KUALA LUMPUR, June 14 (Bernama) -- Manufacturers are concerned that labour, energy and shipping cost will continue to escalate, at a faster pace, over the next six months against a backdrop of better business conditions, says the Federation of Malaysian Manufacturers (FMM).

The FMM-Malaysian Institute of Economic Research (MIER) Business Conditions survey revealed that two-thirds of the 386 manufacturers interviewed expected higher production cost together with increasing competition from Thailand, Indonesia and Vietnam which had already negatively impacted their companies.

"For manufacturers, there are just two priorities, it's sales and cost.

"Raw material prices have recently come down, however, rising labour cost including minimum wages, energy cost and shipping is afflicting manufacturers," FMM President Tan Sri Yong Poh Kon told a press conference.

The semi-annual survey of business confidence in the manufacturing sector conducted in May, revealed that business conditions in the sector would improve to 120.2 points in six months, from 96.8 points at present, with higher business activity, local sales, export sales, capacity utilisation, production and capital investment.

"The current position is not buoyant but with the rolling out of the Economic Transformation Programme-related projects, our members are optimistic conditions will improve.

"Over the next 12 months, manufacturers will accord top priority to increasing productivity as well as reduce operating costs and introduce new products and services to gain higher market share," Tan added.