Malaysia needs efficient COVID-19 management to curb declining production output, says GlobalData

Following the news that Toyota Motors and Honda Motors have restarted their plants in Malaysia as the government updated its list of essential businesses allowed to operate;

Bakar Sadik Agwan, Senior Automotive Consulting at GlobalData, a leading research and consulting company, offers his view:

“Malaysia’s COVID-19 pandemic management has turned out to be weak and the country has been witnessing spike in the number of daily cases. To contain the virus, the government re-implemented movement control order (MCO) on 12 January 2021, again bringing the automotive production to standstill. Top automakers including the national car maker Perodua and Japanese giants Honda and Toyota and others had to shut their plants to comply with the government guidelines.

“However, the government has now reinstated automotive manufacturing to the essential services list, following which Toyota and Honda have resumed their operations in the country. The move by government makes complete economic sense and Toyota and Honda’s resumption of plants is a positive news for the country’s automotive sector.

“COVID-19 has adversely impacted the production output of the SEA’s third largest auto market Malaysia. The MCO implementations, supply chain disruptions and workforce shortages have led to dwindled automotive production output in 2020. According to reports, the January-November 2020 production output in Malaysia declined by 19%.

“GlobalData expects Malaysia’s auto production capacity utilization to improve to 493,000 units in 2021. However, it will still be below the 2019 levels. The government needs to continue offering aid and support to curb the declining output of the country’s auto manufacturing sector. Automotive exports contributed RM13.1bn in 2019 and is of immense importance to the Malaysian economy. Any lapse in efficient COVID-19 management may force auto giants such as Toyota and Honda to realign their production capacities to other strategic markets.”

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