Manufacturing IT Spending In Malaysia Could Turnaround By 2010,
Says Manufacturing Insights Asia/Pacific
Manufacturers in Malaysia are expected to increase spending on IT services

Kuala Lumpur, April 01, 2009 – While manufacturers in the Southeast Asia (SEA) region will be cautious about IT investment in 2009 due to the current economic turmoil characterized by shrinking revenues and profits for businesses, tighter credit markets, and a drop in consumer discretionary spending, renewed interest in IT investments could come sometime in 2010 with signs of global economic recovery and growth in exports. Manufacturing Insights Asia/Pacific, an IDC company, in the ensuing analysis of its recent report, “Economic Crisis Response: Asia/Pacific (Excluding Japan) Manufacturing IT Spending 2008-2012 Forecast Update” (Doc # AP664113S), expects total manufacturing IT spending in Malaysia to reach US$930 million in 2012 with spending in IT services projected to lead the way. The analysis also highlights that compounded annual growth rate (CAGR) in Malaysia is likely to be moderate at 4.3% between 2008-2012.

Debashis Tarafdar, Associate Research Director of Manufacturing Insights Asia/Pacific says, “In 2009, across the SEA region, we expect manufacturing companies to shrink hardware budgets significantly, and channel that money towards software and services. This is in line with the drive to maximize the lifespan of available hardware, which cannot be done without prudent investments in IT services, and to some extent, on software.”

“Similarly, manufacturers in Malaysia are expected to increase spending on IT services in 2009 to gain greater leverage on existing assets and infrastructure. Overall, IT services spending in the manufacturing industry will expand by about 7.7% over 2008. This strategy should see them through the current economic crisis," he added.

Discrete manufacturing industries will be the hardest hit and are expected to experience a drop in IT spending in 2009 over 2008, as many of them are linked to consumer discretionary spending for items like automobiles and electronics. However, the process manufacturing industries (chemicals, metals, pulp/paper and others) are expected to maintain a steady growth in IT investments. Industries associated with government infrastructure projects will also see a comparatively favorable business environment, leading to growth in IT investment, although infrastructure projects usually involve a longer project lifecycle.

For the Malaysian manufacturing sector, Manufacturing Insights Asia/Pacific observes that:

• In the short term, manufacturers will be tightening their belts in terms of IT spending, particularly in hardware investments. As a result, total manufacturing IT spending in 2009 total will drop slightly by 0.8% over 2008.
• IT spending will pick up steam from 2010 after a cautious 2009, with a 5.6% year-on-year (YoY) growth.
• Process manufacturing industries such as chemicals, metals and pulp/paper will perform better in the short term compared to discrete manufacturing industries like automotive, electronics and industrial products.
  

This report provides Manufacturing Insights' forecast update on the market size, short-term outlook for spending growth (2009 over 2008), revised 2008-2012 forecast and compounded annual growth rate (CAGR) for manufacturing IT spending in APEJ. It covers six sub-regions (ANZ or Australia and New Zealand; Greater China; India; Korea; ROAPEJ or Rest of APEJ; Southeast Asia), eight verticals (aerospace and defense; automotive; chemical; metal; pulp/paper; CPG; high-tech; others) and three broad IT categories (hardware; packaged Software; IT services).

For more information about purchasing this report, “Economic Crisis Response: Asia/Pacific (Excluding Japan) Manufacturing IT Spending 2008-2012 Forecast Update” (Doc # AP664113S), please contact Selina Ang at +65-6829-7717 or sang@idc.com.

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For more information about purchasing the report, "Southeast Asia Telecommunications 2009 Top 10 Preditions Philippines 2009 Top 10”, Doc#202102S, please contact please contact Lizzie Shunmugam at +603-2169-7536 or eshunmugam@idc.com.

About Manufacturing Insights, an IDC Company

Manufacturing Insights, an IDC company, provides business and information technology (IT) decision makers with fact-based research and analysis to inform and support critical business decisions. The global independent research and advisory firm closely follows processes associated with the design, development, and distribution of goods across markets, including discrete manufacturing, process manufacturing, high tech/electronics manufacturing, consumer packaged goods, and retail. Manufacturing Insights' research and analysis is critical for end users, as well as hardware and software vendors, service providers, and purveyors of IT outsourcing. Manufacturing Insights is headquartered in Framingham, MA. IDC is a subsidiary of IDG, the world's leading technology media, research, and event company. For more information, visit www.manufacturing-insights.com

Contact

Gowri Mohanadas
Senior Marketing Executive,
Tel: +603-2169-7533
Email:gmohanadas@idc.com

Debashis Tarafdar
Associate Research Director
Tel: +65-6829-7790
Email:dtarafdar@manufacturing-insights.com