Malaysia’s manufacturing sector is projected to maintain steady growth in the first half of 2025 (1H2025), supported by stable business conditions despite global economic uncertainties, according to the Federation of Malaysian Manufacturers (FMM).
FMM President Tan Sri Soh Thian Lai stated that the sector sustained its momentum in the second half of 2024 (2H2024), with business conditions, sales, and production remaining strong despite rising costs. He noted that ongoing capital investments and stable employment levels reflect long-term confidence in the sector.
Steady Performance with a Focus on Efficiency
Looking ahead, Soh indicated that manufacturers are expected to prioritize efficiency over aggressive expansion in 1H2025. While employment levels and investment sentiment remain steady, factors such as increasing costs and external economic risks may influence business decisions.
“The sector is moving toward gradual recovery, but businesses remain cautious in their strategic planning,” he said during the release of the FMM Business Conditions Survey for 2H2024.
The survey results showed that 56% of manufacturers anticipate revenue growth in 2025, while 24% expect stable performance and 19% foresee declines. Soh noted that businesses are focusing on resilience rather than rapid expansion, with external factors such as global trade conditions, inflationary pressures, and supply chain constraints shaping expectations.
Key Challenges and Market Dynamics
The survey also highlighted cost pressures and competition as key concerns for manufacturers in 2025. Rising input costs were cited by 55% of respondents, up from 49% in 2024, while 48% reported increased competition, compared to 47% in the previous year.
Concerns about weak demand and the depreciation of the ringgit have somewhat moderated, with the percentage of manufacturers citing these challenges declining from 51% to 45% and from 47% to 41%, respectively. However, attracting new customers has become a growing concern, rising from 39% to 43%.
Additionally, manufacturers identified emerging challenges in 2025, including regulatory requirements, labor shortages, and sustainability compliance. Soh noted that while some traditional issues have eased, the overall business environment remains complex, requiring a focus on cost management and market positioning.
“The combined effects of rising costs, market uncertainty, and currency fluctuations suggest that businesses will need to emphasize cost efficiency, strategic pricing, and differentiation to maintain growth,” he said.
Outlook for 2025
Looking forward, the sector remains cautious due to global geopolitical tensions and economic uncertainties, which could influence market conditions.
“Key challenges for the year include increased input costs, intensifying competition—particularly due to U.S. tax policies—weak demand, customer acquisition difficulties, and the depreciating ringgit,” Soh added.
Despite these factors, the manufacturing sector is expected to continue adapting to the evolving landscape, with companies focusing on operational efficiency and market strategies to navigate the year ahead.
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