“If the OPR increases, the industry’s (manufacturing sector) financial burden will increase.
“This move made a huge impact on the industry and individuals,” he told the media at the unveiling of the FMM Business Conditions Survey results.
On March 7, BNM’s Monetary Policy Committee (MPC) decided to maintain the OPR at 3% and said that the monetary policy stance remains supportive of the economy.
“The MPC will ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability,” it said.
On the industry’s outlook, FMM said the country’s manufacturing sector is expected to grow moderately in the first half of 2024 (H1 2024) amid improving economic conditions.
Soh said the sector could gain momentum, albeit slowly, with an expected pick-up in sales, production, capital investment, and hiring as global interest rates and inflation ease.
“Although we faced many challenges in early 2023, by the second half of 2023 (H2 2023), manufacturing activities started to improve,” he said.
The survey, conducted from Jan 12 to Feb 26, 2024, drew 613 respondents nationwide.
“Notwithstanding the improvements, some indicators remained below the optimism threshold, an inference that respondents are cautious about H1 2024, in particular local and export sales, production volume, and capacity utilisation,” he noted.
The survey tracked business confidence via the FMM Business Conditions Index (FMM BCI) and covered the actual performance in H2 2023 and the outlook for H1 2024.
It showed that all indicators had increased from the previous survey, except for the number of employees and the cost of production.
Soh said employers are still cautious and concerned about hiring employees as they see employment as a fixed cost and that the cost of production remains on the high side due to the weaker ringgit.
“The cost of production remains high, as you know, due to our weak ringgit and also our cost increase of up to 37% for the past two years,” he added.
On the sector’s revenue and profit growth, Soh said a majority (56%) of survey respondents see an increase of up to 10% compared to 2023.