SHAH ALAM, June 1 — Malaysia must accept it was losing its competitive advantages from three decades ago and adapt, Economy Minister Rafizi Ramli said of Panasonic Manufacturing Malaysia Berhad’s closure of two facilities in the country.

Calling the "restructuring exercise” part-and-parcel of a private company’s overall planning and decisions, Rafizi said Malaysia must develop a new competitive edge that better suited the country’s goal of reaching high-income status.

Rafizi said this included injecting new leadership in the relevant economic sectors and the government’s ongoing push towards green technology, given the reality that some competing nations had cheaper labour and lower infrastructure costs.

"When they decide to invest in Malaysia, they look at how their operations here can fit their specific needs.

"More often than not, after a while, if it no longer meets their requirements and margins, then they will decide to relocate. That is part and parcel of any economist’s routine.

"So, while I wish that multinational companies (MNC) stay here and continue to grow and work with us so that they expand their manufacturing facilities to their higher level, we also need to understand that those are decisions that they make.

"I think as we put out more infrastructure, more policies, more initiatives, the industries and MNCs will recognise our new sets of competitive edge and while we can’t stop those who no longer fit into this high-income value chain, they will have to decide what they want to do, but we will get more who fit into this economic profile,” he told reporters after an engagement session over the mid-term review of the 12th Malaysian Plan here.

Rafizi also said Malaysia must realise that moving up the value chain was the only sustainable way to address the issue of chronically-stagnant wages and growing demands for increased pay to keep up with inflation.

"The kind of companies who will come here and stay here are the kind of companies who are willing to pay the kind of salaries our workforce demands but can produce higher services and products at higher price. So that is the gap,” he said.

News portal Malaysiakini today reported about the possible closures of the Malaysian arm of the Japanese manufacturing giant.

Citing sources, Malaysiakini reported that Panasonic Appliances Refrigeration Devices Malaysia Sdn Bhd in Melaka could close by year end, leaving its current 500 Malaysian workers and 95 foreign staff at risk of unemployment.

The company did not confirm the figure but said "a nominal number” of employees within the affected departments were provided with the option of a Mutual Separation Scheme (MSS), and a significant proportion of them voluntarily opted for this opportunity”.

"During this rationalisation exercise, those employees who opted for the MSS have received fair and equitable compensation packages which are above industry norms,” Panasonic Malaysia said.

Staff who did not opt for the MSS were offered to be transferred to other relevant departments within Panasonic Manufacturing Malaysia Berhad for "positions that suit their skill sets and potential for growth,” the company added.