IT spending in Malaysia negative forecast for 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.


Despite the negative forecast for 2009, the research firm expects to see initial signs of recovery on IT spending in Malaysia as early as 2010, with investments rebounding to its pre-crisis level by 2011.

Basing its assumptions on first-quarter-2009 research results of various IT spending segments, current economic indicators, historical trends and assumptions, IDC foresees 2009 IT spending growth to be at -1.8 percent. However, IDC said if the economy does not pick up by the third quarter of this year, IT spending growth for 2009 could fall to -3 percent.

However, IDC said "bright spots" that still exist in various sub-sectors will cushion the overall IT investment in Malaysia although the major contributors--the consumer and manufacturing sectors--are likely to remain cautious in spending.

Maggie Tan, associate research director of IDC South East Asia, said in a statement: "Depending on the levels of fiscal improvements seen in the economy, how the [government's] overall stimulus package 'kicks-in', as well as the Southeast Asian regional efforts to combat the current world downturn, IDC sees Malaysia riding out this crisis with signs of an upswing in IT investments within 12 to 18 months."

“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.”

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