Friday June 6, 2008
Manufacturers worry
PENANG: Any increase in fuel and electricity costs borne by manufacturers will subsequently be passed on to consumers.
Federation of Malaysian Manufacturers northern branch chairman Datuk O.K. Lee, who likened the situation to a “price increase tsunami,” said the people would have to brace for tough times ahead.
“It’s like we’re experiencing an earthquake and are in need of a disaster relief fund,” he said.
By noon yesterday, Lee was still busy answering numerous calls from members who were “quite depressed” with the news of the price increase.
He said the major costs for manufacturers were electricity, gas and logistics.
Lee added that companies and manufacturers that were export-oriented might not be able to recover the increase in costs from the international market because of competition.
“We cannot simply increase our prices as the cost in other countries might not be so much.”
“Those that cannot recover the costs will make less money and suffer losses. They will try to recover the costs from the market but if they can’t, they will have to think about cutting costs.
“This probably means cutting some employees, as they cannot cut on the goods, or migrating to a country with lower costs,” he said, adding that the increase in costs would be a major factor for new companies coming in to Malaysia.
Lee added that many companies had moved out from China because of the increase in costs.
“Some were thinking of coming to Malaysia but they may have to rethink their strategy if our costs have gone up so much,” he said, adding that this would affect the nation’s foreign direct investments.
He said the federation, which had about 350 members, would study the impact of the price increase and hoped to come up with a better assessment.
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