PETALING JAYA: The US-China trade war offers an opportunity for Malaysian medical device manufacturers to continue to position themselves as alternative producers and suppliers to China, Fitch Solutions Macro Research said in a report.
According to the report, recent moves by the US government to further ramp up tariffs on Chinese-made products will increase pressure on Chinese companies to relocate manufacturing operations; therefore, Malaysia’s access to the US and other major world markets would increase its attractiveness as an alternative manufacturing base.
In the short term, local rubber glove manufacturers stand to benefit from the recent US tariffs imposed on Chinese medical gloves.
“The US government has imposed a 15% tariff on medical gloves made in China effective from Sept 1, 2019, as a result of which US importers are seeking alternative sources of supply from other manufacturers in Asia.
“As the world’s largest producer of rubber gloves, Malaysia stands to benefit from this shift in supply chain. The US imported medical gloves valued at US$2 billion in 2018, of which around three-quarters came from Malaysia and 11% from China,” the report said.
The Fitch report also said higher US demand for Malaysian gloves will boost industry profit margins which have been hit by increases in raw material costs and surplus capacity due to over-expansion by Hartalega Holdings Bhd, Kossan Rubber Industries Bhd, Supermax Corp Bhd and Top Glove Corporation Bhd.
“On the downside, the market environment for medical gloves in Europe is likely to become more competitive as Chinese producers shift their focus away from the US market.”
Over the longer term however, Fitch said, additional tariffs on a broad range of medical devices could help drive direct foreign investment into Malaysia’s medical device industry, boosting its international competitiveness.
“We highlight that the Malaysian government is actively encouraging more investment from China, particularly in high-tech industries.
“Finance Minister Lim Guan Eng stated that Malaysia is keen to learn from Chinese expertise in artificial intelligence, advanced materials, robotics and cloud computing. This would allow Malaysia to build on current initiatives to boost high-tech manufacturing,” Fitch said.
To date, US tariffs on Chinese-made medical devices have mainly targeted diagnostic imaging and electro-medical apparatus with most consumables remaining exempt.
Conversely, Chinese tariffs on US products have targeted a much broader range of devices and this could encourage more investment into Malaysia’s manufacturing sector from the US.
US medical devices companies with manufacturing operations in Malaysia include Abbott, Becton Dickinson, Boston Scientific, Cardinal Health, Medtronic and Teleflex.
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PETALING JAYA: Malaysian small and medium enterprises (SMEs) and mid-tier companies are urged to fully leverage on the perks announced in Budget 2020.
This can be done through incorporating export plan in their business strategy or enhancing their readily-available export plan for 2020 and beyond, according to Malaysia External Trade Development Corp (Matrade).
Local companies will enjoy more benefits from Matrade’s Market Development Grant (MDG) and export promotion efforts following the increment of the claim ceiling per company for the MDG, from the current RM200,000 to RM300,000.
The ceiling for the participation in international trade fairs will also be revised upwards from RM15,000 to RM25,000.
The government will also allocate RM50 million to encourage SMEs to engage in more export promotion activities.
Matrade CEO Datuk Wan Latiff Wan Musa opined that the move is a strong indication of the government’s aspiration to develop more global champions among Malaysian exporters.
“Matrade is optimistic that the allocation will be a catalyst to facilitate the access of local companies to not only markets such as Asean, China and the US but to emerging markets too, such as Central and South Asia, West Asia, Africa and Latin America. This is indeed a great news for Malaysia’s export community and Matrade will be the engine to mobilise its resources in helping Malaysian companies realise their export sales,” he said.
Moving into 2020, Matrade noted that it will focus on its export promotion activities on emerging high-value sectors such as aerospace, automotive, medical devices, halal, creative content, e-commerce and services, among others.
“It is imperative for us to expand Malaysia’s export capabilities in more areas other than conventional sectors like food & beverages or furniture. Promotion in these sectors will be continued still, but will be centred around more niche areas such as manufacturing services and design engineering. This is in line with our strategy to diversify Malaysia’s top exported products too,” he added.
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SHANGHAI: China’s STAR Market kicked off its second day of trading on Tuesday with sharp falls in most listed shares a day after they posted average gains of 140%, underscoring the volatility of the country’s new Nasdaq-style board.
In early trade, 22 out of 25 listed companies on the board were trading lower, with some shares trading down as much as 18%. Micro-Tech (Nanjing) Co., a medical device company, bucked the overall trend, rising about 15%.
The debut of the STAR Market on Monday saw some shares climb as much as 520%, and more than doubled the board’s combined market capitalisation.