Malaysian car manufacturers to stop work again? Eurocham denies Feb-4 lockdown

Hans · Jan 24, 2021 09:37 PM

A leaked memo from the EU-Malaysia Chamber of Commerce and Industry (Eurocham) to its members says that the manufacturing sector should prepare itself for a shutdown/strict lockdown if the Covid-19 situation doesn't improve.

The memo adds that the organization’s CEO Sven Schneider had a meeting with MITI on 22-January and was told that the Ministry of Health (MoH) has made a clear stance for a complete shutdown of the economy if Covid-19 cases continue to rise.

99 of the 300 Covid-19 clusters involve the manufacturing sector. Eurochem’s memo says that the Malaysian government will announce a shutdown/strict lockdown after 4-February if the situation doesn’t improve (which Eurocham later denied).

The memo said, “Should the infection rate not decrease, the Malaysian government will announce a shutdown/strict lockdown immediately after 4 February 2021. This is the current situation we are facing and MITI is appealing to all companies, foreign and local, to join the effort of reducing infections, breaking the chain, to keep the economy open for business.”

However, Eurochem later issued a statement to the press, clarifying that Putrajaya is NOT mulling a complete lockdown.

“Eurocham Malaysia wishes to clarify that while MITI underscored the heightened sense of urgency that currently prevails, given the rising number of cases, there was no mention of an immediate lockdown after 4th February 2021, and therefore, we seek for people to remain focused on the bigger picture – in doing their part to ensure that another lockdown is avoided instead,” reads their latest press release.

Checks with parties familiar with that matter said that MITI has spoken with several other chambers of commerce, not just Eurocham, and manufacturers have been given several instructions to follow with regards to social distancing in workers’ hostels and transportation – the main source of infections for the manufacturing sector.

However they also added that Putrajaya is not considering a lockdown and that there was no mention of consideration for a lockdown after 4-February.

"The main point of the discussion was to keep SOPs in check. There was no mention of a lockdown. At least that was my takeaway from the meeting." said a source.

It should be noted that the automotive manufacturing sector relies very little on foreign labour. Few (if any) automotive manufacturers maintain any workers’ hostel. Instead, a bulk of the clusters in the manufacturing sector involve rubber glove and electronics manufacturers.

For details on the impact of a stop-work order on the automotive sector, you can read our interview with the Honda Malaysia Vendor Association here.

Last week saw Malaysia breaking new record for daily new infections, reaching 4,275 cases on Saturday 23-January. Malaysia now ranks in the top 20 for countries with fastest increase in Covid-19 infections. The only other South East Asian country doing worse than Malaysia is Thailand.

Data compiled by Our World In Data, which utilises data from US-based Johns Hopkins University shows that Malaysia took 38 days to double its total confirmed coronavirus cases from 83,475 cumulative infections on December 13 last year to 169,379 total cases on January 20, 2021.

Several manufacturers that spoke to are confident that automotive manufacturing will remain open, and that Eurocham's leaked memo is blowing the content of the informal meeting with MITI out of proportion.  

Previously, automotive manufacturing was removed MITI’s list of essential services on 12-January, but the decision was reversed on 16-January.