Malaysia's manufacturing output is expected to rebound from its sharp fall, International trade and Industry
Minister Datuk Seri Mustapa Mohamed said.

"Last year was a good year for electronics and semiconductor," he told a press conference on a study conducted by the Malaysian Investment Development Authority (MIDA) together with the University of Malaya (UM) and Malacca Malaysia Technical University (UTEM) on the future of Malaysia's manufacturing industry.

Mustapa was speaking on the sidelines of the World Economic Forum (WEF) ASEAN Summit here today.

"This year, we knew it (manufacturing) was going to slow down and we hope that it will recover," he said.

Malaysia's output fell to its sharpest rate of decline over three-and-a-half years due to poor market conditions and a fall in demand.

The headline Nikkei Manufacturing Purchasing Managers’ Index (PMI) reportedly stood at 47.2 in May, little changed from April’s five-month low, indicating a solid deterioration in operating conditions at Malaysian

Mustapa said the manufacturing sector fell tremendously due to the slowdown in the electronics segment, comprising 35 percent of Malaysia's exports.

"We are still dependent on electronics manufacturing. A lot of that is export oriented so when the export market is softer, that will have some impact (on the electronics segment)," he added.

The government has no plans to review its policies on incentives for the manufacturing sector, he said, adding that, "We think the incentives are quite generous."

Meanwhile, MIDA deputy CEO, Datuk Phang Ah Tong said for Malaysia to be more competitive, the country's manufacturing sector is increasingly being encouraged to adopt and embrace automation and smart manufacturing concepts.

The study conducted by MIDA with UM and UTEM was aimed at providing deeper analysis on issues related to technological and economic aspects of investments in the manufacturing ecosystem of Malaysia as a natural foreign direct investment destination, as well as relevant domestic investments.