Published December 22, 2008

Amcham does not expect layoffs in '09

By PAULINE NG
IN KUALA LUMPUR

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THE American Malaysian Chamber of Commerce (Amcham) does not expect the global recession to result in mass retrenchments at US firms next year, but has suggested power tariffs and corporate taxes be reduced to help the bottom line of companies.

For the first 10 months of the year, approved US investments in M'sia amounted to US$1.8b.

Even so, the chamber's electronics manufacturing arm has projected a drop 'in the order of about 20 per cent' next year in electrical and electronic (E&E) components demand.

'People are hoping by mid-year to have seen the worst of it,' Amcham president Karen Albertson said at a media briefing yesterday on US investments in the country during the current economic climate.

The chamber had been canvassing companies for feedback and was confident the level of investments in Malaysia would be sustained despite less than rosy forecasts for 2009.

For the first 10 months of the year, approved US investments in Malaysia amounted to US$1.8 billion.

'The response I get is that it (the downturn) feels different to the Asian financial crisis, but it will be as difficult,' she said.

Although many sectors had been hit by weaker demand, Ms Albertson said there were also growth areas, specifically business process outsourcing which was going through a 'boom period' and looking to hire talents, as were companies in the green sector owing to Malaysia's recent success in attracting solar energy investments.

But she acknowledged the depth and scale of retrenchments would affect industries and companies differently, depending on how they manage to adjust to various demands.

Amcham said it was unaware of US firms planning to reduce or shutter operations in Malaysia, other than Western Digital Corporation's announcement of 2,500 job cuts, including some 1,500 at its Kuching plant in Sarawak.

As part of moves to balance capacity with changing demand and cost improvement measures, many US firms were implementing planned year-end production shutdowns, shorter work weeks and other strategies to mitigate the possibility of retrenchments. 'US companies in Malaysia see retrenchments only as a last resort,' she said.

In Penang E&E firms, which produce about a third of Malaysia's exports in the sector, are already bracing for a tougher year ahead. Most have implemented a longer year-end holiday shutdown stretching from Dec 22 to Jan 5, according to a report.

Malaysian exports fell slightly over 14 per cent in October from September - the steep drop owing mainly to much weaker demand for E&E products which account for nearly 40 per cent of total exports.

Amcham, which has over 850 members representing over 400 US, Malaysian and other international companies, could not provide data on how many people are employed by chamber members.

But Ms Albertson said a further reduction of corporate taxes from the maximum rate of 25 per cent next year, plus lower power tariffs, which had risen by about 26 per cent in July, would have an immediate impact on the companies.

Amcham also stressed the need for faster action on the government's proposed RM7 billion (S$2.9 billion) economic stimulus package as well as greater investments in retraining schemes.