18/09/2025

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THURSDAY | SEPT 18, 2025

Clear rules on low-altitude economy needed, says Loke o Robust regulatory framework will allow drones, air taxis and other such services to take off properly: Minister Ű BY DEEPALAKSHMI MANICKAM sunbiz@thesundaily.com

Manufacturing to soften in second-half 2025: FMM survey KUALA LUMPUR: The manufacturing sector’s second half of 2025 (H2’25) is projected to be softer due to persistent cost pressures and weaker demand expectations, according to the Federation of Malaysian Manufacturers (FMM). Its president Tan Sri Soh Thian Lai said the expansion of the Sales and Services Tax (SST) effective July 1, coupled with the imposition of tariffs by the United States and higher electricity tariffs for the industrial sector could weigh on the industry. “Firms are also shifting from caution to consolidation. Industry players are now more defensive with less push for expansion. “They are prioritising efficiency and risk management due to geopolitical tensions and global trade shifts resulting from the US tariffs,” he told reporters at the FMM Business Conditions Survey for H1 2025 here yesterday. The semi-annual survey was conducted on July 2, with 627 respondents nationwide. Soh said the SST expansion will drive higher costs and compliance challenges. This has affected manufacturers significantly with close to half reporting substantial impacts ranging from higher operating costs to added compliance burdens and operational complexities. Most companies are grappling with issues such as product classification, treatment of mixed supplies, and unclaimed input exemptions, which risk eroding efficiency and competitiveness, particularly for SMEs. “Rising costs from newly taxed services, difficulties in securing exemptions, and broader compliance challenges, including system upgrades, customs rulings and transaction treatment were cited as key pain points,“ he said. Thus, manufacturers are calling for targeted government action, with top priorities being expanding exemptions for essential inputs, clearer classification guidance, stronger transitional support, and advisory assistance. Soh also said that the ongoing China-US trade war, still unresolved, may impact local industry players, especially if the US were to impose higher taxes on Chinese goods. China’s exports to the US would be reduced, forcing its producers to seek alternative markets. “Asean will be one of their main targets. Not only China, but countries such as Japan, South Korea and the European Union trading bloc will target Asean. Malaysia could face cheap imports from China, creating very challenging com-petition for local SMEs,“ he added. Meanwhile, FMM said the Malaysian manufacturing sector’s first-half 2025 performance had weakened. Business activities and sales and production indices slipped from the earlier 2024 gains, weighed down by rising costs and fragile demand. Despite these challenges, employment remained broadly stable, with most firms retaining their workforce. Capital investment continued at a moderate pace, although ex pansion appetite had weakened. “Cost pressures persisted as the production cost index rose to 158 from 144, reflecting a sustained but moderating input price increases. “About two-thirds of the respondents reported higher costs, although more firms than before cited stable conditions. “Overall, manufacturers in 1H 2025 shifted from cautious optimism to a more defensive stance. They are focusing on consolidation and operational continuity while managing fragile demand and elevated costs.” – Bernama

PUTRAJAYA: Malaysia must put in place a clear and robust regulatory framework to harness the growth of its emerging low altitude economy or risk falling behind, Transport Minister Anthony Loke said yesterday. Speaking at the launch of the new corporate identity of the Civil Aviation Authority of Malaysia (CAAM), Loke warned that drones, air taxis and other low-level aviation services cannot “properly take off” without strong oversight, particularly where passenger and cargo safety are concerned. “The low-altitude economy is a fast emerging sector worldwide and Malaysia cannot afford to be complacent. We need to set out clear rules and ensure strong governance so that innovation is not held back, but at the same time safety remains non negotiable,” he said. Loke stressed that regulation is not about stifling new technologies, but about instilling confidence among investors, operators and the public. “Without robust frameworks, the industry will not gain traction because stakeholders need certainty and assurance,” he added. The low-altitude economy covers a range of activities including logistics drones, passenger air mobility and unmanned aerial systems. Analysts forecast the global drone market alone could be worth hundreds of billions within the next decade, with potential spillovers in logistics, healthcare and urban transport. On the new corporate identity, CAAM CEO Datuk Captain Norazman Mahmud said the rebranding exercise reflects more than just a change of image – it marks a transformation in how the regulator positions itself to meet the demands of a rapidly evolving aviation industry. “Today marks an important milestone in CAAM’s journey. The unveiling of our new corporate identity is more than a change of image, it represents a transformation in how we, as the nation’s sole aviation regulator, position ourselves to meet the needs of an industry that is dynamic, challenging and vital to Malaysia’s future,” he said. Norazman highlighted that aviation has always been a cornerstone of Malaysia’s growth. “It drives tourism, creates employment and connects our businesses to the world. For this reason, a strong regulator is not only about safety oversight, but also about

Loke (right) at the launch of the Civil Aviation Authority of Malaysia’s (CAAM) new corporate identity. With him are (from left) Norazman, Transport Ministry deputy secretary-general (policy) Datuk Normah Osman, Transport Ministry secretary-general Datuk Seri Jana Santhiran Muniayan and CAAM chairman Datuk Mohamed Sharil Tarmizi. – BERNAMAPIC

comes at a crucial time. Air travel demand is rebounding strongly post-Covid pandemic and new technologies are poised to reshape the aviation landscape, from digitalised air traffic management to sustainable fuels and electric propulsion. Norazman said CAAM’s transformation also carries a sustainability agenda. “It means embracing green initiatives such as decarbonisation goals, green airport practices, and ICAO’s target of net zero carbon emissions by 2050. At the same time, we are investing in training and international collaboration to ensure Malaysia has the skilled talent required to support growth,” he said. Loke underscored that the aviation regulator’s mission remains unchanged despite the transformation. “At the end of the day, our priority is safety and efficiency. We want to encourage innovation, but it must always be underpinned by strong regulatory foundations,” he said. As Malaysia looks to position itself as an aviation hub for the region, both Loke and CAAM emphasised unity of purpose. “The Transport Ministry, industry partners and CAAM are aligned in one mission, to ensure safer skies and a stronger aviation future for Malaysia,” Norazman said.

instilling confidence that Malaysia is a trusted, competitive and globally connected aviation hub.” Loke said Malaysia’s efforts to embrace next-generation air mobility must be aligned with international best practices, particularly those of the International Civil Aviation Organisation (ICAO). “Our goal is not only to facilitate the growth of local operators but to ensure Malaysia is recognised as a serious player in global aviation.” The minister added that the government would take a measured approach in appointing new members to aviation-related boards, stressing the importance of finding the “right person with the right credentials” to fill vacancies. Relating to the merger of the Malaysian Aviation Commission (Mavcom) and CAAM, Loke said almost all staff from the former regulator had been absorbed into the new structure, except for a small number who chose to opt out due to factors such as age or personal considerations. “We have kept our promise that the merger would not disadvantage staff. Everyone who was confirmed with Mavcom has been offered a place under CAAM,” he said. Industry observers say the move to strengthen CAAM’s identity and governance solutions a lot faster,” he told reporters after launching the SmartGov Malaysia Summit 2025 and the Malaysia Digital Xceleration Summit 2025 (MDX Summit) here yesterday. Gobind also said the country is expecting more investments in the digital economy, moving ahead to reach its 25.5% gross domestic product (GDP) contribution in 2025. “For the digital economy, the sector is anticipated to reach 30% GDP contribution towards 2030. I think the target (25.5%) is achievable and there’s a lot of work for the ministry to be done, but rest assured, we are committed to getting it done,” he added. Meanwhile, Malaysia Digital Economic Corporation (MDEC) said MDX Summit 2025,

Digital Ministry to build ecosystem to support Malaysia’s AI nation efforts KUALA LUMPUR: The Digital Ministry is committed to building an ecosystem to support the country’s efforts moving towards becoming an artificial intelligence (AI) nation by 2030. running alongside SmartGOV Malaysia Summit 2025, highlighted the government’s journey in embracing digital transformation.

In a statement yesterday, it said the summit showed Malaysia’s capabilities in harnessing its nationwide 5G network and the broader Malaysia Digital ecosystem of solutions, talent, and infrastructure, underscoring the nation’s commitment to inclusivity, resilience, and sustainability in the digital economy. “MDX Summit 2025 is more than just a showcase of technology; it is a platform for action. By connecting global innovators, local talent, investors, and policymakers, we are building the partnerships that will drive Malaysia’s digital economy forward. – Bernama

Its minister, Gobind Singh Deo, said the ministry has taken concrete steps by utilising infrastructure and adopting technology to ensure the country’s readiness in developing an AI nation. “When it comes to building an AI nation, we have taken real steps that show that we are committed to building an ecosystem. “Today, we already see many industries that are operating using AI solutions. As time goes by, we are going to (develop and adopt) these