational Safety and Health (DOSH) Boilerman examination. Led by trainer Boniface Linjong, the programme aimed to improve participants’ theoretical operating skills in steam boiler, as well as enhance their knowledge and understanding of the requirements for operations in accordance to the best practices and laws in Malaysia. Chairman of FMM Sarawak, Dato’ Sri Victor Hii (3rd left) presenting a memento to Dato’ Sebastian Ting (4th left)

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SABAH

Insight for entrepreneurs A seminar was held online by FMM Sabah and the Entrepreneurship Transformation Programme Sabah (TRUS) under the Ministry of Industrial Development (MID), from December 14–18, 2020. The programme aimed at delivering pointers on preparing a proper company business plan including how to structure and calculate cost of a product, plan effective missions and strategies for a business, how to carry out accounting, as well as tips on maximising profits. Entrepreneurs that attended the event were also given information on leveraging their social media platforms through effective online marketing strategies and techniques, all with the aim to enhance profits and visibility. Other topics were pricing management, operations and logistics management, finance management and online marketing.

Participants were seen listening in one of the topics conducted via remote online learning by one of FMM speakers

End to a successful event On December 28 last year, FMM Sabah and the Ministry of Industrial Development (MID) celebrated the conclusion of the successful Entrepreneurship Transformation Programme with a closing ceremony at Wisma Kewangan, Kota Kinabalu. Among those present were Minister of Industrial Development Datuk Dr Joachim Gunsalam, who presented an appreciation certificate to FMM Sabah FMM Sabah Chairman James Ha Haw Yew received the appreciation certificate from YB Chairman James Ha Haw Yew. Datuk Dr Joachim Gunsalam, Minister of Industrial Development

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Business in Action @ FMM JAN - MAR 2021 ASK FMM 37 ?

Advertisement Rates (Full Colour) Double Page Spread ASK FMM 420mm Space Member Non-Member 400mm Human Resources and Industrial Relations Full Page Run-of-book (ROB) RM3,000 RM3,800 When it comes to employees ordered Therefore, in my opinion, it is not correct to say that “wages” Q1. to be quarantined by the Ministry of are only in respect of days on which work is actually done. 270mm Inside Front Cover RM3,800 RM4,600 298mm Health for a certain period of time due The concept of monthly pay is that the wages or salary for Inside Back Cover RM3,300 RM4,100 to having close contact with a COVID-19 positive a particular month is of the same amount as that for every patient, what is the leave status of the quarantined month.” Back Cover RM4,300 RM5,100 employee? Does it fall under annual leave, medical leave, or special leave (paid leave)? “In conformity with this concept, the average daily wages in a Double Page Spread RM5,000 RM6,200 Full Page particular month should be arrived at by dividing the amount of the monthly wages with the total number of days in that Run-of-book (ROB) 210mm We advise employers to utilise the employee’s A1. medical/hospitalisation leave. month.”

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FMM-MIER BUSINESS CONDITIONS SURVEY Manufacturing activity picks up conservatively in 2H2020, outlook for 1H2021 remains challenging

MANPOWER AND BUSINESS ACTIVITY – 2H2020 AND RESKILLING/UPSKILLING OUTLOOK 2021 • 74% and 64% of respondents have • Business activity picked up cautiously in 2H2020; 38% not used the PENJANA HRDF and responded positively, 37% responded negatively SOCSO PENJANA Kerjaya, • Local sales and export sales improved in 2H2020, but respectively remained weak • 34% of respondents willing to pay • Production costs in 2H2020 higher than 1H2020 and 2H2019 local workers up to 10% more than • CAPEX picked up in 2H2020 but remains slow: 17% increased the foreign workers’ salary for the CAPEX, up from 10% in 1H2020, down from 26% in 2H2019 same job • Local and export sales expected to remain at in 1H2021 • In 2020, 40% and 41% of • Cost of production to rise further in the next six months respondents increased salaries of their executives and non-executives, • Employment in 2H2020 steady, expected to remain the respectively, at quantum of less than 5% same in 2021 • For 2021, most respondents will not be • New recruitment in 2021 mainly in operations, technical giving any or, if they do, the quantum and marketing will mostly be less than 5%

BUSINESS RECOVERY AND STRATEGIES • Current business of 44% of respondents are at COVID levels, 30% at pre-COVID levels and 23% better than pre-COVID levels • 27% of respondents still at COVID levels need 4-6 months and 24% need 1-2 years for business to recover to pre-COVID levels • Majority of respondents did not have any issues at all when applying for targeted loan repayment assistance. • 54% of the respondents believe COVID-19 Act 2020 not useful to them as the scope of the Act does not cover their businesses • 40% of respondents of the view that the COVID-19 vaccination should be free for foreign workers • 61% of respondents support re-introduction of GST, subject to improvements to the GST V1.0 • 64% of respondents aware of RCEP FTA but need further information • Further government assistance needed - reduction in corporate tax, discounts for electricity and natural gas, and extension of the targeted wage subsidy to all workers in all sectors

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FMM - MIER Business Conditions Index Values

Indicators Current Looking Forward (Compared to 6 months ago) (Next 6 months) 1H2019 2H2019 1H2020 2H2020 2H2019 1H2020 2H2020 2H2021 Busniness conditions 78 90 31 101 101 88 76 87 Local sales 77 84 34 88 101 86 71 74 Export sales 73 91 41 88 101 87 69 88 Production volume 82 96 35 101 105 93 78 91 Capacity utilisation 82 97 38 101 105 95 78 92 Capital investment 103 109 61 88 108 105 83 98 Number of employment 96 102 82 95 105 104 93 102 Cost of production 153 144 130 146 134 142 133 155

fter a slow 1H2020 due to the BUSINESS ACTIVITY PICKS UP Local and Export Sales Pick Up onslaught of the COVID-19 SLIGHTLY But Remain Weak A pandemic, activity in the Manufacturing activity improved in The index for current local sales in Malaysian manufacturing sector picked 2H2020 from 1H2020. Reflecting this 2H2020, at 88, is the same as the up slightly and cautiously in 2H2020. is the current index for business activity index for current export sales. Although Most indicators registered readings which surged 70 points from 1H2020 both indexes had improved from below the 100-point threshold level to 101 in 2H2020. Its slight breach 1H2020, their persistent stay below the of optimism, an indication that overall past the 100-point demarcation level optimism threshold shows that both sales business conditions in 2H2020 had shows respondents’ slight optimism of in 2H2020 have remained generally remained subdued. Manufacturers’ their businesses recently. 38% of the weak. Most of those who sell locally outlook for their businesses in early 652 respondents saw an increase in (41%) reported lower sales, while 29% 2021 is equally cautious. Except for cost their business activity in 2H2020, while sold more and 30% saw no change in of production and employment which a similar proportion of 37% recorded their sales lately. The same proportions are expected to trend up, the outlook theirs as lower and 25% were neutral were observed for those who export. for local and export sales, production, on this. capacity utilisation and capital investment is cool going forward.

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Local and Export Sales Production Volume and Capacity Cost of Production and Capital Utilisation Investment

41% 41% 57% 37% 36% 35% 34% 54% 32% 27% 29% 30% 29% 30% 32% 29% 17% 11%

Local Sales Export Sales Production Volume Capacity Utilisation Cost of Production Capital Investment

Higher Same Lower Higher Same Lower Higher Same Lower

Production Volume and Capacity Utilisation Increase Hiring Picks Up in 2H2020 Production volume and capacity utilisation shifted cautiously More jobs were available in the manufacturing sector recently, higher in line with the slight pick-up in sales. The current as reflected in the current index for employment which rose indexes for both these indicators stood at 101 each in from 82 in 1H2020 to 95 in 2H2020. Its stay below the 2H2020, up from 1H2020. 37% of the respondents expanded 100-point optimism benchmark denotes a continuing lack of their output recently, while 36% reduced theirs and 27% job optimism in this sector, although sentiments have improved maintained the same volume as previously. Capacity utilisation currently. 15% of the respondents had increased their was higher for 35%, and lower for 34%, of the respondents in headcount by end 2020, while 20% had retrenched theirs, 2H2020. compared to 6% and 24% in 1H2020, respectively.

Cost of Production and Capital Investment Up 70% Production costs increased further in 2H2020. This is shown by 65% the index for current cost of production which rose to 146 in 2H2020, up from 130 in 1H2020 and 144 in 2H2019. 57% of the respondents had to put up with costlier production costs in 2H2020, up from 46% and 53% in 1H2020 and 2H2019, respectively. 24% The latest current index for capital investment (CAPEX) 20% improved from 1H2020. At 88, the index had gained 27 15% points over 1H2020, implying that CAPEX had increased in 2H2020 but its reading below the optimism threshold suggests 6% that respondents are not optimistic yet to invest more for now. 17% increased their CAPEX in 2H2020, while 29% invested less, compared to 10% and 49% in 1H2020, respectively. Employment 2H2020 Employment 1H2020 Higher Same Lower

FMM – MIER BUSINESS CONDITIONS INDEX VALUE – OUTLOOK 160 155 150 142 140 134 133 130

120

110 101 100 growth-neutral threshold level of 100 points 90 88 Business Conditions Index 87 Cost of production Number of employees 80 Capital investment Capacity utilisation 76 70 Production volume Export sales Local sales Business conditions 60 2H2019 1H2020 2H2020 1H2021

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64%

50% 45% 42% 41% 40% 40% 38% 36% 36% 35% 33%

26% 25% 26% 23% 24% 24% 19% 17% 14%

Global Business Local Sales Export Sales Production Volume Capacity Utilisation Employment Capital Investment Activity Higher Same Lower

OUTLOOK FOR 1H2021 REMAINS The latest indexes for expected MANPOWER AND RESKILLING/ CHALLENGING production volume and capacity UPSKILLING The resurgence of the COVID-19 utilisation are also below the optimism Current Employment cases in the last quarter of 2020 has threshold. At 91 and 92, respectively, In light of the current pandemic continued to pose challenges for both these are additional signs that situation, the survey seeks to the government and businesses. With respondents are cautiously projecting understand respondents’ current status constrains on mobility and demand a pick-up in these aspects in 1H2021. of employment and uptake of the going forward, respondents are 26% of the respondents are planning government incentives under PENJANA cautious on their business projections to increase their production volume and the 2021 budget to support human for 1H2021, as reflected in the latest soon, up from 24% in the previous resource and employment. forward-looking indicators of the survey. Those contemplating producing Results of the survey show that survey. While most of these indicators less fell to 35% from 46% previously, employment was generally steady in have improved from the previous while 38% will likely maintain theirs at 2020. More than 68% of the 652 period, their persistent stay below the existing levels in the coming months. respondents have managed to maintain optimism threshold is an implication that On capacity utilisation, 25% are their existing workforce to date and cautiousness among manufacturers has considering increasing their capacities only 3% have resorted to implementing continued to prevail in their business soon, little changed from the prior retrenchment. 16% have increased their outlook for the next six months. survey’s 24%. 33% will lower theirs, down from 46% previously. headcount, while close to 12% did not The expected index for business activity replace any of their employees. rose to 87 in the latest survey, and The expected cost of production index Among those who expanded their with its reading below the optimism rose from the prior survey to 155 workforce, majority (29%) estimated threshold, it implies that respondents are currently, an inference that production their increase at 6-10%, while 20% cautiously hopeful of a pick-up in their is likely to cost more in the coming hired 1-5% more staff and 14% businesses soon. 23% replied positively, months. This is projected by 62% of the recruited 16-20% more employees. 9% while most (41%) do not foresee any respondents, up from 45% previously. increased their staff by 21-30%. Of change in their businesses in the coming Only 7% are anticipating otherwise. those who retrenched, 21% retrenched months. CAPEX and employment are expected to 1-5% of their staff, while another 21% The prognosis for local and export shift higher in 1H2021, as shown by the reduced theirs by 16-20% and 21% sales in the next six months is equally expected indexes for capital investment downsized their workforce by 51-100%. subdued. Registering below the and employment which increased from optimism threshold, both the expected the preceding survey to 98 and 102 in Expected Employment in 2021 the current survey, respectively. 24% of indexes for local sales and export Going into 2021, employment in the sales stood at 74 and 88, respectively, the respondents are planning to increase their CAPEX soon, while 26% will likely manufacturing sector is expected to reflecting, once again, cautiousness on remain stable as well. 54% and 26% the part of the respondents. Favourable reduce theirs, compared to the prior survey’s 19% and 36%, respectively. of the respondents will likely retain replies from 14% of those who sell their existing workforce and hire more locally and 24% of those who export 19% of the respondents have new recruitment plans for 1H2021, while workers in 2021, respectively. Only 2% indicate that export sales are expected are contemplating retrenchment. to perform better than local sales in 17% will likely downsize theirs, 1H2021. compared to 16% and 23% previously, respectively.

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2021 Recruitment by Category

Increase Top level management 1.7% 25.8% Middle level managers 13.7% N/A 0.9% 2021 Supervisors 12.4% Expected Technical 33.5% Employment Not sure Operations 63.1% 9.2% Support/Clerical staff 11.2% Retrench Maintain 2.0% 54.3% Sales/marketing 18.0% No replacements 7.8% Others 2.4%

A breakdown of those planning to especially in the 3D sectors and increase their workforce in 2021 shows processes, most (34%) respondents are that most are estimating an increase of Yes No willing to pay local workers up to 10% up to 10%, while most of those planning 25.2% 73.9% more than the FW salary for the same to retrench are considering downsizing job. Another 25% of the respondents 20% of their staff. Utilisation are willing to adjust salaries higher than of PENJANA the FW salary by 11%-20%, while 8% In 2021, most of the recruitment will be HRDF N/A are agreeable to a hike of 21%-30%. in the operations category, followed by 0.9% technical and sales/marketing. Less than Salary Increment and Bonus 2% planned to hire top level managers. Payout in 2020 and 2021 Other positions that will likely be employed are middle management In 2020, 40% and 41% of the personnel, supervisors and support/ respondents increased the salaries of clerical staff, as indicated by 11-14% of their executives and non-executives, the respondents. respectively, at a quantum of less than Yes 5%. Executives and non-executives Retrenchment will affect mostly those 35.0% of another 41% and 38% of the employees in operations, support/ No respondents, respectively, did not Utilisation 64.1% clerical, as well as supervisory receive any increment at all. Of those categories. Most of those planning to of SOCSO PENJANA who awarded increments, 13% raised retrench will do so in 1H2021. N/A Kerjaya the salaries of their executives by 0.9% 5%-6%, while 14% granted the same PENJANA HRDF AND SOCSO quantum to their non-executives. PENJANA The situation is expected to remain the Most respondents have not used same for 2021, with most respondents the PENJANA HRDF and SOCSO either providing no increments at all or, PENJANA Kerjaya, with 74% and 64% if they do, the quantum will mostly be attesting to this, respectively. This is less than 5% as well. 12% and 14% of mainly because they did not fulfill the used them, respectively, mainly in the the respondents are planning increments criteria for eligibility. Non-awareness hiring of more local workers, as well as of 5%-6% for their executives and non- was the other reason cited for not using the upskilling and reskilling of workers. executives, respectively. them, while some are awaiting their In 2020, non-contractual bonuses training approval from HRDF. Foreign Worker Employment were awarded to executives and non- Of the 25% who have used the With the current restrictions on the executives by 37% of the respondents, PENJANA HRDF, 53% have participated employment of foreign workers (FWs) respectively. Contractual bonuses in “place and train”, while 27% and the plan by the government to were also given to executives and and 17% in Industry 4.0 and SME increase the levy via the multi-tier levy non-executives by 17% and 18% of Development, respectively. Among the mechanism (higher rate for higher intake the respondents, respectively. Both 35% who have used SOCSO PENJANA of FWs in total employment), most contractual and non-contractual bonuses Kerjaya, 67% have participated in (45%) respondents are planning to hire were also paid to executives and hiring (#MyApprentice/#HireMalaysia) more locals, while 38% will increase non-executives in 2020 by 15% of the and 32% in their training programme. automation of their operations going respondents. But unlike 2020 where forward. SOCSO PENJANA Kerjaya and only 12% were undecided on whether PENJANA HRDF have benefitted 55% Given the reluctance of local workers to award bonuses or not, there were and 49% of the respondents that have to do certain works done by FWs, even more (30%) respondents now who

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Salary Increment 2020 Salary Increment 2021

53% 52% 41% 40% 41% 38%

30% 27% 14% 14% 13% 12% 4% 4% 4% 4% 1% 1% 1% 1% 1% 1% 1% 1%

None 1-<5% 5-<7% 7-<10% >10% N/A None 1-<5% 5-<7% 7-<10% >10% N/A

2020 Executive 2020 Non-Executive 2021 Executive 2021 Non-Executive

Bonus Payment 2020 Bonus Payment 2021

37% 37% 29% 30% 31% 30%

17% 18% 16% 17% 15% 15% 16% 16% 12% 12% 11% 10% 11% 10% 2% 2% 2% 3%

Yes - Yes - Non Yes - Both No Bonus Not Sure N/A Yes - Yes - Non Yes - Both No Bonus Not Sure N/A Contractual Contractual Contractual & Contractual Contractual Contractual & Bonus Bonus Non Contractual Bonus Bonus Non Contractual Bonus Bonus

2020 Executive 2020 Non-Executive 2021 Executive 2021 Non-Executive

Bonus Quantum 2020 Bonus Quantum 2021 % % 90.0 <0.5 months 0.5 - <1 months 1 - <1.5 months 1.5 - <2 months 80.0 <0.5 months 0.5 - <1 months 1 - <1.5 months 1.5 - <2 months 80.0 2 - <2.5 months 2.5 - <3 months >3 months N/A 70.0 2 - <2.5 months 2.5 - <3 months >3 months N/A 70.0 60.0 60.0 50.0 50.0 40.0 40.0 30.0 30.0 20.0 20.0 10.0 10.0 0.0 0.0 Executive Executive Executive Executive Executive Executive Executive Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Contractual Non Contractual Both Contractual Not Sure Contractual Non Contractual Both Contractual Not Sure Bonus & Non Contractual Bonus Bonus & Non Contractual Bonus

are unsure if they could do so in 2021. In terms of quantum, BUSINESS RECOVERY AND STRATEGIES most (19%-29%) paid their executives bonuses of 0.5 month to When asked about their business recovery currently, most less than 1.5 months in 2020, regardless of whether the bonus respondents (44%) believed that they are still at the COVID is contractual, non-contractual, or both. The same quantum of level. While 30% opined that they are at the pre-COVID level, bonus (contractual, non-contractual or both) was also paid to 23% said they are better now than pre-COVID level. For those non-executives by 22%-33% of the respondents. still at the COVID level, most (27%) said they need 4-6 months Bonus plans for 2021 are expected to be the same as in to recover their businesses to pre-COVID levels, while 24% 2020. Among the respondents planning to award bonuses will require 1-2 years and 20% need a recovery period of 7-9 in 2021, most are considering a quantum of less than 0.5 months. Close to 4% believed they could return to pre-COVID month to not more than 1.5 months, be they contractual, non- levels in 1-3 months’ time but 6% will need more than two contractual, or both, for executives and non-executives alike. years to do the same.

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Business Recovery Period for those still at COVID Level

Pre-COVID N/A 1% level 30% Still at >2 years 6% COVID level 1-2 years 24% Business 44% Recovery 10-12 months 19%

7-9 months 20% Better than 4-6 months 27% pre-COVID level 23% N/A 3% 1-3 months 4%

Targeted Loan Repayment Goods and Services Tax (GST think that the SST should be retained. Assistance The government is studying the re- Of the areas to improve, the GST The automatic loan moratorium that introduction of the GST to replace the refund process topped the list with 59% ended in September 2020 was current Sales and Services Tax (SST). responses, while zero-rated goods and replaced with targeted repayment 61% are supportive of this initiative services, and Approved Trader Scheme assistance until December 2020, with on condition that it is subject to and Approved Toll Manufacturing some banks even extending it beyond improvements to the GST V1.0, but 23% received 32% responses each. that. Most (61%) respondents do not require such assistance. Among those who do, 15% and 8% said they benefitted from the rescheduling, Application N/A 3% rejected 4% and restructuring of this assistance, Yes, restructured respectively. 9% also benefitted from and rescheduled Targeted loan both the restructuring and rescheduling 9% repayment assistance of their loan repayments. Of the issues Loan Yes, NOT required faced by those in their negotiations with Repayment banks, majority 49% did not face any rescheduled 61% 15% Assistance issues at all. 13% felt that the process was too lengthy and tedious while rigid Yes, bank evaluation was faced by 12% of restructured respondents and 6% cited tighter terms 8% imposed by the banks.

COVID-19 Act 2020 According to 54% of the respondents, the COVID-19 Act 2020 that was Yes, it provided Usefulness implemented on October 23, 2020 is temporary reprieve of COVID-19 No, the scope not useful to them as the scope of the to protect again legal disputes Act to Business of the Act does Act does not cover their businesses. 43% not cover my 43% opined otherwise as it provided business them temporary reprieve to protect 54% against legal disputes. N/A 3% As to who should bear the cost of the COVID-19 vaccination for foreign employees, most (40%) opined that Views on Reintroduction of Goods and Services Tax it should be free for all. 24% felt that the cost should be partially subsidised by the government with the employer Retain SST 23% bearing the balance of the cost, while 21% suggested that the cost be borne by employers and it should be tax Improve current SST incoporating 13% deductible. Only 5% were of the view positive elements of GST V1.0 that the employees should bear the full cost of the vaccination. Yes, support reintroduction of GST 61% subject to improvements to the GST V1.0

N/A 3%

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Regional Comprehensive Economic Partnership second by 77% of the respondents, while customs and trade (RCEP) facilitation ranked third with 75% responses. Lower or zero The RCEP, signed on November 15, 2020, is the world’s duties, mobility of manpower, more competitive prices and largest Free Trade Agreement (FTA) consisting of ten ASEAN business opportunities, including joint ventures, are other areas countries with China, Japan, South Korea, Australia and New that some respondents are looking at to benefit from the RCEP. Zealand. 64% of the respondents are aware of this FTA but they need further information on it. Although 17% are aware Strategies in the Next Six Months of the RCEP, they have concerns over competition and 18% Productivity-related strategies that respondents will undertake are not aware of it. In terms of the benefits of the RCEP, both in 1H2021 will be mainly in training and upskilling, and market expansion and supply chain were ranked first and implementation of lean manufacturing, as disclosed by 50% and 48% of the respondents, respectively. 28% will adopt flexi- hours and work from home, while another 28% will increase Awareness Level of RCEP their technical staff. Automation is the most popular technology-related strategy that Not aware at all 17% 55% of the respondents will embark on in 1H2021, followed by digitalisation and Industry 4.0, with 37% and 28% responses, respectively. 23% will also establish channels for Aware but need more 64% digital sales in the coming months. Among other strategies that information will also be undertaken by respondents in 1H2021, market expansion is the most popular, with 54% votes. Introduction of Aware and have concerns 17% new products will be implemented by 43% of the respondents, over competition while 30% will diversify their business activity and 26% will deploy R&D and innovation. 25% will accelerate their key N/A 2% projects and 22% will expand their local supply chain in the next six months. Of the many other forms of assistance that respondents require from the government in 2021, a reduction in corporate tax BUSINESS STRATEGIES IN THE NEXT 6 MONTHS was supported by 75% of the respondents, while 54% hoped for discounts for electricity and natural gas and 43% called for PRODUCTIVITY an extension of the targeted wage subsidy to all workers in all sectors. Additional export incentives, and lower regulatory and statutory costs were also suggested by respondents. Training pskilling 50% OTHERS

Implement AN 54% Market xpansion Management System 48%

BUSINESS RECOVERY 43% Introduction of TECHNOLOGY STRATEGIES New Products

Automation 55% Diversification of 30% Business Activity

Digitalisation 37%

The FMM-MIER Business Conditions Index (FMM-MIER BCI) is a collaborative effort between FMM and the Malaysian Institute of Economic Research (MIER). Business condition is the general state of an economy affecting business viability. The FMM-MIER BCI uses the current level of business activity as a proxy for current business conditions, compared to six months ago. Index values range from 0 to 200 points. A value above the growth-neutral threshold level of 100 points indicates an improvement or positive outlook, while that below the threshold indicates a worsening or negative outlook. The FMM – MIER Business Conditions Survey 2H2020 received 652 responses, of which 67.2% were SMEs (based on full-time employees), with 164, 121 & 115 responses from Klang Valley, Johor & Perak respectively. The top three industries for responses were: Food, Beverage & Tobacco (15.2% of respondents); Chemicals & Chemical Products (14.7); and Electrical & Electronics (12.1%).

FMM_BIA_Jan-Mac2021_FINAL.indd 45 06/04/2021 3:29 PM Business in Action @ FMM 46 NEW MEMBERS JAN - MAR 2021 WELCOME TO FMM The Federation of Malaysian Manufacturers (FMM) thrives on the active participation of its members. The involvement of our members and their staff is essential to the long-term growth of the manufacturing sector and to the primary role of the Federation. It is with great pride and honour for FMM to welcome 44 Ordinary Members and 8 Affiliate Members that joined the Federation from January to February 2021.

• LSF Technology Sdn Bhd • LVC Ecopack Sdn Bhd • LyondellBasell Advanced Polymers (Malaysia) Sdn Bhd • Mark’s Food Solutions Sdn Bhd • MCI Paint Sdn Bhd • Metro Plastic Manufacturer Sdn Bhd • Moltec Precision Sdn Bhd • Nets Impression Sdn Bhd • Pet World Nutritions Sdn Bhd • PolyGreen Chemicals (Malaysia) Sdn Bhd • Red Wheels Trading • RK Malaysia S.A. Sdn Bhd • SBP Health Food & Beverages Sdn Bhd • SMI Paper Industry Sdn Bhd • SS Minerals Trading Sdn Bhd • Syarikat Zulkifli Bamadhaj Sdn Bhd • TAG Fasteners Sdn Bhd • Tai Sin Electric Cables (Malaysia) Sdn Bhd • Tevo Creations Sdn Bhd • Toad Publishing & Distributions Sdn Bhd • UB Framewoods Sdn Bhd • United Vehicles Industries Sdn Bhd • Wansern Technology Sdn Bhd • Yan Sheung (M) Sdn Bhd Ordinary Member • Engtex Metals Sdn Bhd Affiliate Membership • Advantest (M) Sdn Bhd • Essex Furukawa Magnet Wire (Penang) Sdn Bhd • Al Haddad Manufacturing Sdn Bhd • All Active Resources Sdn Bhd • Flortech Sdn Bhd • Alliance Steel (M) Sdn Bhd • ASP Medical Clinic Sdn Bhd • Gem Impression Sdn Bhd • Altus Engineering & Trading Sdn Bhd • Genesis Environmental Advisory Sdn • Hiroyuki Industries (M) Sdn Bhd • Atlas Industries Sdn Berhad Bhd • Hoya Electronics Malaysia Sdn Bhd • Best Nine Food & Beverage Sdn Bhd • Goche Corporation Sdn Berhad • Idemitsu Advanced Materials (M) • Classic International Sdn Bhd • Kujaya Management Sdn Bhd Sdn Bhd • Computime (Malaysia) Sdn Bhd • Leuze Electronic Assembly Malaysia • Jiesin Plastics Industry Sdn Bhd Sdn Bhd • Dareo Integrated Sdn Bhd • Kilang Amang Onn Sdn Bhd • Tapway Sdn Bhd • DRI’N Guard Sdn Bhd • Kosel Industries Sdn Bhd • Yusuf Taiyoob Sdn Bhd

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CMY

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