 | FMM is conducting the 25th FMM Business Conditions Survey on performance in the first half of 2024 (1H2024) and outlook for second half of 2024 (2H2024). |
As with the last 24 surveys since 2012, we are tracking the FMM Business Conditions Index (FMM BCI), which measures members’ feedback on their current and expected levels of business activity, local and export sales, production volume, capacity utilisation, capital investment, employment and cost of production.
Topical issues for this survey will focus on assessing manufacturers’ views on the following:
- Revenue and Profit Growth
- Business Confidence Level
- Challenges to Business Operations and Growth
- Biggest Opportunities in 2024
- Minimum Wages
- Automation and Technology Adoption
- Ringgit Exchange Rate
- Service Tax on Logistics
- Government Procurement
- 2025 Budget Wishlist
FMM aims to obtain over 1,000 responses for this survey. We seek members’ continued support and participation to ensure that the BCI is a REPRESENTATIVE and ACCURATE index of manufacturing business conditions and feedback on the current state of business and the economy and current challenges faced are reflective of the industry.
The survey will be conducted completely online. The questionnaire takes about ten to fifteen minutes to complete and can be accessed by scanning the QR code above OR online via this link: https://tinyurl.com/FMMBCS1H2024Survey.
This survey continues to be an important tool to collect members’ feedback on the current and expected levels of business activities as well as on topical issues impacting the manufacturing sector. For instance, the last survey revealed the following:
- In 2H2023: Business conditions in the Malaysian manufacturing sector improved in 2H2023 amid challenges in the global and domestic economic landscapes. While several indicators within the sector showed improvement, the overall situation remained below the optimism threshold, signalling a slow recovery as the sector continued to grapple with persistent economic headwinds.
- Outlook for 1H2024: Going into 2024, with economic conditions expected to improve, including the easing of global interest rates as inflation continues its descent, manufacturing activity could likely gain some momentum, albeit slowly, with an expected pick-up in sales, production, capital investment and hiring going forward. Across-the-board improvements were charted for all the forward-looking indicators covered in the survey. Notwithstanding the improvements, some indicators remained below the optimism threshold, an inference that respondents are cautiously forward looking in 1H2024, in particular, local and export sales, production volume and capacity utilisation.
- 3 biggest challenges to business operations and growth in 2024: rising input costs, weak demand and ringgit depreciation.
- Revenue & profit growth 2024: higher revenue and profit by 1-10% expected in 2024 vis-à-vis 2023.
- Manufacturing operations preparedness and resilience: 45% of respondents are somewhat prepared and 44% are adequately prepared to withstand disruptions to operations.
- Assistance needed for export market expansion: expand double tax deduction incentive and introduce new incentives to increase the visibility of Malaysian brands regionally and internationally.
- Top Markets Identified for Free Trade Agreement Negotiations: Tanzania, USA, UAE, Saudi Arabia, Qatar, South Africa and Brazil.
- Industry 4.0 and digitalisation: 55% of respondents have not invested in IR4.0/smart manufacturing yet. Most (53% respondents) cited the lack of in-house expertise to lead their adoption of IR4.0, while 45% do not have a budget for it.
- Areas Equipped with Industry 4.0 Technologies: The set-up of IR4.0 technologies at most factories is mostly low (20-40%) to moderate (>40-60%). 30-40% of respondents were moderately equipped with IR4.0 technologies in production, quality control systems, packaging management systems, inventory management systems, maintenance, store/warehouse and logistics.
- Government support required to commence IR4.0 (Pilot POC) and to scale up current IR4.0 (expand Pilot scope)
- Financial support from government for IR4.0 adoption: incentives, matching grants and double tax deduction
- Technical support from government for IR4.0 adoption: training, consultancy, and research and development
- Access and Speed 5G Internet: Most (46%) rated coverage as Average, 24% as Poor and 17% as Very Poor.
- Top 3 IR 4.0 technologies and tools used in factory operations: cloud computing, cybersecurity and industrial Internet of Things (IoT)
- Cost is biggest challenge to manufacturing sector in adopting or transitioning towards Environmental Social and Governance (ESG) practices
- New service tax on logistics expected to increase the product prices of 78% of respondents
- 54% of respondents were not sure about volunteering their participation in the PWM. Main concern is lack of clarity on the implementation mechanism and requirements
- 83% of respondents opined that the new tax measures, as announced in Budget 2024, will likely impact their businesses, with minimal or moderate impact expected. Increase and expansion of the scope of the service tax and e-invoicing are expected to impact most respondents.
The closing date of the survey is August 2, 2024.
Thank you for taking your valuable time off to complete the questionnaire.
Enquiries: Puan Hema Thiruchelvam / Puan Nurhafizah Ngatiran / Puan Kamsiah A Rahim, Business Environment Division at Tel: 03-6286 7200or e-mail: Business_Environment@fmm.org.my.
Click here to download Circular GI/15/2024. FMM Advocates Transparency, Integrity, Accountability and No Corruption
Tan Sri Dato’ Soh Thian Lai
President
