July – September 2003
MALAYSIAN
TIN PRODUCTS
MANAGEMENT COMMITTEE
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PRESIDENT MR. JASON LEE HENKEL (MALAYSIA) SDN
BHD VICE-PRESIDENT MR. MAMORU KAWASAKI (ALTERNATE – MR. LOH
YOON SOON) SELAYANG SOLDER SDN BHD HON. SECRETARY MR. C.S. LIM METAL RECLAMATION (IND)
SDN BHD TREASURER MR. EDWARD WONG E.M.I.S. SDN BHD |
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Letters to the Editor are
welcomed. We appreciate your feedback
to further improve our editorial content. Please address your letters to: The Editor The Malaysian Tin Products Newsletter P O Box 12560 50782 KUALA LUMPUR. |
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COMMITTEE MEMBERS MS. GAY LEONG ROYAL SELANGOR
INTERNATIONAL SDN BHD EN. AB. PATAH MOHD PERUSAHAAN SADUR TIMAH
MALAYSIA (PERSTIMA) BHD MR. KOJI TSUBONO SENJU (M) SDN BHD |
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SECRETARIAT ADDRESS The Malaysian Tin Products Manufacturers’ Association (MTPMA) 8th Floor, West Block Wisma Selangor Dredging 142-C, Jalan Ampang 50450 KUALA LUMPUR. |
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EDITORIAL SUB-COMMITTEE MR. JASON LEE MR. C.S. LIM MR. EDWARD WONG MS. GAY LEONG EN. AB. PATAH MOHD |
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Tel: 03
– 21616171 Fax: 03
– 21616179 Email: mcom@mcom.com.my The Malaysian Tin Products Newsletter is published
quarterly by the Malaysian Tin Products Manufacturers’ Association (MTPMA).
The opinion and statements expressed in the Newsletter are not necessarily
those of the MTPMA or the Editorial Sub-Committee and neither endorsement nor
confirmation are intended or implied. |
Dear Members
It gives me great pleasure to say a few words
in this newsletter. To begin with, we
would like to thank the previous Management Committee and the Secretariat staff
for their good effort in moving the Association forward.
The new Management Committee would strive to
emulate the achievements of its predecessors.
One of the main tasks that we need to do is to gather more articles of
our industries so that it could be shared.
Besides business matters, articles on issues relating to environment,
safety and health would make interesting reading. I am confident that with the support and concerted efforts by all
parties concerned, this quarterly newsletter will be a regular source of
updating members on knowledge as well as development and progress of our
Association.
What a year it had been. The tin price has reached this dizzy heights
of over RM20.00. The last time we saw
this price was in the year 2000. Let's
hope that in the year 2004, the Malaysian economy would improve further.
Here's wishing all of you good health and a
successful 2004.
Thank you.
Jason Lee
President
NEC Malaysia to Raise Output
NEC Computers Malaysia Sdn Bhd will increase its annual production capacity by fully utilising its Penang plant through its newly-transferred notebook engineering and development section to cater for European markets. NEC Computers International (NECCI) chief financial officer and vice president of finance Asia Pacific, Bernard Saw, said that to-date, the company utilises only a quarter of the Penang plant although it has annual production capacity of one million units of notebook and desktop computers. "We still have a low capacity at the Penang plant. All we have to do is to boost up sales and move all the three shifts. Presently, we are moving only one shift," he said after the company, a subsidiary of Japan's NEC Corp, presented computers to Penang Library Corp in Penang recently. Saw said that based on current sales, the plant produced about 200,000 units of desktop and notebook computers per year.
"For the last financial year, we closed at about US$150 million of sales and for this year we are targeting US$200 million and next year at US$250 million of sales," he said. He added that the Penang plant contributed about 15 per cent of the global market sales. The notebook engineering and development section was previously based in Angers, France, and was transferred to Penang earlier this year. Saw said that preciously the Penang plant only catered to the Asia-Pacific region, including South Korea, Hong Kong, New Zealand, Australia, India, Pakistan and Sri Lanka. He also said that a new section of programme management team would be set up and to commerce fully in August this year.
(Source: Business Times, 9 July
2003)
Electronic circuit board manufacturer Nippon Electric (M) Sdn Bhd is closing down its entire manufacturing facility in Shah Alam, which will result in the loss of 700 jobs. Industry sources told StarBiz the company was expected to shut down on Oct 15, after having been in operation for about 10 years. In the initial five years it had enjoyed pioneer status. "All employees have been informed of the decision and were given two months' notice with full pay," the source said, adding that the company was currently finalising orders for clients.
When contacted, a company official confirmed this, but declined to elaborate. No labour disputes are expected as the employees were told that lower demand for its printed circuit board (PCB) was the main reason for the closure of the facilities, which started operation in 1992. The Shah Alam facilities were built to produce some 180,000 sq m of PCBs per month, but at its peak in 2000, it produced some 120,000 sq m monthly, the source said. "Right now, monthly production barely reaches 30,000 sq m," he added. The lower production had put a strain on the company's profitability, and prompted the Japanese owners to close the facility, he said. An industry analyst said the closure of Nippon Electric reflected the turmoil currently facing PCB manufacturers worldwide, which had to trim capacity in view of slowing global demand. "Nippon Electric currently produces 90 per cent of the old type of PCB and is losing out to competitors moving towards high-tech cooling-based PCBs," said the analyst, who tracks the semiconductor industry. He said there was higher demand for cooling-based PCBs, used in mobile phones, than for the older PCBs, for PCs. "Most industry players are facing a situation where they either have to upgrade their current facilities or ship out," the analyst said.
While Malaysia is expected to lose out with the latest closure, the country has also gained from the current situation, he said, pointing to the decision by Motorola Inc to transfer its manufacturing facilities here from Singapore and Hong Kong early this year. Nippon Electric is a joint venture between Japanese-based Nippon Steel and Chemical Corp and Kyoden Group. It is understood that Kyoden, which has its own facility in Thailand, might transfer part of the production lines of Nippon Electric to that country. Kyoden-owned unit, Toei Denshi Thailand, is likely to step in to fulfil any of Nippon Electric's outstanding contracts, should the latter not be able to complete its order before the shutdown.
(Source: The Star, 23 August
2003)
No other industry has been watched so closely and seen so many alterations in forecasts as the chip sector. Pundits who for many quarters have expected a pick up in the industry have been proven wrong enough times to keep their projections to themselves until clearer signs emerge. That time may be up about now. Global chip sales in May increased for the third consecutive month up about 2 per cent to US$12.5 billion month-on-month and about 10 per cent year-on-year. Semiconductor Industry Association (SIA) president George Scalise had said the growth forecast for the year is on track with this "uptick in May".
And while it may be still be far from returning to its dizzying heights of early 2000, most market observers reckon this strongly signals a recovery. With that, most analysts are saying they expect a double-digit growth for the local semiconductor industry this year. That's saying quite a bit for an industry that has remained in the doldrums for two long and gruelling years. Malaysia's exports of semi-conductor products surged 30.4 per cent in the first quarter this year to RM14.7 billion year-on-year (Exports in the second quarter is expected to be released over the next few weeks). Malaysia's electrical and electronics (E&E) exports comprising semi-conductors and other electronic components and products amounted to RM197.9 billion, or 55.8 per cent of total exports, last year. Of that, semi-conductors alone accounted for 36.6 per cent.
Another factor to keep in mind is that the industry generally witnesses a pick-up in the second half of the year, largely driven by the festivities. If this pans out, 2004 may be even a better year for the whole industry. "The year 2004 will generally be better compared to 2001," OSK Research analyst Shin Kao Jack says, adding that the monthly global chip sales are still far from its peak of US$19 billion in 2000, but is slowly getting there. Mayban Research expects a stronger showing from the industry in the second half of this year with the fear of SARS abating and as the replacement cycle in the PC and mobile segments begin to kick in. "More importantly, the chip sector, which started improving in 2002, is anticipated to gain further strength going into 2004 on the assumption that the semiconductor three-year cycle holds." The inventory levels of the industry (of computers and communications equipment in the US), currently at a historical low, are expected to pick up in the second half of the year, driven by festive sales. Malaysia is likely to reflect this trend. Also, the US electronics computer unfilled orders have been coming down year-on-year (y-o-y) for 13 months but since December 2002, the data started to show y-o-y growth for five consecutive months. "This is a significant signal of a turnaround in the industry," Shin says.
Industry watcher SIA has forecast a 10.1 per cent increase in sales this year, 16.8 per cent next year, 5.8 per cent in 2005, and 7 per cent in 2006. It also expects industry sales to grow from US$141 billion last year to US$205 billion in 2006. According to the association, the Asia-Pacific market will become the leader in regional semi-conductor consumption, with a growth rate of 23.6 per cent this year, compared with 13.5 per cent for Americas, 17.6 per cent for Europe and 21.6 per cent for Japan. Such positive news has not suprisingly stirred a buying frenzy of semi-conductor stocks in the local bourse. Big players namely Malaysian Pacific Industries (MPI) and Unisem (M) Bhd have seen their stock prices rise significantly against this backdrop. But it's time to take stock of the situation. OSK's Shin says, "The current prices of these two stocks have, more or less, factored in the positive data. But in a strong bull market, share price isn't really based on fundamentals or valuation, but on sentiments. That's why the share prices of MPI and Unisem are still going up." Much of the good news has already been factored in the share prices. In addition, the recovery may be one way or the other impacted by the inventory overhang situation, it has caused one analyst to deem these stock as "fundamentally overvalued." Nonetheless, supported by stronger chip demand, Shin expects MPI and Unisem to return to the black for FY03 and thereon, their FY04 net profit will increase at a much stronger rate. The house has forecast a net profit of RM47.8 million for MPI for FY03, with a big amount of tax write-backs in the fourth quarter due to its restructuring and RM70.7 million for FY04; and a net profit of RM15 million and RM38.3 million for Unisem for FY03 and FY04 respectively.
Manufacturers have been ramping up semi-conductors production in first half of 2003 with MPI operating at over 70 per cent capacity – high by industry standards. This indicates their view of a pick-up in demand. Mayban Research points out that the improvement in volume orders since March has resulted in higher utilisation rates for MPI. The company is currently producing 11-12 million chips per day, which translates to utilisation rates of 69-75 per cent. "This represents a significant improvement from 50-55 per cent capacity utilisation (estimated) in FY02. Furthermore, current utilisation is also comfortably above breakeven levels, estimated to be at 48 per cent," says the local research house. According to SIA, sales of programmable logic and standard cell chips rose 8.6 per cent in May, pointing to signs of life in telecom spending. In the wireless sector, flash memory – used in digital cameras, music players and other handheld devices – sales increase by 4.4 per cent. Japan recorded the strongest growth in sales. Asia Pacific reported an 11.7 per cent increase y-o-y; Europe up 9.3 per cent but sales in Americas declined by 6.7 per cent as the outsourcing of electronic equipment production to Asia continued. With the semi-conductor industry showing signs of reviving, local information and communication technology (ICT) spending is also expected to be more aggressive in 2004, especially for the private sector.
(Source: The Star, 5 July 2003)
AKN Upbeat on Recovery of Global Semiconductor Industry
Penang-based AKN Technology Bhd is upbeat on the recovery of the global semiconductor industry. Executive chairman Datuk Ahmad Kabeer Mohamed Nagoor is optimistic that purchases of several local and foreign technology players over the past year will place the group in good stead as a global semiconductor player. "Things are looking up for the semiconductor industry and we intend to continue exploring and exploiting the opportunities," he said. Confident of brighter days ahead for the industry based on the revival of the US economy, Ahmad Kabeer said AKN is well prepared to grab the opportunities that come along. He said the global computer replacement is picking up and the US inventory for personal computers (PCs) is levelling off. "We see a dynamic growth in the communications sector especially involving the third-generation mobile Internet network as well as more applications by personal digital assistants. Global demand for PCs has also increased sharply to about 21 million a month from about 10 million in 2001. As such, we are gearing the group to capture a sizeable share of the growing semiconductor industry," he said.
The first Bumiputera concern of its kind, AKN group recorded a satisfactory performance for its financial year ended March 31. It achieved a 46 per cent increase in turnover of RM250.3 million compared with RM 170.9 million the previous year. In tandem with the increase in turnover, the group's profit after tax also doubled to RM25.7 million from RM12.9 million recorded in 2002. Ahmad Kabeer attributed the significant increase in the group's turnover and profit to the recovery of the global semiconductor industry. "Of course, our aggressive review to curtail costs, improve operational efficiencies and increase market share further boosted our coffers," he added. He said although the contributions of newly-acquired subsidiaries, JIT Technology (M) Sdn Bhd and Autoplus International Group Ltd, were minimal, the group is confident they will contribute significantly this fiscal year. He added that the group's design, engineering and distribution division was the main contributor to AKN's coffers. The division recorded a turnover of RM154.2 million last year, a 46.7 per cent increase from RM105.2 million the previous year. The increase, coupled with improvement in operational efficiencies and cost cutting measures, resulted in almost doubling the profit-after-tax for the division to RM22.41 million from RM12.16 million.
At the meeting, the group also announced the appointment of Ooi Boon Leong as its chief executive officer, effective from August 11. An accountant by profession, Ooi is also a member of the Malaysia Industry-Government Group for High Technology-photonics Committee. The group also announced the appointment of Jia Tiejia, a Taiwanese, as an executive director while non-executive director Lim Eng Thong has been appointed as an executive director of the group. The group now has four independent directors following the appointment of Mohamad Najeb Ali to the board recently.
(Source: Business Times, 20
August 2003)
Intel Corp's chief executive officer, Datuk Dr. Craig R Barret, says Malaysia will continue to feature very strongly in its operations despite competition from other low-cost countries like China, India and Russia. When asked whether Malaysia would continue to shine brightly on Intel's radar screen, his reply was, "Off course! Look at the number of employees we have in Malaysia. We have more employees in Malaysia than we have in the US Silicon Valley!" Intel, the world's largest chip manufacturer headquartered at Santa Clara in California, has around 8,000 employees in Malaysia.
It operates two manufacturing plants in Penang and Kulim (Kedah) and has a software development centre at the Multimedia Super Corridor (MSC). Speaking to Bernama via telephone ahead of his visit to Penang next week to announce fresh initiatives in Malaysia, Barret said Intel has been continuously investing in the country. The company, which also makes flash memories, networking and communications products, had invested US$2.3 billion since it began operation in Malaysia 31 years ago. "l expect Penang to continue to play an increasing role in Intel's success, not just in manufacturing but also in technical innovation. It is really about bringing more innovation capability to play in Penang and utilising the resources there to do that," he said.
Intel Penang's all-Malaysian team, consisting of over 100 engineers, has been involved in the design and development of the Mobile Input/Output Controller Hub 4, a central component of the Intel 855 chipset. It is a high-performance mobile chipset built for Intel's latest Centrino mobile technology chip. The Centrino, which represents Intel's best technology for mobile PCs, includes a new mobile processor, related chipsets and integrated 802.11 wireless capabilities that have been optimised, tested and validated to work together. Referring to Intel's MSC activities in Malaysia, he said they are rather small at present as the company has not been ramping up operations in many of its sites in view of the continued downturn in the US and Europe. "Right now we are waiting for recovery to come before we announce any substantial plans to expand our presence in the MSC," he said.
However, Barrett said given Malaysia's competitive wages, good education system and pool of well-trained engineers, the country would rank highly in any future expansion by Intel. He said Intel has been transferring technology to innovate Intel Malaysia and sending Malaysian engineers to various Intel plants around the world. "It is important that product engineers and engineering resources in Malaysia understand the products very well from the design up," he said. On his views on rising business costs, Barrett said the challenge for countries like Malaysia would be to raise productivity when wages rose. To be able to do so successfully, he said both the public and private sectors have to invest substantially in training the workforce and in getting the right tools and infrastructure to make them more productive and innovative. Citing Intel as an example, he said it could not afford to be complacent while awaiting for recovery in the US and European economies or an upswing in new computer hardware purchases by enterprises. "You never sit still and wait for the market to turn good. Your research and development has to go on, whether the market is good or bad," he said.
In a separate interview, Peter Choong, Intel Electronics (Malaysia) Sdn Bhd's country manager, said Intel is able to shield itself from the negative effects of the Severe Acute Respiratory Syndrome outbreak in this region in the second quarter of this year. He said its market in the Asia Pacific market contributed 41 per cent of the Intel's overall revenue of US$6.8 billion during the period. The Asia Pacific region posted an all-time revenue record for Intel following the improved personal computers penetration rate. Choong, who is bullish over Intel Malaysia's income prospects in the second half of this year, said this is especially so with the seasonal higher consumption during the year-end festivities and school holidays. In addition, many companies are expected to replace their PCs after major purchases in 2000 in anticipation of the Y2K bug.
(Source: Business Times, 23
August 2003)
Intel Corp will invest RM152 million to expand its manufacturing capacity in Penang, including the opening of a new technology design and development centre in Bayan Lepas. "Today we celebrate and build on Intel's 31-year history of technology manufacturing in Malaysia and invest in the country's advanced technology design and development capabilities," said Intel's chief executive officer Datuk Craig Barrett at the opening of the new centre which was officiated by Penang Chief Minister Tan Sri Dr Koh Tsu Koon. "Malaysia's readily available infrastructure, high-volume manufacturing capabilities, skilled workforce and strong government support for information technology innovation made it an ideal location for our new centre."
Intel spends US$100 million of its total US$4 billion research and development budget on its Malaysian operations every year. Barrett said Malaysia's share of Intel's research budget will increase in the coming years as local research activities increase. A total of 1,000 Malaysians involved in R and D work are on Intel Malaysia's payroll and have obtained 21 US patents to date. Intel Malaysia, whose investment presence in Penang can be traced to 1972, is dedicating its new facility, also known as PG12, to develop assembly and testing processes for chipsets and non-central processing unit (CPU) packing technology for the company's manufacturing facilities globally. The company has over three decade, invested US$2.3 billion in Malaysia at sites in Penang, Kulim in Kedah and Cyberjaya and Kuala Lumpur. Intel's new three-storey design and development centre, which spans a floor area 360,000 sq feet and will house several design and development facilities, including Intel Malaysia's Assembly Technology Development and Testing Technology Development laboratories, which focus on manufacturing processes and packaging technology for various Intel products. The laboratories' research is also taking a global lead in developing manufacturing processes and packaging.
Urging Malaysia to be more competitive in the expanding global economy, Barrett said the country should not rely solely on its manufacturing successes, but also focus on value-added technology design and development. "The countries that drive technology innovation and invest in the development of the future IT workforce today, will be well-positioned to lead and be successful in the digital age tomorrow," he added. While commending the Malaysian Government and business leaders for their work in stimulating IT research and innovation through university research grants and efforts to strengthen education programmes, Barrett also cautioned that a critical factor to the impact of Intel's investment hinged on the continued availability of talent to sustain design and development efforts locally.
(Source: Business Times, 27
August 2003)
Semiconductor Sector in Asia to Expand by 14pc in 2003: Gartner
Asia's semiconductor market is projected to generate US$67 billion worth of sales in 2003, an increase of 14 per cent from a year ago, technology research house Gartner said recently. For 2004, the market will be worth US$86 billion, US-based Gartner's principal analyst for the region, Philip Koh, said. "For the Asia Pacific itself, we are looking at close to 14 per cent growth against 2002," Koh said at a media conference. "Looking ahead, we are talking about more than 20 per cent in the year 2004 and 2005," he said. The projected rise in sales in the region will be driven by buoyant demand in China, South Korea and Taiwan, the three biggest semiconductor markets in Asia, Koh said. "The demand of semiconductor consumption, particularly in (the) three major countries is really driving up the whole industry. And of course China will still continue to lead five years down the road," Koh said.
Globally, the semiconductor market is expected to generate revenues of US$173 billion in 2003, up 11 per cent from US$156 billion in the previous year, Gartner's vice-president Richard Gordon said. Despite the projected improvement, Gordon said there is still "healthy scepticism" due to prevailing global economic uncertainties. "There is turmoil in the world these days and businesses are being cautious about spending on things like computer technology. So we have to be a little bit cautious about the end market here," he said.
(Source: Business Times, 27
August 2003)
Intel, the biggest chipmaker, true to its
reputation and size, has investments all over the world. It represents the new economy, which is
information technology-based, and its investment strategies have been seen as a
weather vane of host economies' fortunes.
With the strong competition for
foreign direct investment (FDI), some of its decisions, and other
multinationals like it, could deliver strong psychological boosts or
blows. Economists and analysts are
quick to tally the gains of some and the loss of others. This zero sum game approach tends to scare a
lot of people, and for the past few years the biggest bogeyman has been China,
especially since its ascension into the World Trade Organisation in 2001.
The Middle Kingdom is threatening to dwarf all others, turning the FDI spigot off to other countries with its vacuum-like manner in drawing investments its way. Even people as far away as the US and Europe are fearing the lost of jobs to cheap Chinese goods. "We try to be good corporate citizens . . . we try to be not too big (in a particular place)," Intel chief executive officer Datuk Craig Barret said when asked how he felt when making decisions that could impact domestic economies that host its operations. Even in its home country, the US, Barret said Intel scatters its investments and doesn't concentrate in an area or state. Barret was in Penang recently for the official opening of a US$40 million Intel design and development centre, which is yet another sign of Intel's commitment to Malaysia. To date, since 1972, the group has invested over US$2.3 billion in Malaysia, and employs over 8,000 people. Along the way, it has spawn entrepreneurs and technopreneurs. It has been said that over the years some 100 companies were set up to serve Intel operations in Penang, with over 100,000 employed. Till now seven of them are on the main board and five on the second board of the Kuala Lumpur Stock Exchange.
Five years ago a study by a local university put Intel's impact on the domestic economy 3.5 times the money it spent here, which is about the same multiples as in the US. Annually the company spends about RM1 billion in Malaysia. Thus, it is easy to understand the boom Penang experienced since the 1970s, with the hundreds of multinationals (MNCs) and home-grown companies located there. Barret, who has been visiting Penang at least once a year for over 30 years, has a front seat during the island's transformation. "It is a phenomenal transformation . . . the roads (in Penang) then were all bicycles and trishaws." There is a famous picture of Andy Grove, one of Intel founders and current chairman, pants rolled up in what was a muddy parking lot in the middle of a padi field in Bayan Lepas, which now is choc-a-bloc with factories at the attendant shift-ending traffic jams. Intel's new investment in Penang is seen not just as another investment, but more importantly it signals to many that foreign MNCs are not all packing their bags and buying a one-way ticket to Beijing or Shanghai. Also of significance is that the investment is in research and development (R and D), way up to notch of labour intensive assembly, like wire bonding back in 1972. More than 30 years ago, a fledgling Intel was looking for a site to do some of the cost and labour intensive works, like manual wire bonding. The then Penang Chief Minister, Dr Lim Chong Eu, went courting companies abroad to set up shop in what was to be the island's free trade zone. "The expectations then were not much. The technology, was rudimentary, labour and cost-intensive operations," he said. Thirty years on, despite Intel's rapid expansion elsewhere, including China, the company continues to have a strong presence in Malaysia. For the past 20 years the Malaysian operations have moved up the value-added chain that includes R and D. More than 20 US patents have been attained by the Penang operations, manned largely by local engineers and designers.
In 1998, when Malaysia was hit bad by the financial crisis, a delegation led by International Trade and Industry Minister Datuk Seri Rafidah Aziz was in the US trying to attract investments during a time when many were re-evaluating their ratings of the country. Two US firms – Intel and Citibank – became Malaysia's biggest supporter as their representatives came along for the roadshow telling good things about the country to the American business community. The bottom line then and now is that Malaysia is still extremely competitive, in terms of monetary cost as well as the overall cost of doing business. The biggest potential for Intel, Barret said, now that growth in computer sales have slowed down, is the convergence of information technology and telecommunications, specifically mobile telecommunications. The chips in the personal digital assistants and computer notebook planted with radio devices that would make wireless connectivity more of a convenience than rarity these days. And Intel Penang has been integral in the design and development of the ICH4M, a strategic component of Intel 855 chipset for Intel Centrino mobile technology.
Malaysia's competitiveness, Barret said, did not come by chance, and reminded the Government to continue investing in infrastructure and more importantly, education. While the economic realities of the globalised world cannot be denied, and there has been too much fretting about the impact of China on FDI flow into the country, strong human assets could always ensure competitiveness. Malaysia, he said, should always do a quantitative and qualitative comparison of its education system with other countries. A well-trained workforce, in relation to the rest of the world, is one the best incentives it can offer.
(Source: Business Times, 2
September 2003)
Global semiconductor sales rose 12.5 per cent
in August on higher demand for chips used in personal computers (PCs) and
consumer electronics, a trade group said.
The growth marked the sixth consecutive monthly gain. Sales increased to US$13.42 billion from
US$11.93 billion in August of last year, the San Jose, California-based
Semiconductor Industry Association, or SIA, said in an e-mailed statement. Sales gained 4 per cent from July. Demand for chips used in PCs, mobile phones
and DVD players is starting to recover after chip sales fell or stagnated for
the past two years.
The benchmark Philadelphia Semiconductor Index
has gained 47 per cent this year to last Friday's close. "August sales confirmed the broad-based
strength of the semiconductor market, led by demand in the consumer, computer
and wireless sectors," SIA president George Scalise said in the
statement. Infineon Technologies AG,
Europe's second largest chipmaker, gained as much as 1.7 per cent in Frankfurt
and Royal Philips Electronics NV, the region's largest consumer electronics
maker, climbed as much as 1.4 per cent in Amsterdam.
(Source: The Malay Mail, 30 September 2003)
American investors in the Malaysian electronics industry are optimistic sales will be higher this year as demand for computers increases. The Malaysian American Electronics Industry (MAEI), an industry group of the American Malaysian Chamber of Commerce (Amcham), expects sales of their products to increase by 15 per cent this year. Amcham governor C.B. Teh said the group also predicted sales by member companies next year to be even better. "The ongoing inward consolidation of operation and activities into Malaysia will be the main factor that will push up MAEI's sales," he said at a media briefing to announce results of the MAEI annual survey for 2003 here recently. For instance, Teh said, in the last one or two years, personal computer manufacturers had moved a lot of their operations to this country. "They are not only bringing in with them new investments but also value-added investments," he said.
However, he could not provide statistics to show how many American companies based in Malaysia have shifted their operations elsewhere. Teh said total exports of MAEI members last year rose 15.5 per cent to RM51.3 billion from RM44.4 billion in 2001. "Almost 100 per cent of the goods produced in Malaysia are exported, mainly to the United States," he said. There are 18 MAEI members in Amcham and each member is 100 per cent American-owned. They have operated in Malaysia for between 25 and 30 years. As for global factors that would boost sales this year, Teh said the second half of 2003 was expected to be better, especially with the pending recovery of the US economy. In addition, he said, there was general expectation of the next replacement cycle for personal computers in the later part of 2003 and into 2004. "Many new companies are also introducing new products with higher semiconductor content," he said. Teh said Malaysia's competitiveness as a location for electrical and electronic manufacturing remained favourable. There are also ample knowledgeable and skilled workers. In fact, 14 of the MAEI member companies are managed by Malaysians. Teh said to enhance competitiveness, productivity needed to improve and the number of skilled research and development personnel increased. While the Malaysian Industrial Development Authority has been very responsive in terms of coming out with incentives to attract foreign direct investments, he said the agency could respond faster to the industry's queries. On capital investment, he said the forecast for 2003 was RM 1.4 billion, down from RM1.6 billion in 2002. Capital investment in 2001 was at RM2.3 billion. He said most companies surveyed had excess capacity and were trying to improve their plants' utilisation. Plant utilisation in 2003 is projected at 70.3 per cent, up from 65.2 per cent in 2002 and 60.7 per cent in 2001.
Amcham president Timothy Garland, who was also present at the Press conference, said the drop in capital investment was in line with the global trend of declining foreign direct investments. "There is nothing unusual to Malaysia since Malaysia falls within the trend of global investments," he said. He expects investment to pick up by next year and 2005. "We conducted a new survey about two months ago and it shows that we are on track to achieving about 15 per cent growth," Garland said. He also said the 15.5 per cent sales growth recorded for last year actually exceeded the group's earlier forecast of seven per cent.
(Source: New Straits Times, 31
July 2003)
Penang industrialists want Multimedia Super Corridor (MSC) status to be given to companies even though they operate outside the MSC area. The Free Industrial Zone Penang Companies' Association (Frepenca) said this will encourage their members to reinvest in Penang for research and development. "Giving us MSC status will serve as an inducement to invest more in product development in Malaysia as the funding granted to MSC-status companies can be utilised to build or improve on infrastructure outside the MSC, such as broadband capabilities." A Frepenca spokesman said members also hoped for incentives that will encourage companies to establish design centres in Penang.
Frepenca's founder companies include Intel, Clarion, Hitachi, Litronix (now known as Osram Opto Semiconductors), Monolithic Memories (Advanced Micro Devices), National Semiconductor (Fairchild Semiconductor) and JASI (B. Braun Medical Industries). The association currently boasts over 60 member companies, most of which are electronics-based, with a combined workforce of about 80,000 and total member revenues contributing around RM25 billion to Malaysia's gross domestic product. The association also hopes that Budget 2004, which will be tabled on Friday, will contain automatic extension of another five years for companies currently enjoying 10-year pioneer status, reduction of corporate tax and provision of training grants for Malaysian engineers overseas. Frepenca is also seeking an increased rebate from the current RM400 allowed every four years to Malaysians to purchase computers to RM1,000 every two years. Members are also proposing that more incentives be given to overseas Malaysians to return, such as facilitating the permanent residence and local employment of foreign spouses, to reverse the brain drain.
(Source: Business Times, 9 September 2003)
Economy Expanding Faster Than Expected
Malaysia's economy has expanded faster than the Government expected after it announced a package of measures to boost growth in May, said Tan Sri Dr Zeti Akhtar Aziz, Bank Negara Malaysia's governor. "Given that we have had some adverse developments, all the numbers that are coming in show that growth has been better than expected. The underlying growth trend is intact," she said, declining to elaborate.
In May, Malaysia cut its benchmark interest rate a half point and announced a RM7.3 billion loans and spending plan to help businesses stalled by the Severe Acute Respiratory Syndrome outbreak and slowing exports. That led to economists raising their forecasts for Malaysia's growth. This month, the Malaysian Institute of Economic Research (Mier) said it expects the economy will expand 4.3 per cent this year, helped b positive developments in the US and at home. The group's latest estimate aligns itself closer to Bank Negara's forecast that South-East Asia's third biggest economy will grow 4.5 per cent in 2003. Malaysia's economy is the third largest in South-East Asia after Indonesia and Thailand. Manufacturing makes up two-thirds of industry. The Government will announce second-quarter growth estimates next month. In April, Mier, whose forecasts are closely followed by Government and businesses, had cut the forecast from its October estimate of 5.7 per cent by more than a third, citing concerns about SARS and the Iraq war.
On Malaysia's plan to sell about 600 million euros (1euro = RM4.41) of Islamic global bonds, Zeti said this is something the bank is looking at. "As and when the Government decides to raise (money), this is one of the options."
(Source: The Malay Mail, 29 July 2003)
Manufacturing sales data for June closed the chapter on weak demand for Malaysian products after the end of the Severe Acute Respiratory Syndrome scare and the Iraq war, economists said, with a rebound now expected in the second half of 2003. The sales value of the country's manufacturing sector grew by 7.4 per cent to RM27.7 billion in June against June 2002. The monthly sales, the highest since March this year, increased by 3 per cent against RM26.9 billion recorded in May 2003.
Economists believe that signs of improving demand are already visible in the latest global semiconductor sales. In June, global semiconductor sales returned to its double-digit growth when it rose by 10.3 per cent year-on-year. Semiconductor sales were registering a healthy 22.1 per cent growth in January this year before they started to steadily decline following the looming global uncertainties. In March, they grew by 12.8 per cent before the growth slowed further to 9.7 per cent in April. "The recent catch-up by manufacturing sales is timely, having under-performed the double-digit pace in industrial and manufacturing output for the previous two months. This lends credence to manufacturers' decision to boost output during the first two months of the second quarter of 2003. Their anticipation of a better demand outlook towards the second-half of 2003 may have been accurate after all," said MIDF Sisma Securities economist Azrul Azwar Ahmad Tajudin. The June data have closed the gap between the manufacturing sector's performance in terms of output and sales. The 7.4 per cent increase in sales was only a notch lower than the 8.6 per cent rise of industrial production index in June. According to Azrul Azwar, although solid gains in output might signal optimism among manufacturers of a pick-up in future orders, out-of-synch real sales for a sustained period pose the risk of inflating stockpile out of proportion. Excessively enlarged inventory could take sometime to unwind, he added, compelling manufacturers to draw down on existing stocks as part of their inventory correction instead of churning out new products. "Since the gross domestic product (GDP) is essentially a measure of output of the supply side, lower production levels will be translated into slower GDP growth," he said.
According to GK Goh Research regional economist Song Seng Wun, electrical and electronic exports, which were particularly muted during the first-half, are expected to pick up during the July-December period this year. "Our assumption is that technology exports will rebound in the second-half on the back of a steadily improving demand. We are already seeing a pick-up in demand for disk drives," she said. According to the data from the Department of Statistics, the number of employees involved in the manufacturing sector rose 0.2 per cent to 984,316 persons in June as compared with 982,654 persons employed as at end-June last year. However, there was a 0.2 per cent decline in the number of employees as at end-June against the 986,347 persons involved in the sector as at end-May. Meanwhile, total salaries and wages disbursed during the first six months of this year increased by 5.8 per cent to RM9.34 billion compared with RM8.83 billion paid out in the corresponding period a year ago.
(Source: Business Times, 19 August 2003)
Malaysia will not review its ringgit peg unless there is a "significant, fundamental, structural change" in the region's exchange rate environment, said Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz. Despite substantial fluctuations in the major currencies in the last 15 months and increasing international pressure for countries in Asia to adopt a more flexible exchange rate policy, Malaysia is unlikely to make any change to the RM3.80 to US$1 peg.
"From time to time, the major currencies adjust but what we want to have in place is a system that continues to facilitate our trade and investment," said Zeti. "Therefore no, this kind of development is viewed as temporary as it could easily shift to an opposite direction. We will only make a review if there's a significant fundamental structural change that has occurred in the region." Malaysia's exports have been benefiting from the weak US dollar and becoming more competitive as the currency slid 14 per cent against the euro in the last year. Malaysia first introduced its peg five years ago as part of the capital control measures put in place to stabilise the country's economy after the Asian financial crisis chaos. Now, only the peg remains, but the Government does not seem to be in a hurry to do away with is.
Of late, however, there has been a chorus of calls urging Asian countries to relax their currencies' link with the US dollar from the likes of the International Monetary Fund and the Group of Three nations. The criticism is mainly targetted at China, whose yuan — pegged at around 8.28 yuan per US dollar — is deemed too cheap. Washington blames China's tight grip on the yuan for a growing trade deficit, while Japan says Beijing is deepening its domestic deflation by churning out super-cheap exports. But China's central bank offical recently stated that it will keep the value of the yuan despite pressure to appreciate the currency, though it will gradually allow it to trade in a wider range. International ratings agency Standard & Poor's, however, cautioned that any move to float the yuan would hurt the ratings of local banks as the Chinese banking system is insolvent and poorly prepared to handle exchange rate volatility. "Any large and disorderly adjustments in exchange rates would have disruptive implications in the region and for the overall global growth," Zeti said in her keynote address.
Zeti also said Asia can expect to remain as the fastest growing region in the world amid stronger economic and financial sectors — of about one-an-a-half times faster than the global average. "Prospects for Asia continue to remain positive. The economic and financial sectors in the region had strengthened significantly and are better positioned to utilise the region's surplus capital to provide broader, deeper and more liquid sources of financing to facilitate the region's growth," she said. Zeti said rising economic integration had enabled the region to be more resilient in an increasingly volatile and uncertain external environment, while increasing intra-regional foreign direct investment flow.
(Source: Business Times, 16
September 2003)
Association 13th
AGM on 26th June 2003
The Association held its 13th AGM on Thursday, 26th June 2003 at the Secretariat. At the AGM, a new line of office-bearers was elected, namely President, Mr. Jason Lee of Henkel (M) Sdn Bhd, Vice-President, Mr. Kawasaki of Selayang Solder, Honorary Secretary, Mr. C. S. Lim of Metal Reclamation (Industries) Sdn Bhd and Honorary Treasurer, Mr. Edward Wong of E.M.I.S Sdn Bhd. The AGM was followed by the Association's Annual Luncheon.
Below is the Address delivered by the out-going President, Ms. Gay Leong at the 13th AGM.
" Ladies and Gentlemen,
I trust that you have all received the Association's Annual Report for 2002. The report as usual, provides an overview of the activities of the Association during the past year. My focus in this Presidential Address, however, will be more on the current developments and future prospects of the tin-based products manufacturing industry, locally and globally. I will also touch on some of the major events and directions that are likely to emerge for the economy, industry and the Association in the upcoming year.
The Malaysian economy recovered and gained momentum in 2002 amidst a more challenging external environment. According to Bank Negara, real economic growth turned positive in the first quarter and strengthened to 5.6 per cent in the fourth quarter. For the year as a whole, real gross domestic product (GDP) expanded by 4.2 per cent compared with 0.4 per cent in 2001.
The electronics industry recovered to register a strong growth in both production and exports. The turnaround was driven largely by the improvement in global semiconductor demand, especially from the Asian market. In 2002, the Asia-Pacific region overtook US as the leader in global semiconductor sales.
However, output of electrical products continued to decline in 2002, as manufacturers faced keen competition from lower cost producing countries, particularly for the audio visual and communication products segment. Only the production of air-conditioners continued to expand in response to higher offtake from the US market.
Labour market conditions remained favourable in 2002 to support the recovery in economic activity. Lower retrenchments were recorded in all the main sectors of the economy. The overall decline was attributable to a lower number of workers retrenched in the electronics and electrical products sub-sector. In tandem with the economic recovery, labour demand increased by 23.8 per cent to 162,787 in 2002.
Despite the recent outbreak of the severe acute respiratory syndrome or SARS, Malaysia's economy is expected to still register commendable growth in the year 2004 backed by stronger and stable consumers' spending, according to economists.
Ladies and Gentlemen,
Let me now touch on matters specific to our own industry, namely to highlight some of the critical aspects of the major programme of activities pursued by the Association. The upgrading exercise of the Association's Newsletter called "The Malaysian Tin Products" has resulted in continuing improvements in its format, contents and layout to suit the flavour of cost and time. This publication is our Association's most important communication media and public relations tool. It is also a vital instrument for not only information dissemination but for the expression of views and opinions concerning the industry. In addition, the newsletter provides a platform for exchanging and sharing ideas, knowledge and expertise that can further enhance the development and advancement of our value-adding resource-based products manufacturing industry.
At this opportunity, may I again repeat the invitation I did last year, for all members of the Association to give their fullest and continued co-operation and support for the Newsletter. I fully believe that with such support, the publication will continue to mature and gain influence and value. Your support can be in many ways. One is by contributing articles regarding your company, your business operations or those of others that you feel would be newsworthy to our readers. Another is by way of taking-up advertising space to help defray its publication cost. The publication undoubtedly offers an excellent medium to advertise your company, its products and services at low cost, which can help not only to retain and maintain your existing customers but also to capture new ones.
Another activity (while it failed to materialise over the last few years due to poor business conditions within the tin-based products industry and the fraternity) is the holding of technical seminars and workshops. Although your Management Committee did endeavour to hold a technical workshop on lead-free solder in the last couple of years, it had to be aborted due to poor response from Association members. As economic and business conditions continue to improve, the Management Committee hope that a window of opportunity would exist for such activity programme to be revived in the not too distant future.
One major concern, which your Management Committee is having to deal with presently is the lack of support in the activities of the Association organised for the benefit of members. There even appears to be a lack of interest by members in attending meetings of the Associations' various Committees and Sub-Committees. Whether this is a sign that members view the Association as being irrelevant today, is a million dollar question. In attempting to answer this, a survey questionnaire form will be sent out shortly to all members to provide feedback on the future of the Association. A decision on the future of the Association will be guided from the majority of the answers to that survey.
Ladies and Gentlemen,
As is customary in this annual Presidential Address, let me on behalf of the Association offer our gratitude to the ministries and agencies that have continued to lend us support. Our thanks to the Ministry of Primary Industries, the Ministry of Human Resources, the Ministry of International Trade and Industries, and the Department of Environment for all their co-operation and understanding, especially during these difficult times. Also, our grateful thanks to the Tin Industry (Research and Development) Board for providing invaluable secretariat assistance and administrative support ever since the Association's formation in 1990.
I wish to thank all members of the Association, especially the Management Committee and its various Sub-Committees, for their commitment and strong support given to me during my past three years in office. As this is my last year as President, I do hope that you will extend the same support to the incoming President. On behalf of the Management Committee, I also wish to extend our sincere thanks to the Secretariat staff for their hard work and diligence.
Last but not least, may I wish everyone good business and health in the years ahead. And please do give your support to the Association and its activities, always.
Thank you and God bless us all.