SINGAPORE — Business is good in Malaysia's plastics processing industry. Maybe too good, says Liew Sew Yee, president of the 870-member Malaysian Plastics Manufacturers Association.
While others in Malaysia's plastics industry publicly wring their hands about rising costs and a distinct shortage of skilled labor, Liew — now in his fourth two-year term as president of the Selangor-based MPMA — worries more about too much success going to the industry's head.
``To me, the biggest challenge to our industry is that people have forgotten the effect of the bad times. More and more people want to get into the business, because they believe they can't lose,'' Liew said in a Jan. 21 interview at the ASEANplas '97 trade show in Singapore.
``We must constantly address our position,'' he warned, noting that ``there are signs of overheating,'' both in Malaysia's resin-producing sector and in its booming plastics processing industry, which counts packaging, automotive, construction, electrical/electronics and agricultural sectors as major end markets.
``Six months ago,'' he said, ``there was some excess capacity in the electronics molding industry, but it's picked up.''
Sources in the region suggest that Malaysia, as well as Indonesia, is picking up lower-added-value injection molding business in that key product sector from its higher-cost neighbor, Singapore.
Malaysia as a whole has been on a strong run. Its gross domestic product increased for seven consecutive years. GDP growth is expected to slow to about 8.3 percent this year. Meanwhile, the country's plastics industry saw its sales grow by 19 percent in value terms that year over 1994, to about 5 billion Malaysian ringgit (US$2 billion). Last year's figures are not yet available, but the strong growth trend continued. Malaysia's plastics industry boasted more than 1,300 processing companies and 80,000 employees in 1995.
Malaysian exports of plastics products continue to soar, growing 27 percent in 1995. The value of such exports has almost tripled in five years, from about 500 million ringgit (US$200 million) in 1991 to 1.4 billion ringgit (US$561 million) in 1995, according to MPMA data.
The industry's plastics raw materials consumption grew by more than 10 percent in 1995, to almost 2 billion pounds.
Liew frets mostly now about excess activity in the low-end packaging sector, especially for HDPE shopping bags. He sees too many people with too little experience, particularly export experience, jumping onto the currently lucrative bag-making bandwagon. But there is only so much that he, and others who share his views, can do.
``We cannot make people not go into business,'' he said. But the association ``should always play a leadership role. We must continuously expound our concerns, our visions. Some low-end product companies are starting to see the danger signals, and are upgrading and diversifying.''
Liew terms Malaysia's oft-mentioned ``labor shortage'' a misconception — even though many companies rely on foreign workers to help run their factories.
``It's more a case of a skill shortage,'' he said of his country, which has a population of nearly 20 million.
``We may be a step behind [Singapore] in skill training and in the upgrading of technology,'' he conceded, while noting that more of the necessary training programs now are appearing in Malaysia. But simply helping workers develop new skills is not enough, Liew stressed.
``We need to develop technology. Skill without value-added products will not carry us very far.''
Other countries in the region offer lower labor costs, such as Indonesia, with its population of some 200 million people.
Liew also heads his own firm, based in Ipoh. Thong Fook Plastics Industries Sdn. Bhd. is a two-plant, 300-employee extruder of PE films for heavy-duty industrial bags and consumer bags.
His firm's injection molding, tooling and contract assembly arm, TFP Precision Industries Sdn. Bhd., specializes in serving Asia's electronics industry. The firm employs about 1,000, and runs 20 presses with clamping forces of 25-220 tons. It also makes molds for internal use, and does contract molding.