Manufacturing sector to expand 3.1% this year

The Economic Report (Thestar.com.my)

Saturday September 8, 2007

Manufacturing sector to expand 3.1% this year

The manufacturing sector is expected to grow 3.1% this year, supported by domestic-oriented industries, particularly chemicals and chemical products, food and, construction-related industries.

For the first six months of the year, softer external demand, particularly for electrical and electronic products, textiles and apparels as well as machinery and equipment affected the overall performance of the sector.

The sector grew by 0.5% compared with last year's 8.8% during the same period.

Output in the domestic-oriented industries grew 5.3% while export-oriented industries contracted 1.9% during the first six months.

Despite the contract, export-oriented industries continue to remain as a major contributor to the total manufactured output.

The chemicals and chemical product industry, including agricultural and industrial chemicals, cosmetics and toiletry products, paint and soap is a significant contributor to the manufacturing sector.

For the first six months of the year, output of the construction-related industry continued to expand significantly by 30.8% due to strong growth in basic iron and steel and structural metal products.

Output of the food products industry grew significantly by 12.7%, driven by higher output in processing and preserving of fish and fish products, which grew by 27.1% in tandem with increased marine fish landings.

Output of the off-estate processing industries, comprising mainly palm oil and rubber contracted by 7.8%, constrained by supply of latex and crude palm oil.

The plastics products industry registered a decline in output and sales of 3.6% and 0.7% respectively due to lower demand for components from electrical and electronics (E&E) and transport equipment industries and lower supply of petroleum feedstock.

While export-oriented industries contracted in the first six months of they year, following the downtrend in global demand for E&E products, that fall was mitigated by strong growth recorded in the medical, optical and scientific instruments, and resource-based industries.

Output of the E&E industry declined by 5.6% in weak global demand.

The rubber-based industry however continued to register growth of 8% contributing 3.9% share to total manufacturing output.

Output of medical, optical and scientific instruments also posted strong growth of 10% in the first six months of the year.

In line with lower production of crude oil, output of petroleum products grew moderately by 8.6% in the same period.

The production of textiles, apparels and footwear industry declined by 10.1% for the six months due to a contraction in output of textiles and apparels as a result of stiff competition from low-cost producing countries.

Meanwhile, production of machinery and equipment industry including air conditioning, refrigerating and ventilating machinery, contracted by 13.7% during the first six months of the year.