Demand for welding equipment in Malaysia is set to expand as foreign investment boosts the general level of industrial infrastructure and manufacturing activity in the country, according to a Frost & Sullivan report. In 2005, the Malaysian Government eased rules to allow foreign investors 100% ownership of newly established manufacturing firms, thus putting Malaysia on par with other countries vying for foreign capital.
The report finds that Malaysian Markets for Welding Equipment and Consumables earned revenues of $71.6 million in 2005 and estimates this to reach $108.3 million in 2012.
"The spill over effects from other sectors benefiting from an increase in investment are likely to boost the demand for welding equipment and consumables," notes Frost & Sullivan Research Analyst Titus Hocevar. "The growth caused by rising foreign investment is also likely to encourage developments in welding technology as foreign companies are expected to have higher requirements for welding equipment."
The upstream oil and gas sector will be the prime beneficiary of the foreign ownership policy, with exploration and production activities expected to take center stage in the next few years. Investment is likely to accelerate if the price of crude oil remains close to its all-time peak. Local incumbents in the automotive industry will also need to modernize their facilities and equipment to remain competitive in the liberalized domestic market.
Lack of technological expertise has led to an underdeveloped domestic welding equipment industry in Malaysia, primarily due the lack of resources for research and development, emphasizing price competition.
"Employees and staff are not given direct and proper training on handling welding equipment, as appropriate welding standards have yet to be established in Malaysia," says Hocevar. "Production engineers are also unaware of the best ways to improve welding productivity. This leads to companies buying relatively standard, but low-technology solutions."