KUALA LUMPUR, 9 APRIL 2009 -- Manufacturing IT spending in Malaysia could turn around by 2010, according to IDC analyst firm Manufacturing Insights.
Manufacturing Insights Asia Pacific associate research director, Debashis Tarafdar, said that while Southeast Asia (SEA) would be cautious about IT investments in 2009, due to the current economic turmoil, renewed interest in IT investments could come sometime in 2010 with signs of global economic recovery and growth in exports.
Tarafdar cited the company’s recent report, Economic Crisis Response: Asia/Pacific (Excluding Japan) Manufacturing IT Spending 2008-2012 Forecast Update, which expected total manufacturing IT spending in Malaysia to reach US$930 million in 2012, with spending in IT services projected to lead the way.
Manufacturing Insights, an IDC company, provides business and information technology (IT) decision-makers with fact-based research and analysis to support critical business decisions.
Maximising lifespan of hardware
“The analysis also highlights that compounded annual growth rate in Malaysia is likely to be moderate at 4.3 per cent in 2008-2012,” said Tarafdar. “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 maximise 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,” he said.” Overall, IT services spending in the manufacturing industry will expand by about 7.7 per cent over 2008. This strategy should see them through the current economic crisis."
Tarafdar added that for the Malaysian manufacturing sector, the study indicated that in the short term, manufacturers would 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 per cent over 2008.”
“However, IT spending will pick up steam from 2010 after a cautious 2009, with a 5.6 per cent year-on-year growth,” he said. “In addition, process manufacturing industries such as chemicals, metals and pulp/paper will perform better in the short term compared to discrete manufacturing industries such as automotive, electronics and industrial products.”
Hardest hit
Tarafdar said discrete manufacturing industries would 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,” he said. “Industries associated with government infrastructure projects will also see a comparatively favourable business environment, leading to growth in IT investment, although infrastructure projects usually involve a longer project lifecycle.”
