Malaysia’s standing in international supply chain in jeopardy
“Worldwide supply chains are far too intertwined and Malaysia’s industrial sector is a supplier to the rest of the world. So, it was not possible to clearly separate essential from non-essential production”
(The Edge) – While the Restricted Movement Order (RMO) came as a surprise and challenge to the people of Malaysia, it was even worse for factory owners and manufacturers. This unprecedented move left manufacturers with more questions than answers on how they were supposed to navigate this period, especially when it came to completing the supply chain internationally.
Speaking to Enterprise, CEO and board member of the Malaysian-German Chamber of Commerce and Industry (MGCC) Daniel Bernbeck says Malaysia is an important part of the international supply chain and the disruptions have the potential for a severe long-term impact.
Additionally, the instructions coming out of the Ministry of International Trade and Industry (MITI) have been complicated and unclear, with factories being considered “essential” based on their willingness to continue operations with only 50% of their normal human resources requirements, rather than any more objective definition of “essential”.
The MGCC was invited to a meeting with MITI on March 17, at which Minister Datuk Seri Mohamed Azmin Ali explained the situation and the measures that needed to be taken. “Chambers and associations were informed that manufacturing companies had to send in their applications for exemption from the lockdown by 2.30pm the same day to prevent a complete shutdown at midnight,” says Bernbeck.
“Even though there was open communication and discussion, it became quite clear that the exact procedures and guidelines were still unclear and did not consider enough the questions of practical execution for the industry,” he points out.
He adds that the industry also learnt that the decision would be solely with the National Security Council, which would be considering the threat of the disease to the nation rather than questions of the economy.?
Malaysian Dutch Business Council (MDBC) executive director Marco Winter, who was also at the meeting, says there were several immediate concerns raised by manufacturers such as the level of bureaucracy in the application process for exemption and whether the RMO would be extended.
“There were also questions of how clear the list of what was considered ‘essential products and services’ would be. And how the authorities would deal with the full supply chain for the manufacturing, and possibly imports, of these essential goods,” he adds.
“We are talking about suppliers of components and all the logistics involved, some even cross-border. Would the authorities have the knowledge of integrated supply chains?”
The situation was chaotic right from the beginning, says Bernbeck. It was obvious MITI did not expect thousands of applications.
