KUALA LUMPUR, MALAYSIA (June 25, 1:10 p.m. ET) — While a weak domestic market has hurt Malaysia's plastics processors, economic problems in Europe and Japan have actually given them an unexpected lift as companies are outsourcing more to Malaysia to reduce their own costs, a top official in the country's plastics trade association said June 23.
Lim Kok Boon, president of the Malaysian Plastics Manufacturers Association, said the plastics products industry saw revenues rise only a “marginal” 2.1 percent in 2011, to 16.14 billion ringgit (US$ 5.04 billion), but exports rose 6.2 percent and now make up more than 60 percent of revenue for the industry.
Malaysia's plastics processors are benefiting from major European and Japanese firms looking to reduce their own costs in tough times, and buy more components and material from Malaysian companies, he said.
“We are seeing more exports to Europe and Japan,” said Lim, who is also CEO at Malaysian plastic packaging manufacturer Great Wall Plastics Industries Berhad in Rawang, Malaysia. He spoke at the MPMA's annual dinner, held in Kuala Lumpur.
MPMA, which is based in Petaling Jaya, near Kuala Lumpur, said there was stronger demand for exports of packaging films, in particular, to those countries. As well, Lim said Australia's strong economy is lifting Malaysian exports.
In Malaysia, on the other hand, there were troubles, Lim said: “The domestic electrical and electronics industry, which is an important sub-sector for the plastics industry, was largely flat while there was a mild decline in the automotive sector.”
Even with the export gains, 2012 is likely to be a difficult year amid uncertainty about the global economic situation, Lim said.
He said it is important for Malaysia's industry to continue investing in technology and training to maintain competitiveness against firms in China, Vietnam and other lower-cost spots.
He attributed Malaysia's export rise to the country being positioned as offering higher quality than places like China or Vietnam, but with lower costs than developed markets, including Europe.