KUALA LUMPUR: Malaysia risks losing Investments and confidence in the government's institutional capability, built up over the last six decades, are now at serious risk, said the American Malaysian Chamber of Commerce (AMCHAM).
The international, non-profit, private-sector business association said the perception of Malaysia as a reliable location for the critical path in a company's global supply chain is also at stake.
AMCHAM chief executive officer Siobhan Das said companies might continue to run some portion of their productions locally, but it will be challenging for Malaysia to secure higher value reinvestments.
"They will reflect on today's reality before committing to Malaysia in the critical path of their global supply chain," she told the New Straits Times.
She said American companies is an integral part of the global supply chain and highly integrated within Malaysia's economy.
"Our members now run the medium- to long-term risk of deprioritisation in terms of new investments and product lines," she said.
Das said many AMCHAM members are severely impacted directly, but more so the small-medium enterprises (SMEs) that support members not just locally but globally.
"The electrical and electronic/semiconductor (E&E) industry was, and still is, one of the hardest hit, exacerbated with increased demand coupled with the global shortage of chips," she said.
She said inputs into the healthcare industry are equally important, ranging from medical devices and components to basic needs such as detergents, both personal and industrial, all critical in combating a global healthcare crisis, are still not considered essential in Malaysia.
Other technology sectors feeding into security, aviation and many other value chains are also disrupted.
Das said factories that are already classified as essential and operated safely during the first Movement Control Order (MCO 1.0) and MCO 2.0 are now sidelined without considering their safety records or protocols.
"Many manufacturers did not even have a chance to deliver existing supplies to customers, which would have eased the impact slightly or the option of lowering to a 'warm idle' status to preserve the integrity of their equipment and operations.
"The damage for some is incalculable," she said, adding that as a result, global supply chain managers had been forced to reactivate business continuity plans and, based on the current pattern of behaviour, reconsidering Malaysia's viability as a partner.
In the current iteration of Phase One of the National Recovery Plan during the Enhance Movement Control Order (EMCO), she said AMCHAM's multinational corporations (MNCs) and their respective supply chains have been shut down and unplugged from their supply chains.
"This has caused uncertainty and led to risk assessments," she warned.
Das said this is of extreme concern for Malaysia's long term competitiveness both at the international and domestic level, and the full value of being in larger partnerships like the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) in the years to come.
"As the world recovers, the pressure on Malaysia will be greater; this is an opportunity for Malaysia to capture or from which to pull away," she said.
She said Malaysia built itself to become a critical node for many value chains in the globe, with its strength over the decades from targeted policies attracting high-value add industries along with transferable technology.
"Covid-19 has exposed the level of integration and the sophistication that lies within our borders," said Das.
According to Harvard Growth Lab's Country Rankings, Malaysia's pre-Covid-19 ranked 26 out of 133 nations in their Economic Complexity Index, with Singapore ranking 5th and Thailand 22nd.