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American firms report significant losses, likely to revise investment in Malaysia
Published on: Monday, May 18, 2020
By: The Sun
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PETALING JAYA: US companies in Malaysia have taken heavy financial hits over the past few months as 82 per cent have reported significant losses, and around one third of respondents have been incurring losses of more than RM10 million for every two weeks that restrictions on business activity have been in place, according to a survey by the American Malaysian Chamber of Commerce (Amcham).

A considerable number of respondents (16pc) are heavily invested multinational corporations that have reported losses in excess of RM500 million since the movement control order (MCO) was put in place.

As a short-term solution to mitigate the pandemic’s impact, the majority of respondents have been forced to look into cost-cutting measures and adjustments of their long-term business strategy, while devising new standard operating procedures (SOPs) to ensure employee safety and well-being during the crisis.

Despite these challenges, and reflecting the long-term perspective with which American companies invest in Malaysia, the vast majority of employers have been able to avoid laying off staff or implementing mandatory unpaid leave.

Global companies are reevaluating their investment plans in response to the pandemic, and half of the survey respondents are now expecting to reduce their investment in Malaysia during 2020, with a further 20pc feeling that it is too early to comment.

Many companies are also taking steps to revise their supply chain strategies to ensure future business continuity, and may see some readjustments such as the movement of sourcing lines or the shifting of test and assembly operations. A majority of respondents indicated that they work extensively with local SMEs to support their operations in Malaysia, and therefore these local businesses may also incur considerable losses if adjustments to the supply chain become necessary.

A majority of companies emphasised the need for greater clarity of current policies relating to the MCOs, and have requested the government to work alongside the business community to identify ways in which business activities in various sectors can be restarted as expediently as possible without compromising on safety.

Amcham CEO Siobhan Das said it looks forward to continuing its active engagement with the government to find pragmatic solutions.

“Through strong partnerships between Malaysia’s public and private sector, international and local, we can ensure that Malaysia’s dynamic economy proves resilient during these challenging times and is in a strong position to bring about a new prosperity,” she said in a statement.

She added that the pandemic has necessitated a paradigm shift within the Malaysian economy and society as a whole towards a new normal. An institutionalisation of new health and safety protocols, as well as SOPs, will bring about a new way of working. These adjustments have to be made to ensure businesses can play their part in revitalising the Malaysian economy and this is also an opportunity for Malaysia to leapfrog into a higher-value future.

“With strategic choices, reforms, and commitment to developing the skills of its people, Malaysia can cement its central role in the global value chain and economy. As the world moves towards a living-with-Covid-19 era, American businesses that have found a home in Malaysia are committed to contributing to the solutions.”

The survey was conducted between April 17-24, in the fifth week of Malaysia’s measure to manage the Covid-19 outbreak and at the beginning of the MCO Phase 3. A total of 114 respondents took part in the survey during the third phase of the MCO and almost half of the respondents are based in the electrical & electronics and semiconductor industries.


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