Lim

Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam will have zero import tariffs. The other four ASEAN member countries -- Brunei, Cambodia, Laos and Mayanmar -- will be subject to the AFTA tariffs after 2015, giving them time to establish or strengthen their industries.

“As it is, the Malaysian plastics manufacturers have already established a global export market and leads the region in product quality,” said Lim Kok Boon, president of the Malaysian Plastics Manufacturers Association (MPMA).

“We are confident of benefiting from the zero export tariffs for finished plastics products from 2010,” he said in an interview at the MPMA International Plastics Conference, held November 4 to 5 in Kuala Lumpur.

He said MPMA was looking at an expanded regional market of 550 million people by 2015, compared to Malaysia’s current domestic market of 27 million people.

Lim pointed out that 57 percent the Malaysian plastics are exported. Malaysia is already Asia’s largest stretch film producer and has modern technologies for injection and blow molding, he said.

Malaysian plastics industry exports grew by 18 percent, to 4.6 billion Malaysian ringgit (8.87 billion yuan) in the first half of this year from 3.9 billion ringgit (8.67 billion yuan) a year ago.

Comparatively, the industry’s total first half growth, which also includes domestic sales, grew by 8.3 percent to 7.96 billion ringgit (15.4 billion yuan).

Lim called on MPMA members to be aware of the increased competition due to globalization and competition from low-cost nations.

Lim has outlined some strategies for the industry including upgrading manufacturing capabilities, improving design capabilities, and developing their own brands.

He also called for companies to collaborate with foreign partners to produce complete products and gain technical know-how.

As for new markets, MPMA is exploring business opportunities in Africa and Russia, he said. MPMA members have already ventured as far as South America since March 2006.

Lim also wants the MPMA member companies to establish overseas production centers in countries with lower production costs, including China, Indonesia, Vietnam and Cambodia.

“The industry should capitalize on technical capabilities and experience and set up multiple production locations for specific product and market,” Lim said.

Highlighting that 80 percent of MPMA members are small and medium-sized enterprises with family ownership, Lim expects to see more mergers and acquisitions. Only about 30 of the 900-strong MPMA members are publicly traded. With the looming threat of the global economic recession, industry consolidation is likely, he said.

Though the Malaysian plastics industry is on par with global players, albeit in smaller size, the industry also faces manpower and expertise challenges. The industry needs to upgrade skills and use more automation, said Lim, calling for more training so that workers can move away from labor-intensive procedures.

Lim also highlighted potential growth areas for the industry. He cited packaging applications including stretch, multilayer and barrier films. He expects companies to phase out low-value-added products.